Chamber and committees

First, the evidence that is set out in our business and regulatory impact assessment suggests that the market appears to be recovering towards pre-Covid-19 levels of activity, although we will have to keep an eye on that.

We used the 2019 data, which was established in the Scottish Government’s 2019 research, as a baseline for our BRIA. The BRIA also sets out trends in existing data sources, which include the non-domestic rates roll and data provided from Airbnb. Both those sources show a period of rapid growth in the short-term lets sector over the past decade.

Baseline activity, however, is challenging, not least because properties can appear multiple times on the same platform or on different platforms. The licensing scheme will help to clarify the levels of activity locally and nationally, thereby allowing us to map a more comprehensive picture of short-term let activity across Scotland for the first time, which will be helpful.

Clearly, the number of short-term lets varies from area to area. There is quite a concentration in some areas—particularly in Edinburgh and some rural parts of Scotland, such as the Highlands, where rates can be well above 10 per cent. As I have said, more comprehensive data will be gathered through the licensing scheme.

I recognise what Fergus Ewing has said. However, in looking at the issues in detail earlier, I spoke about local authorities’ ability proactively to put in place requirements for preventing antisocial behaviour. The proposal is about bringing all that together so that, in looking at short-term lets, local authorities can look at issues through the lens of the licensing scheme as well as using existing powers, if they so wish. I gave the example of people drinking for hours. If a holiday let becomes a place where that causes significant concern to neighbours, local authorities could proactively put in place requirements and conditions.

Fergus Ewing spoke about the concern that is felt. I absolutely recognise that the pandemic has had an impact on the tourism sector, but there have certainly been signals over the past few months that the self-catering and short-term let sector in Scotland has been recovering pretty well, with burgeoning numbers of staycations. We will, obviously, have to keep an eye on that.

The Government has recognised the impact of the pandemic on the tourism sector, not least through the 100 per cent non-domestic rates relief for hospitality premises. That relief will continue at 50 per cent next year, as was announced in the budget. There are also all the supports that are given to businesses to consider, including the small business bonus, so it is not a fair accusation to say that the Government has not supported businesses, including in the hospitality sector.

The proposed set of requirements is not onerous. I think that the sector will see that, once the scheme is up and running. A lot has been said that might cause concern: people might think that they will have to pay thousands of pounds for a licence, but they will not. The scheme will be proportionate. Small operators will pay less than big operators and local authorities will be given strong guidance to make sure that the scheme is based on a risk-based inspection regime that is not onerous and should not drive up costs. I reassure the sector of those things and will continue to try to reassure the sector over the next few months, as we introduce the measures.

First, we expect all relevant authorities to use all the powers that are available to them to deal with antisocial behaviour. Existing antisocial behaviour legislation is, however, better suited to handling issues with longer-term residents when follow up and enforcement is more straightforward. I am sure that Willie Coffey has had to deal with cases along those lines, as I have, and he will know that it takes some time to work through the legislative process and to support people in doing that.

The licensing scheme will give local authorities and Police Scotland transparency by letting them know who the owners of short-term lets are and ensuring that they are fit and proper people to hold a licence, including whether they have had issues with antisocial behaviour. Local authorities will have the power to use the scheme appropriately to meet the needs of their area.

Local authorities could also include proactive conditions so that, for example, if people in a big holiday house have been annoying the neighbours by drinking all day and all night, they could include a condition that alcohol cannot be consumed on the property after a certain time. They could do that proactively rather than having to deal with the consequences of antisocial behaviour. It is about giving local authorities the appropriate powers.

Licensing authorities might also wish to include a condition requiring the licence holder to manage their premises in a reasonably practicable way to prevent antisocial behaviour; I have just given an example of how. The draft guidance that was published in June includes a template for additional conditions relating to antisocial behaviour. We expect local authorities to impose proportionate additional conditions only when they are necessary, but if a property has been causing concern, the local authority might want to consider that.

I will ask Rachel Nicholson to come in to outline some of the penalties for offences.

As I have said in my opening remarks, we believe that the package of measures in the licensing scheme, plus the short-term let control area powers for local authorities, will be enough. We think that those will give local authorities the powers that they need to address concerns. As I have set out, Edinburgh and Highland have moved forward with proposals for control areas and other local authorities may do that, too.

However, I also flag that we would have a review in the summer of 2023, which would give us an option to look at whether more controls are required. We will be able to take stock of where we are and, if that shows that these powers are not sufficient to address areas of concern, we would have an opportunity to look at that as well as at anything that is not working with the licensing scheme, or any concerns from the tourism sector. Summer 2023 would be the opportune moment for having a look at all those things.

No. I think that it would have been difficult to have a specific definition that would exclude some but not others in the way that you describe. The danger in doing that is that some operators could redefine their businesses as B and Bs to avoid licensing, as I said earlier.

The point about the scheme not being onerous is important. The level of fee for a small B and B should be proportionate to the level and size of the business. I was struck by the evidence of Andrew Mitchell, from the City of Edinburgh Council, when he said, first of all, that

“The inclusion of traditional B and Bs makes sense. If they are not included, a loophole would be created, which would allow every short-term let to provide a wee breakfast and claim that they were exempt from licensing laws. We strongly support the closure of that loophole by including traditional bed and breakfasts in the definition.”

