Statutory Obligations 

Short Term Let Licences

The legal position:

There is a new licensing system for short-term let providers.  The legislation which introduces this is the Civic Government Scotland Act 1982 (Licensing of Short Term Lets) Order 2022. That amends the current general licensing system in the 1982 Act.

What is a Short-Term Let?

There are four types of short-term let licence:

1. Home Sharing – where the host is sharing their home;
2. Home Letting – where the host is letting their own home but is absent during the let; and
3. Secondary Letting – where the host is letting premises which are not their own home.
4. A combined home sharing and home letting licence.

When do I need a licence?

A licence is needed to provide residential accommodation by a host to a guest in the course of business and for commercial consideration is a short-term let where:

• The guest does not use the accommodation as their only or principal home
• The let is for a commercial consideration.  That means money or a ‘benefit in kind’ or a reciprocal arrangement – like a house swap.  This can also cover provision of a service in exchange for the use of the accommodation, but that does not exclude worker’s accommodation (they are, or at least should be, excluded)
• The guest is not an immediate family member of the host; and
• The guest is not sharing accommodation with the host as part of an educational arrangement.
• The guest is not an owner or part owner of the accommodation
• The accommodation is not provided to allow the guest work or services by the guest to the host or to another member of the host’s household – such as having a builder stay in the report to carry out work to the property or to the hosts home.

The term ‘immediate family’ means: where the owners(s) are:  married, in a civil partnership, living together as though they were married.  The owner (A) is then able to allow their spouse or partner as above (B) to stay in the accommodation without the need for a licence.

This also extends to someone who is a parent, grandparent, child, grandchild or sibling of A or B.    Sibling means having one parent in common so step siblings and half siblings are included this definition and it extends to the child of another person of they are treated as a child of that person – for example, blended families.

No licence is needed for certain tenancies including private residential and social housing tenancies.

Certain premises are excluded:

• Residential accommodation and residential accommodation where personal care is provided to residents
• A hospital or nursing home
• A residential school, college or training centre
• A refuge
• Student accommodation
• Accommodation which is provided by the guest
• A hotel which has planning permission granted for use as a hotel
• accommodation owned by an employer and provided to an employee in terms of a contract of employment or for the better performance of the employee’s duties
• Accommodation which is capable, without modification, of transporting guests to another location (such as a caravan which is not static, a motorhome or a boat (although boats and barges which have been converted and cannot sail will require a licence)
• A bothy, which means a building of no more than two storeys which does not have any form of mains electricity, piped fuel supply, nor any piped mains water supply. It must be 100 metres or more from the nearest public road and 100 metres or more from the nearest habitable building
• Secure residential accommodation (including a prison, young offenders institution, detention centre, secure training centre, custody centre, short-term holding centre, secure hospital, secure local authority accommodation, or accommodation used as military barracks).
• A hostel, which means a building, other than a dwelling house, in which there is provided either or both of meals, cooking facilities.
• Accommodation which otherwise requires a licence for use for hire for overnight stays (but an HMO (house in multiple occupation) licence does not apply here and of you have an HMO licence you will still require a short-term let licence
• Premises in respect of which a premises licence is in place. That is a liquor licence.  This is granted in terms of the Licensing (Scotland) Act 2005.  The main point here is that in the operating plan of the premises licence, the provision of accommodation must be an activity marked that the premises carries out.  A restaurant with some associated cottages where they are not covered by the liquor licence is unlikely to meet the criteria here, but may do if the rooms are on the same land.
• An aparthotel. This means a residential building containing serviced apartments where: the whole building is owned by the same person/entity; a minimum number of 5 serviced apartments are managed and operated as a single business; the building has a shared entrance for the serviced apartments; and the serviced apartments do not share an entrance with any other flat or residential unit within the building. A serviced apartment is a flat or residential unit in respect of which: services are provided to guests (such as housekeeping, a telephone desk, reception, or laundry); each flat or unit contains its own washing, cooking and dining facilities separate from each of the other flats or units; and there is a management system in place to prevent anti-social behaviour and to impose limits in respect of the maximum occupancy of the flats or units.

How will this affect me?

You must apply for a licence before 1^st April 2023 if you are an existing operator (do not apply on 1^st April 2023 – that will be too late!).  If you are not an existing operator you will have to apply for a new licence then wait until it is granted. An operator is not well defined but Scottish Government have said that is means anyone who has bookings in the period prior to 1^st October 2023.

Licensing authorities (local councils) should have their application forms, fees and policy documents completed by 1st October 2023 in order to allow Short Term Let operators to begin applying for licences. This is also the date at by which someone must be trading to allow them to apply as an existing operator.

If you are not operating at 1^st October 2023, you will have to apply for a new licence and cannot trade until that is granted.  You may be able to apply for a temporary licence to run alongside your main licence application. That would allow you to trade under the temporary licence, if granted, until the full licence application is determined.  Not all licensing authorities are offering temporary licences so please contact us and we will check and advise you.  There is also more information on different licensing authority approaches in our member area.

If you have not already done so, please create a log in which will give you access to a huge amount of further information and advice. Existing short-term letting operators should consider the potential planning requirements as well as checking whether their property meets the required licensing standards. For those considering entering the short-term letting market, the additional cost of a licence and potentially planning permission should be taken into account. If buying a property, they should consider what information or evidence the seller might provide to allow short-term letting to continue or indeed begin.

How long will my licence last, how many licences will I need and what are the Council fees?

One licence will be needed for each property.  Properties located on the same piece of land, such as three cottages on the one farm with all held under the one title will be one licence and it has one postal address.  A block of flats where an operator owns three flats in the block will be three separate licences as they all have separate titles and separate postal addresses.

