Airbnb consultation: What does new regulation mean for holiday accommodation?

06 June 2023 by

Scotland's short-term letting regulations may soon travel south of the border, but what will that mean for operators?

A crackdown on short-term lets was introduced in Scotland in October 2022 in an attempt to "level the playing field" with traditional accommodation providers and stem housing shortages.

Across Scotland hosts using platforms such as Airbnb are now required to prove they are abiding by planning legislation and have to apply for a licence to operate.

Russell Imrie, director of Scottish hospitality group Queensferry Hotels, which owns Keavil House hotel near Dunfermline, said the Holyrood legislation as it has been implemented in Edinburgh was ensuring fair treatment for operators across the sector.

"There are reports of people leaving the short-term lets business and moving into long-term lets, but that's not necessarily a disadvantage, particularly for the likes of hotel workers in the city who are in need of long-term accommodation," he said.

Imrie said Edinburgh experiences huge international demand for accommodation during the month of August, when the city plays host to Edinburgh Festival and the Fringe.

"Short-term lets, historically, fill that need quite well. It's a very difficult situation though, when short-term lets are required in super-peak periods, but they're not necessarily required over other periods of the year.

"Edinburgh is experiencing a large increase in accommodation supply, with new hotels in the pipeline across all price points, and these will be able to fulfil accommodation demand," he added.

Neil Ellis, chair of the Edinburgh Hotels Association (EHA), which represents more than 50 hotels, said that licensing schemes did create financial challenges for short-term let hosts.

He said: "The licensing of short-term lets will place burdens of compliance on operators. We see this as fair and reasonable from a consumer perspective and it is no less than is demanded of even small hotel, B&B and guest house operators, who must meet obligations under various safety regulations, fire precautions, food hygiene and safety and, where appropriate, alcohol licensing laws.

"Licensing should be fair, transparent and fees should only cover the direct cost of administration of the scheme."

New accommodation schemes in England and Wales

In England the Department for Digital, Culture, Media and Sport has proposed a registration scheme for tourist accommodation, adding a layer of bureaucracy to short-term lets, which it says will allow it to define the size of the sector and its impact on long-term stock levels. It is anticipated that local authorities will then be able to define planning restraints – such as the 90-day limit on short-term lets already in force in London.

In Wales, the government has proposed giving local authorities the power to impose council tax rates up to quadruple the standard amount on second homeowners as well as new business tax rates. As well as levelling the playing field with traditional operators the changes aim to counter housing shortages in towns and cities popular with tourists and address the subsequent hollowing out of communities.

If people keep buying in order to let out, there won't be enough business to go around

In holiday hotspot Margate, Fort Road hotel's manager Tom Fogg said while he didn't believe Airbnb and hotels necessarily cater to the same market, he did feel accommodation provision was "already kind of saturated".

"If people keep buying in order to let out, there won't be enough business to go around," he said.

Like Ellis and Imrie, Fogg said the biggest impact he had seen the likes of Airbnb hosts have on the town was on the rental market, with a shortage of properties available.

"That is extremely damaging, because it means that the youth market is going to go somewhere else. It affects the culture, the labour market – all those things."

Holiday let registration schemes to protect customers

Since Airbnb launched in the UK in 2012, the UK-wide Bed and Breakfast Association, has been pressing the government to implement a registration scheme to protect consumers, "level the playing field".

Founder and chair David Weston said the idea had been that anyone selling accommodation to paying guests must register and might subsequently be inspected by fire safety authorities and other regulatory bodies.

But Weston said the way the Scottish government had implemented the crackdown was "just about the worst way they possibly could have chosen", due to the choice of the "more bureaucratic" licensing schemes over a registration system and the freedom given to local councils to implement the scheme differently.

Weston warned that such an approach had a substantial knock-on effect, with the disappearance of the money visitors would have all spent, contributing to the local economy.

Likewise, a spokesperson for Airbnb touted several economic benefits its business offered to hosts and communities, including boosting local economies and increasing accommodation capacity for major events.

"We recognise the historic challenges facing Scotland. We want to work with local authorities in Scotland on rules that help – not hurt – everyday hosts who rely on the additional income, while giving councils the data they need to take an evidence-based approach to address local housing concerns."

A survey Airbnb conducted of Scottish hosts found 27% are "unlikely" or "very unlikely" to continue operating as a result of the new rules, a figure that jumped to 67% when looking at those who hosted a private room in their home.

Previously, a spokesperson for the company said most of their hosts across England and Wales share just one listing and earn just over £6,000 a year, with one in three hosts reporting the extra income "helps them stay in their homes and meet rising living, energy and mortgage costs".

However, Adrian Ellis, general manager of the Lowry hotel, said that while it was important for guests to the city to have choice in accommodation style, there was a real need for regulation, ensuring there was enough housing for Manchester locals.

Ellis also pointed out that the legislation would help protect Manchester's reputation by increasing the likelihood that visitors' experience of the city was a good one.

"What you don't want is guests having a poor experience and then attributing that to the city that your business is operating in," he said.

Short-term let proposal for England and Wales

Former tourism minister Nigel Huddleston MP's call for evidence received 4,000 responses, with 60% of respondents calling for further intervention and 42% supporting a registration scheme. Of all respondents, 18% favoured a more interventionist approach.

England's Department for Digital, Culture, Media and Sport (DLUHC) is consulting on a Tourism Accommodation Registration Scheme with the introduction of a use class for short-term lets, which could see new hosts have to apply for planning permission to ‘convert' their property into a rental.

A public consultation on the proposals was open for 8 weeks and closed on June 7.

In December last year, the Welsh government launched a consultation on establishing a statutory licensing scheme for all visitor accommodation providers. This would create a database of who was operating in the industry, requiring hosts to obtain a licence if they wished to operate holiday lets.

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