Local Government, Housing and Planning Committee [Draft]

Meeting date: Tuesday, June 25, 2024

Official Report 886KB pdf

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Subordinate Legislation

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Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Amendment Order 2024 [Draft]

We turn to agenda item 4, under which we will take evidence on the draft Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Amendment Order 2024 from Paul McLennan, who is Minister for Housing in the Scottish Government. As members know, Mr McLennan will give evidence remotely. He is joined online by Scottish Government officials Craig McGuffie, who is a lawyer; Jessica Niven, who is unit head in the more homes division; and Andy Kinnaird, who is head of transforming planning.

I welcome the minister and his officials to the meeting, and I invite the minister to make a brief opening statement.

I apologise for not being in the room. After coughing and spluttering my way through some statements last week, I tested positive for Covid on Thursday, and I have still not recovered. I thank the committee for being so accommodating—it is much appreciated.

I am grateful to have the opportunity to speak to the draft Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Amendment Order 2024. Legislation to establish a licensing scheme for short-term lets was approved by the Parliament in January 2022, and the scheme opened in October 2022. The scheme delivers a set of basic safety standards to protect guests, hosts and communities and guarantee high-quality accommodation across Scotland. Those core principles have underpinned our approach, and we have consulted extensively and worked with a range of stakeholders on the scheme’s early implementation.

When the then Cabinet Secretary for Social Justice, Housing and Local Government appeared before the committee in February 2023, the committee made it clear that the Government should use the available time to respond to concerns that had been expressed about the operation of the licensing scheme. I am therefore pleased to have the opportunity to speak to the draft order, which reflects operational adjustments that have been made to the scheme as a direct result of feedback from a range of stakeholders.

The development of the proposed statutory amendment is by no means the only action that we have been taking to continue to refine and improve the licensing scheme. I know that some groups in the sector have shared with the committee evidence that reflects their perspectives on the scheme, and which encourages us to go further. We will continue to work with and listen to stakeholders. I am pleased to inform the committee that, in addition to the regular engagement that we have, we are formalising an expert group to further refine guidance, taking into account the feedback that has been received since the scheme was launched.

The provisions in the amendment order offer technical clarifications and operational improvements for businesses. In bringing forward the proposed amendments, we are conscious that implementation of the scheme is still in a transitional period, in which thousands of operators have recently taken action to comply with the legislation, and that authorities are still processing applications for existing hosts, so any action must be proceeded with in a measured way. That approach has been endorsed publicly by many in the sector.

I turn to the order itself. We are making it more straightforward for short-term let operators to transfer their businesses to a new operator. That aligns with our commitment in the new deal for business. We are also ensuring that new short-term let enterprises can apply for provisional licences, as we listened to and acted on feedback that indicated that securing lending in industries such as agritourism was challenging.

We have reflected the feedback that we received on the operation of exemptions to short-term let licences by clarifying the periods in which that provision may apply. That will ensure that local authorities can apply flexibilities for key sporting and seasonal events that can heighten demand for accommodation, while still having regard for health and safety.

We are also taking the opportunity to make some minor changes to the provisions relating to guest rooms in certain types of residential accommodation and the provisions that require safety information to be provided to guests. The latter change has been made in response to a fatal accident inquiry into a case that involved short-term accommodation.

The approach that is being taken aligns with our commitment to supporting businesses and with the Verity house agreement. It will ensure that the high-quality accommodation that visitors expect in Scotland is maintained, and it prioritises the importance of doing business. I therefore ask the committee to support the draft order.

Thank you for that. I think that you touched on this in your opening statement, but I would like to get a better understanding—without getting into too much detail, because members have a number of questions—of what the problem is that the order is trying to fix through the provisional licence provisions. What was the problem that you identified that meant that you needed the order to address that?

When it comes to provisional licences, I remember that, when I was a member of the committee, an issue was raised about the financing aspect and what was required in that regard. At the time, there were applicants who had had issues with their lenders, and the committee took evidence on that. I have also spoken to other stakeholders about that point, including the Scottish Tourism Alliance and the Association of Scotland’s Self-Caterers. There was an issue in relation to finding finance, particularly for people who were new to the business. There was an accumulation of evidence that indicated that we should make it easier for people in that position to proceed.