Licences are expected to last around three years but can be granted for a shorter period, such as a year.  In addition, after the first renewal, the licence can be renewed for a longer period.  Some councils are suggesting 10 years.

Each licensing authority will set its own fees and these should be on the basis that department is self-funding, so no profit is made.  Fees are now being confirmed – see our spreadsheet on our website for details of the fees.

The person or entity applying for the licence must pass a fit and proper test and the property must comply with health and safety standards including fire safety requirements and up to date compliance with gas and electricity standards.

What if I do not get a licence?

Anyone operating a short-term let without a licence application having been lodged by 1^st April 2023 will be committing an offence.  New operators must wait until a temporary or full licence is granted before operating.  Trading without a licence is an offence and is punishable by fine in the first instance.

Applicants must be assessed as “fit and proper”, and must comply with various mandatory conditions, largely relating to safety.

Electrical checks will be required at least every five years and gas checks annually. PAT testing is five yearly but the competent person who carries it out can insist that certain electrical devices are tested again sooner than the 5 year period.   Properties must have sufficient fire and carbon monoxide detection equipment, and furnishings must be fire safe. Records must be kept and information displayed within the premises.

Licence holders must take “all reasonable steps to ensure the premises are safe for residential use”. For accommodation within a building, the repairing standard applies and the licence holder must ensure the accommodation meets the standard. This should not be onerous for most operators but does mean they will have to meet any minimum standard for Energy performance certificates (EPC’s).  There is no minimum standard in place at present although England does have a minimum standard and there was discussion that it may become requirement in the future in Scotland.  EPC’s are only required where a property would already require an EPC under the existing regulations – Energy Performance of Buildings (Scotland) Regulations 2008 – and you can check if there is an EPC in place on https://www.gov.uk/find-energy-certificate.

Local conditions:

Councils can set their own further local conditions, which could be used to address specific local concerns such as noise or rubbish, and/or impose specific conditions on individual licences.

Mandatory Conditions:

Fire Safety

In 2006, the Fire (Scotland) Act 2005 (‘the 2005 Act’) introduced changes to fire safety law in Scotland and repealed previous fire safety legislation. The Scottish Fire and Rescue Service (‘SFRS’) is the enforcing authority. Guidance has been produced to assist those who have responsibility under this Act for ensuring fire safety in premises with sleeping accommodation in Scotland. This includes all forms of short-term let.

You must ensure your premises has satisfactory equipment installed for detecting, and for giving warning of:
(a) fire or suspected fire, and
(b) carbon monoxide present in a concentration that is hazardous to health.

Tolerable Standard Guidance: Satisfactory Fire Detection and Satisfactory Carbon Monoxide Detection

There is also guidance for well-managed small bed and breakfast and self-catering premises. Compared to other ‘sleeping risk’ premises, the risk from fire to persons in this type of property is likely to be relatively low. This applies where:

• premises are used for self-catering holidays if occupied by not more than 10 persons
• bed and breakfast premises in the home of a resident operator (for not more than 8 guests)

In either case, the accommodation must have a means of escape from bedrooms via a traditional ‘hall’ with at least one exit directly to the outside; do not have letting or guest accommodation below a ground floor or above a first floor; do not act as the principal residence for paying guests; and do not have any storey area over 200 m ² internal floor space.

The legislation requires the provision of fire safety measures; this includes risk reduction measures, means of fire warning, fire-fighting, escape, staff training and instruction, as well as emergency procedures. It sets out fire safety responsibilities and seeks to ensure the safety of persons from harm caused by fire.

Furniture and Fittings

You must ensure that all upholstered furnishings and mattresses within the parts of the premises which are for guest use, or to which guests are otherwise permitted to have access, comply with the Furniture and Furnishings (Fire Safety) Regulations 1988, and keep records showing that all upholstered furnishings and mattresses within the premises comply with the Regulations.

Gas Safety

When you apply, you must be able to provide confirmation that a currently valid, annual gas safety check has been carried out on all gas appliances by a Gas Safe registered engineer.

Electrical Safety Checks

Licenced premises require five yearly EICR certificates as well as PAT testing.  Competent persons carrying out the PAT test may deem that certain appliances have to be checked more regularly than the five year period.  The electrical installation, including wiring, sockets and fittings within the property will need to be inspected and tested by a competent person at least every five years. On completion an electrical installation condition report (or EICR) must be provided to the owner. Appliances that are accessible to guests will also be required to be inspected and tested which could include washing machines, tumble dryers and fridges. A report will be required to prove the safety of these appliances called a Portable Appliance Testing (PAT) Report.

Private Water Supplies

If your premises has a private water supply, then you must comply with requirements on the owners of private dwellings in the 2017 Regulations. You can find more information and guidance from the Drinking Water Quality Regulator for Scotland: Guidance on the Water Intended for Human Consumption (Private Supplies) (Scotland) Regulations 2017.

Legionella

You must assess the risk from exposure to Legionella within your premises, whether or not it has a private water supply.  The risks from hot and cold water systems in most residential settings are generally considered to be low because water is used regularly and does not stagnate.

Repairing Standard

You must ensure that the premises meet the repairing standard.

Maximum Occupancy

You must ensure that the number of guests residing in the premises does not exceed the number specified in the licence.   A short-term let licence application will be forwarded to the building control section of the relevant council who will consider the number of beds, bedrooms, size of the premises and means of escape. It may wish to visit your premises or ask to see floor plans.  The Council may require that floor plans are lodged as part of the short-term let licence application.  These may be indicative or may have to be to scale.  This will be detailed in the Council’s Short-term let Licensing Policy once these are finalised.

Insurance for buildings and public liability

Valid buildings insurance and valid public liability insurance to the value of £2 million for the duration of each short-term let agreement should be in place.

This is not a service we offer to consumers in England.