Holiday lets Scotland: Government told to close licensing loophole as holidaymakers turned away last minute

The loophole around holiday lets has potentially cost some businesses in Scotland thousands of pounds in cancelled bookings

The Scottish Government is being urged to overturn a loophole in holiday let licensing legislation that has led to some holidaymakers being turned away at the last minute.

As of October last year, anyone operating a short-term let needs to have a licence from their local council to do so. However, a loophole in the law has meant if a short-term let business changes hands while the licence is still pending, it cannot be transferred over to the new owners.

The Government is due to meet on Thursday to review the legislation, and is being told they must address the “irreversible damage” this loophole is causing.

One holiday let owner, who had been running her parents’ holiday cottage in Sanquhar, Dumfries and Galloway, for the past eight years, told The Scotsman that tourists were having their holidays cancelled at the last minute because of this loophole.

She recently sold the property to a new family, along with the business and the 19 pre-booked holidays for the summer. However, the new owners have had to apply for a completely new licence.

They told The Scotsman: “The council won’t honour the licence for the new people even though we submitted all the paperwork, which means this business isn’t allowed to run.

“They are thousands and thousands of pounds out of pocket. They are now having to cancel holidaymakers on the Wednesday when they should be arriving on the Saturday because the licence hasn’t come through.

“Last week they even had guys who didn’t receive the email and rocked up at the cottage for their holiday.”

The let owner added: “It just needs a name change. All the relevant paperwork has been done, but there is just no leeway at all.”

Fiona Campbell, chief executive of the Association of Scotland’s Self-Caterers, said these types of incidents were damaging the reputation of Scottish tourism.

She said newly-appointed First Minister John Swinney and Deputy First Minister Kate Forbes needed to “make good on their commitment to reduce red tape” by starting off with addressing this “botched” loophole.

Ms Campbell said: “Sadly, it is another example of how short-term let licensing remains unfit for purpose, impacting real people who are trying to earn a living in a nationally important industry that hasn’t been given the respect it deserves.

“Our sector repeatedly warned of the negative consequences that would follow from the licensing regulations, which continue to burden small businesses day in, day out for absolutely no discernible benefit.”

This call has been echoed by the Scottish Conservatives, who say there needs to be an “immediate rethink” of the restrictions.

Murdo Fraser MSP, the party’s business and tourism spokesman, said: “Their ill-considered tinkering has imposed unnecessary costs and regulations on small businesses and risks serious damage to our vital tourist sector.”

On Thursday, the Government will look to amend the Civic Government (Scotland) Act 1982. If the proposed changes are agreed, this loophole would be closed and licences would be able to change hands when properties are sold. 

Dumfries and Galloway Council, which is responsible for the short-term let licensing in Sanquhar, said they could not transfer this particular licence until the Scottish Government changes its legislation.

A spokesman for the council said: “The Scottish Government has proposed an amendment to the licensing order that would introduce powers enabling the transfer of short-term let licences, which will aid the selling and purchasing of short-term let accommodation.

“The Scottish Government intends to lay secondary legislation on May 16 that amends the Civic Government (Scotland) Act 1982 (licensing of short-term lets) order 2022.

“Our council will only be able to make a decision on the inclusion of the transfer of short-term lets licences in its policy and procedure if the legislation is agreed and put into law by the Scottish Government.”

A Government spokesman said: “Short-term let licensing legislation has been introduced to ensure short-term lets are safe and the individuals providing them are suitable. 

“Following engagement with the sector, the Scottish Government will lay an amendment to legislation that benefits new owners of short-term let accommodation. Subject to the approval of Parliament, licence holders will be able to apply to licensing authorities to transfer their licence.

“In the meantime, licensing authorities are working with prospective purchasers and hosts to prioritise licence variations or applications from new hosts.”

Online accommodation company Airbnb has claimed the short-term lets policy is scaring tourists away from Scotland.

In a report entitled 'Six Months On: An update on the impact of Scotland’s short-term let rules', the firm concluded: “The implementation of short-term rental rules in Scotland is harming its tourism industry and limiting economic opportunities for local families.

“Despite the measures, they have not delivered positive impacts on housing and rental prices, which have reached their highest annual rate in nearly a decade.

“The disruption to supply will limit accommodation options for guests, restrict earning opportunities for families and hurt small businesses that rely on visitors to Scotland.”

Edinburgh councillors meanwhile on Monday rejected plans to make it cheaper and easier for residents in the Scottish capital to let out their home or spare room during this year’s festivals.

Council chiefs had suggested trialling the relaxation of some “unreasonably onerous” conditions for temporary short-term let licenses and reducing the application fee by over 50 per cent in response to concerns about the cost and availability of accommodation in the capital this summer. However, councillors said the proposal was based on “one-sided anecdotal evidence” and came as a “direct result of lobbying by the Festival Fringe”.