That is the main thing that we are trying to do. We will work with stakeholders on that. That is an issue that has been raised over a period of time. It is important that we try to get people into the sector.

Thank you. What was the problem that you are trying to fix with the order through the provisions on the transfer of licences? What came up that made you feel that you needed to respond?

There will always be an element of interchangeability, with people coming into the sector and people moving out of it. We want to make that process as easy as possible. Stakeholders have told us that we should make it easier. That came from evidence that we received when I was a committee member, but also outwith that. The point was raised by stakeholders such as the STA and the ASSC. Again, that was the main point that was raised through engagement with stakeholders.

11:15  

Okay—thank you for that. I have a couple of process questions. First, I am interested to hear who you consulted and how as you developed the changes in the order. Secondly, how did the results of that consultation shape the final content of the order?

There have been a number of consultations. Looking back, I remember what was said at the time when I was on the committee. I have probably met the ASSC on about a dozen occasions. We have spoken to the short-term let providers—the trade groups such as the STA, as well as Airbnb and other such organisations. We have spoken to the industry advice group and I have met it on a number of occasions. That group includes VisitScotland and other stakeholders.

I have also spoken to and met the Society of Local Authority Lawyers and Administrators, as have my officials—I might bring my officials in to speak about their broader consultation as well. SOLAR represents the local authorities in Scotland. We have therefore had feedback on the particular point from across the whole group of stakeholders. That includes individual authorities within SOLAR, because it is partly about their individual interpretations of the scheme and how they see it. Different local authorities will have different aspects and issues that they would like us to deal with. It was really important to meet SOLAR so that I could listen to people who are on the ground and hear about the impact.

We have heard from stakeholders ranging from individual groups, such as the ASSC, to those who represent the broader sector, such as VisitScotland and the industry advice group, along with local authorities. We have tried to cover as broad a range as possible. That is my involvement, but I will bring in Jess Niven if that is okay, convener, to talk about officials’ engagement on a daily and weekly basis and the broader work that has been going on.

I would welcome that.

Thank you for the opportunity to give evidence, convener. As a team of officials, we have engaged widely. There have been three public consultations but, in the most recent period since October last year, which was the deadline for existing hosts to apply, we have refreshed the work with a new round of engagement. That involved small group sessions with local authorities in their role as licensing authorities, and we implemented a questionnaire feedback session with them. Some of the issues that industry members reported to us in the previous consultations were reflected and put into a draft format, which was shared with an industry advisory group at official level. We took that away and reflected on the feedback.

The minister chaired another industry advisory group meeting in April, and since then we have taken further action to refine what is in the order, as well as wider action to establish the expert group that the minister mentioned, because a lot of the evidence that has been provided to the committee, as you might have noticed, relates to the guidance.

I think that the groups are broadly supportive of the provisions, although they wish that they would go further. We were conscious that guidance is another area of focus and, although we have worked with industry and local authorities on it before, we wanted to formalise that into the group that we have mentioned.

Thank you for that detail. I have another question. I will start with you, Paul, and you can see who you might need to bring in after that. I am interested to understand why you decided on the relatively limited scope of the amendment order, particularly given the on-going concerns, which you and Jessica Niven have mentioned, that the industry has expressed about the impact of the licensing regime.

There are a number of things. Returning to your previous question, I add that we spoke to two other groups as well. We met the Edinburgh International Festival and Edinburgh Festival Fringe Society, and we had a joint meeting with them and the City of Edinburgh Council to clarify their understanding. We worked closely with them in that regard, because Edinburgh is a major city and the festival is literally just weeks away. We will meet them again after the festival period to analyse what it looked like from their side.

The broader point is that it is an iterative process and the legislation is still in a transitional period. The key things that we have acted on are the key measures that were picked up on, and we have tried to reflect those in the draft order.

