This autumn, new rules for holiday lets will come into effect in Scotland and Wales requiring that all holiday lettings are licensed. The days of simply signing up to a letting app and hosting as-and-when are over. The Scottish Government has claimed that such measures are necessary, not only to ensure the safety of visitors to Scotland but also for the well-being of residents living next to holiday lettings. It is in the long-term interest of the country, it is argued, to help neighbourhoods and local communities thrive and maintain their identity. While it’s difficult to object to such laudable aims, owners who have until now enjoyed the freedom to let their properties on their own terms might not welcome such additional layers of bureaucracy.
In Scotland, the new licensing scheme will encompass any and every property that can be defined as operating as a holiday letting. Besides casual Airbnb lets, this will include established B&Bs, holiday cottages, guesthouses—even tents, tipis, treehouses, and yurts!
The Limitations of the New Rules for Holiday Lets
The new rules require that owners of all holiday lettings are not only licensed and compliant with the new regulations, but also place a duty on owners to consult with the police, the Scottish Fire and Rescue Service, and local Environmental Health and Planning and Building Standards departments. While property management services will be able to handle this process for some owners, many might not have the time or inclination to go through such a complicated administrative process. This will especially be the case for owners only interested in making a bit of cash on the side by advertising their flat on Airbnb whenever they happen to be out of town.
As well as off-putting to the casual letter, the new rules for holiday lets have not been welcomed by some in the wider holiday lettings industry. The UK Short-Term Accommodation Association (STAA), for example, has highlighted concerns over the economic impact on the sector of potential supply reduction. It has criticised the new licensing scheme as ‘burdensome’, and for putting increased pressure on local authorities to deliver the licensing scheme effectively. The new regulations, the STAA concludes, are ‘some of the most regressive in the world’, and will negatively impact tourism, the letting industry, and ultimately ‘Scotland’s competitiveness as a tourism destination’.
How to Turn the New Rules for Holiday Lets to Your Advantage
However, despite such stark warnings, for the established property owner there is also evidence that regulation might bring welcome benefits. In the longer term, and if the new regulation succeeds in achieving its aims, safer and more cohesive neighbourhoods and communities will mean more attractive tourist destinations. In the shorter term, if the holiday let licensing scheme puts off more opportunistic and casual letters, this will inevitably result in a reduction of the supply of holiday lettings and consequently increased demand for professionally-administered holiday lettings. Established property owners will be able to charge more competitive prices, once cheap and improvised holiday lets are squeezed out by tighter regulatory controls.
There is ample evidence that if there is tourist interest in an area, scarcity of accommodation doesn’t translate into fewer visitors, it translates into higher prices. To pick a recent example, since Liverpool became the official venue for Eurovision 2023, hotel rooms usually available at £35 a night have been booked for nearly one hundred times that amount. As Guardian reported, people are spending thousands of pounds per night (one venue was able to charge a whopping £17,600 per night) for the Eurovision weekend in May, bringing a massive economic boost not only to property owners but also to the entire region.
New Rules for Holiday Lets in Scotland
Now let’s take a look at the Scottish new holiday lets licensing scheme. While the scheme is still in its infancy in Scotland, property managers have already started applying. There are really two paths that you, as an owner/host or a property manager can go down. If a property has been trading as a holiday let for more than 10 years, then the application is pretty straightforward. forward, however, for those that have been in business for less time, it can be a little trickier. There are two licences that will need to be applied for - the first is a planning licence and the second is the regulatory licence that permits the continued use as a Holiday Let. And both will cost the homeowner.
We wanted to hear about the new licensing scheme first hand and so we interviewed a Scottish property manager to hear more about her experience regarding the new holiday let rules and regulations. She told Beyond:
“The Highland Council estimates that a 3rd of all properties currently under the status of “Holiday Let” will cease to trade, which is such a shame. As a medium-sized agency, we have added to the local economy by millions each year, which has been very positive for the local community. However, there are those that take advantage of the status “Holiday Let” and leave their properties empty for 50 weeks of the year, therefore adding nothing to the surroundings and local economy.”
The positive in this new licensing plan is that those PMs dedicated to the Staycation industry will continue to thrive under the guidance of Agencies that keep abreast of the ever-changing environment.
New Rules for Holiday Lets in Wales
In Wales, the picture is a little different. In Wales for many years, there has been a clear definition between Business Rates and Council Tax. In order for owners and PMs to qualify for Business Rates they had to ensure that their properties have been available to rent for a minimum of 140 days out of the year and occupied by paying guests for 70 of those days. When a holiday lets meet this criterion, they became eligible for business rates instead of council tax. As of 1st of April 2023 properties will each need to be made available for 252 days and occupied by paying guests for 182 days in order to be eligible for business rates.
To understand the bigger picture, we interviewed a private holiday let the owner of 5 properties on her Welsh farm:
“Due to the new regulations, we have had to be proactive in our pricing to ensure this level of occupancy. For us, this means keen pricing when required and therefore there has never been a better time to look for agile pricing tools.”
The long-term impact of such tighter regulatory controls is of course impossible to fully ascertain. Few would argue that some form of regulation isn’t necessary, and government intervention in the market has been inevitable for some time. Property owners committed to the industry should be cautiously optimistic that as well as additional admin, financial and other benefits might follow.
As our Liverpool example, the new licensing scheme is definitely inducing many changes in the self-catering accommodation industry. Hence, the use of dynamic pricing tools that react to quick market changes has never been more relevant. Beyond’s revenue management tool was able to instantly detect the rise in demand, and in turn, skyrocket nightly rates. The same may happen in your local market - if a few holiday lets close in the next months, your holiday let will be able to charge much higher nightly prices, meaning only looking at historical trends simply won’t cut it in 2023. Don’t wait, sign up for a free 30-day trial and gain invaluable insights into your market today!