New laws in Scotland have significantly changed the landscape for short-term property lets.

What is a short-term let?

The Scottish government has no single set definition of ‘short-term let’, due to the term being used widely with different meanings depending on the context. 

For the sake of the new short-term let licensing laws, a ‘short-term let’ is where one or more guests rent accommodation where the property does not become their main residence. This differs from a private residential tenancy, where the tenant occupies the property as their primary home. Short-term let can also be referred to as holiday let.

Almost any type of property can be rented as a short-term let. It could be a house, a flat, a cottage, a houseboat, or even pods and yurts. The guest(s) may have access to the entire property or just a select area within the property.

Short-term let licensing laws

These changes came into effect on 1 October 2023, requiring everybody in Scotland to have a short-term let license before they can take bookings or receive guests for a short-term stay. 

The licence must be applied for and can take months to process. New hosts who are just starting up in the short-term let business can advertise in advance, but cannot take bookings or allow people in for tenancy until their licence is granted. Councils have up to nine months to process applications for new hosts.

If an owner / landlord was already trading as a letting service before 1 October 2022 and applied for a licence before 1 October 2023, they can continue providing accommodation to customers while the local authority considers their application. Existing host applications can take up to twelve months to be processed.

Other than the caveat above, anyone found to be taking bookings or receiving guests before their licence is approved will be committing a criminal offence and may be fined £2,500 and banned from applying for a short-term let licence for a year.

Types of short-term let license

There are four types of short-term let licenses, each one relating to a different method of letting. Every license covers letting out the entirety of the property, or just a room or section.

• Home sharing - When the license holder lives in the property alongside short-let guests.
• Home letting - When the license holder will never live in the property when short-let guests are there. For example, if the property is only being let out whilst the license holder is on holiday.
• Home letting and home sharing - When the license holder will sometimes be living in the property at the same time as short-let guests, but not at other times.
• Secondary letting - If the property is not the sole residence of the license holder, such as a second home or holiday home.

For owners / landlords who have more than one property in the same location, extra consideration is required to determine whether one or multiple licenses are required. This is down to the local authority's discretion, but is commonly approached by considering whether the property falls under ‘conventional accommodation’. For example, an owner looking to let out multiple flats within one block may require a license for each flat, but the owner of multiple yurts in a field space may be covered by one single license.

The short-term let license scheme varies by area. Some local authorities may refuse a license application whereas others may have accepted it. This could be due to planning control zones or local licensing policies.

Exemptions

Certain circumstances are exempt from needing a short-term let license, such as:

• Long-term let premises with certain legal tenancies
• Hotels and hostels
• Student accommodation
• Accommodation provided to employees in their contract, and bothies

The list of exemptions is full of strict and complex legal definitions. The government has a free license checker that can determine whether a short-term let license is required, and if so, which type of license is likely to be the most suitable.

Local authorities are legally allowed to agree to short-term let of a maximum of six weeks per year without a license, but whether they exercise this right and under which circumstances they allow it will depend on the authority.

Applying for a short-term let license

Applicants can apply through their local council’s website.

There is a fee for applying for a short-term let license. The cost will depend on the type of license, as well as the size of the accommodation. For example, the license for letting out a single room within a home will likely be cheaper than letting an entire multi-bedroom house. Fees are set by local authorities, so will vary by area. The government originally estimated that fees would be between £300 and £500, but since implementing the scheme it seems that some authorities have priced theirs much higher.

When applying for a short-term let license, three main areas are assessed:

• The property - whether the property is compliant with planning regulations and if it has the appropriate safety certificates.
• The applicant - any prior convictions that the applicant has must be declared.
• The community - any objections from neighbours of the property will be taken into account.

The license will need to be renewed after a set period. The maximum period is three years, but some authorities are requiring an annual renewal.

For individual owners – from the large players with multiple buildings and hundreds of users, all the way down to private individuals who have happily provided small rural bed-and-breakfast rooms as a part-time or incidental service, this is a new legal world.

Anybody providing a letting service who is unsure of the new regulations is advised to contact their local authority or seek legal advice to check that they are on the right side of the law.