The other key thing was to be cognisant of the impact on tourism more broadly. Again, we have had meetings in that regard—we have spoken to VisitScotland and tourism officials to get that other perspective. It is not just about the safety aspect. That is the main point of the order, but we also want to ensure that there is no detrimental impact in the tourism figures that come through. In that regard, what we have seen so far has been reasonably encouraging. One of the key things for me is to try to strike that balance in the interpretation of where we need to go with this.

It is very much an iterative process, and I think that I have shown that in the engagement with the sector. We have met the ASSC approaching a dozen times. We have also met other stakeholders—SOLAR and others—on a number of occasions, and we will continue to do that. I think that I have mentioned before that I am happy to come back to the committee at any stage to discuss the issues and the impact of the legislation as we see that coming through. I think that we have struck the right balance, but it is very much an iterative process.

That brings me back to the point that I made about Edinburgh. We have another meeting planned with the festival, the fringe and the council after the festival period in order to, almost, analyse the impact on the Edinburgh festivals, which are some of our biggest festivals with regard to tourism. There is a broader question about what the scale of the festival and the fringe should be and what the capacity of the city is in that regard. We have already agreed to meet the festival, the fringe and the council again after the events in August to interpret that. If we need to make changes accordingly, we will do so.

The committee has heard from councils and some accommodation providers that they need greater clarity on applications for sites that have a single licence but multiple accommodation units. Do you intend to provide further clarity on that as we move forward?

Yes. That is one of the key issues. It comes back to the point that I made about our meeting SOLAR. I can get anecdotal feedback on what local authorities are saying, but it is really important to hear that directly, and I will continue to meet SOLAR, as my officials will, on that particular point.

I think that you are right. The example of yurts has been given. There could be two different sites for a project that has 30 or 40 yurts, and we might need two groups of 20 yurts in different places. In such cases, there could be slightly different interpretations of how the licence works. We are working with individual local authorities to try to give them that guidance.

I will bring Jess Niven in to go into the detail of the discussions that officials have been having with individual local authorities that have raised the issue, but you are right. There are impacts in relation to the paperwork that is involved—if there is one application for all the yurts, for example. There is also the cost element, because the cost has to be proportionate.

We believe that it is for local authorities, as the licensing authorities, to consider and make decisions on applications to the scheme depending on the circumstances. It may be that multiple short-term lets within a single premises can be covered by a single licence. It will really depend on the situation of those premises. Quite a few examples are detailed in guidance, and there is flexibility for local authorities to consider a single application and vary their fee structure according to how many individual pods or whatever are on one site.

That is one of the issues that we are monitoring. We may well gather further feedback from local authorities based on the operation of the scheme. It should be remembered that we are in a transitional phase and local authorities are already processing applications.

I want to ask a couple of questions about transfers, which Paul McLennan spoke about in his opening remarks. If a licence is going to a new host, will the conditions that apply to it remain in force during the transfer and pass to the new host, or can the licensing authority amend the conditions before the transfer takes place?

I will bring in Jess Niven again on that point. My understanding is that the conditions should stay the same in the transfer process unless any specific issue is raised. There is the element of making sure that, when the application is first dealt with, it reflects everything accurately. As part of the transfer process, the conditions should remain the same unless any specific new information comes to light and there have been specific changes. The important point is that it very much depends on individual circumstances.

I have not been made aware of those things in any correspondence or any discussions that I have had, so I ask Jess Niven to come in on that.

Just to confirm, the balance left to run for the original licence will remain the same at the transfer. That means that the new licence holder will be required to submit a renewal application in due course once the licence expires, and that is subject to the usual scrutiny.

Local authorities also have the ability at the point of transfer to check whether the change in licence holder has resulted in changes to the accommodation. For example, if any extra furniture or electrical equipment has been added, they might request further information about compliance at that point.

On the opposite side of the coin, the amendment order does not include provision for the transfer of a licence where the current licence holder has passed away, is bankrupt or has fallen into administration or liquidation. Is that something that you are aware of and might reflect on?