He then—this is the important bit—said:

“As I said, each local authority will deploy licensing systems that reflect what it sees as the risks. For example, if somebody is living in a property, which is more likely to be the case for traditional B and Bs, they might be subject to a less onerous inspection regime with fewer requirements.”—[Official Report, Local Government, Housing and Planning Committee, 14 December 2021; c 11-12.]

Therefore, the fee would be proportionate to that.

Traditional B and Bs should not be concerned about the proposals at all. A lot has been said that might have worried them, but I would like to say that we want them to continue. They are an important part of the tourism sector and there is nothing in the proposals that is onerous or to be concerned about. I think that local authorities will take a sensible approach to the way in which they deploy the licensing scheme that will ensure that traditional B and Bs continue to be supported and that there is nothing onerous in it for them.

It is about having a proportionate, risk-based inspection regime. If we were to do an analysis of fees that was not founded on a risk-based inspection regime and if every property was inspected every year, the fee level would be higher. However, we are not asking local authorities to do that. That would not be proportionate.

The guidance will set out the detail of how we will ask local authorities to set up a risk-based inspection system. A range of issues that could be brought to the local authority’s attention—for example, if there had been any concerns about particular properties or about somebody being a fit and proper person—would determine which properties might be inspected more than others. The local authorities understand that approach and proportionate fees. That is what we will ask them to do and it will help considerably in keeping the costs down. That is probably where the difference in the figures lies.

No. As I set out earlier, the licensing scheme gives the additional protections. It makes sure, or example, that the fit and proper person test is there. As the committee heard at its previous evidence session, there is a lot of support among local authorities for the scheme, which would allow them to use the additional powers that have been given to them, if they so wish. There would be no requirement on them beyond the core element of the licensing scheme, but I think that local authorities welcome the fact that they would have additional powers to deal with things such as noise, antisocial behaviour and littering, as appropriate to their areas. The licensing scheme does that in a way that I am not convinced a registration scheme would have done.

I am grateful for the opportunity to speak to the two motions seeking approval for the instruments. With the committee’s permission, I intend to speak to both instruments together.

We are committed to ensuring that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with the wider economic and tourism benefits of short-term lets. We have consulted extensively to take this forward.

In 2019, we consulted on the broad principles of a regulatory framework, and that consultation showed broad support for some form of regulation. That formed the basis for the proposals to implement a licensing scheme and control areas, which were announced in January 2020. In September 2020, we launched a second consultation on detailed proposals for legislation, which was then laid in the Scottish Parliament in December 2020.

As the committee will be aware, the licensing order was withdrawn in February 2021, following concerns that were raised by some members and some tourism stakeholders. In response, we established a working group made up of a wide range of stakeholders to explore and resolve those concerns. The working group made helpful suggestions for changes to the legislation, which was reflected in the draft that we published for the third consultation in June. Further pragmatic and significant changes were made to the licensing order following careful consideration of the consultation responses that we received. The changes were set out in my letter to this committee in October and included the removal of overprovision powers and stronger guidance on fees.

I know that short-term lets bring many benefits to hosts, visitors and the Scottish economy. They are an important source of flexible and responsive accommodation for tourists and workers. However, they have also caused issues for local communities that need to be addressed.

At the heart of the licensing scheme are basic safety standards that will help to protect guests, hosts, neighbours and communities across Scotland. Many hosts will already be following those standards as a matter of compliance with existing law or best practice. We do not consider those standards to be onerous.

Where there are other problems such as noise, nuisance, littering, antisocial behaviour, the loss of residential housing stock and adverse impact on local communities, the licensing scheme, together with the control area legislation, will give local authorities the powers to address those problems. Issues arise in rural and urban areas across Scotland and we expect local authorities to use their powers to do no more or less than is necessary to tackle them.

I understand the impact that Covid-19 has had on the tourism sector, which is why this Government has supported the tourism and hospitality sector throughout the pandemic, not least through an extension of the 100 per cent non-domestic rates relief for all retail, leisure and hospitality premises for 2021-22. However, we need to put the legislation in place now, so that councils can get their licensing schemes ready. Many local residents and communities are keen to see progress on the issue and today provides the opportunity for us to make sure that that happens.

The control area regulations were laid in December 2020 and approved by the Scottish Parliament; they came into force on 1 April 2021. Control areas will help to manage high concentrations of secondary letting, where it affects the availability of residential housing or the character of a neighbourhood and they will help to restrict or prevent short-term lets in places or types of building where it is not considered appropriate. That will help local authorities to ensure that homes are used to best effect in their areas. The City of Edinburgh Council and Highland Council are both moving forward with proposals to designate control areas. The control area amendment regulations align the definition of short-term let for control area purposes with that in the licensing order.

We will continue to work with and listen to stakeholders. We will shortly reconvene the stakeholder working group to finalise the guidance on the licensing scheme and prepare for implementation. We will work with local authorities to review the levels of short-term let activity in hotspot areas in summer 2023. The review will identify whether any further measures are required to control numbers and check that we have avoided any unintended consequences.

I believe that our proposals take a robust but proportionate approach to the regulation of short-term lets and that they are right for Scottish circumstances. Therefore, I ask the committee to support the motions. I look forward to any questions that members may have.

Naeem, has there been any assessment of that?