Yes. We have engaged with the Law Society of Scotland over a long period of time and it raised that point about the order. We are still in discussion with it about that, and we would certainly look to engage with it on that point. We got its feedback at a relatively late stage in the process, we continue to engage with it, and we will continue to engage on that point. If we need to amend the guidelines or whatever, we will ensure that we do that. However, we are still in discussion with the Law Society on some of the points that it has raised.

Okay. Thank you.

Emma Roddick, who is online, has questions about transfers, too.

Good morning, minister. What was the justification for not including transfers in the original order?

There were a number of issues. This takes me back to when I was on the committee and we discussed those. It was about trying to bed in what was already in place at that point. That has been the key thing for me during the process and from speaking to the ASSC, the STA and others. Obviously, this is the first point at which we could do that.

I will again bring in Jess Niven, who has been involved in the process, which goes right the way back to 2019.

11:30  

Covid made an impact in 2019, which continued to 2021, 2022 and 2023. There was a bit of flexibility within the sector, with people coming into and out of it. The issue was highlighted then—and I will bring in Jess Niven to discuss that point. From our interactions with stakeholders, I thought that we needed to act on the issue relatively quickly, hence why we took the opportunity.

Jess Niven has been involved in the process for a lot longer than me, and she was involved in the original discussions.

It depended on the local authority administering the scheme. There were local arrangements for what might happen to a licence if there was a transfer request. Some local authorities were operating through letters of comfort, but we recognised that we could use the opportunity of the draft order before us today to improve provision and to ensure that the process is as smooth as it can be for business.

One particular piece of feedback was that, the more complicated the process, the more unlikely it is that a new host and a new operator would be attracted to the commercial entity. We therefore wanted to ensure that the process was as smooth as possible, although there was provision for that before.

Emma, have you completed your questions?

No—sorry, convener.

That is all right. Please continue.

Picking up on the point about local authorities and the process, I note that councils have raised concerns about the complexity of the different kinds of licence, as well as about inconsistency in comparison with other licensing schemes. Other licences administered by local authorities cannot be transferred from person to person in the same way. What is it that makes short-term let businesses different?

There are a number of things to consider. One takes us back to the general principle. Was the scheme to be a national scheme or a local scheme? It was established that it would be best for it to be a local scheme, for a number of reasons. Edinburgh, the Highlands and East Lothian, for instance, are all different areas, and the level of interpretation within local authorities is really important.

There are a wide range of short-term let units. Coming from a local government background, I am aware that there are various licensing schemes, for taxis, alcohol and other things. The idea was to recognise the variances that could exist within the short-term let sector and to allow for local interpretation. There will be variances in what local authorities think and in relation to the local authority’s outlook on certain types of accommodation among short-term lets. The key thing is to be as flexible as possible within that.

We spoke with SOLAR representatives on a regular basis—to people who are themselves engaging with and licensing people. They are engaged not just in short-term lets licensing but in licensing more broadly, too. We have tried to listen to them regarding their approach, and we will continue to listen to them. I know that there are different interpretations of the guidelines and policies; it can come down to individual authorities, as you will see within planning broadly, and in alcohol licensing, for example. It is about recognising that individual local authorities will have their own input and their own outlook, which I think is really important, while understanding the variances in the types of accommodation. It is a matter of being as flexible as possible. However, we want to deliver on the overarching safety aspect behind why the scheme was brought in without having a detrimental effect on tourism, so that people can come to Scotland and have faith that the accommodation that they are staying in is safe and suitable for them.

I do not know if Jess Niven wants to add anything, but the overriding principle is to encourage flexibility.

But local authorities could not choose not to implement a transfer scheme; that is something that they will have to provide.

Yes. Pretty early on, we had feedback from the sector about what the transfer scheme would look like. It would have been a relatively straightforward process, but the feedback suggested that we should make it simpler and more flexible, so that if someone wanted to transfer a licence to a family member or anybody else, they could do that. Jess Niven noted that if a licence was being transferred and there were little or no changes, the process should be pretty straightforward. Obviously, if there had been a material change, as with planning, there would need to be an updated description to ensure that the safety of the premises was not affected. Jess, do you want to add anything on that?

I emphasise that there would still be a fit-and-proper person test for the person who would be taking over a licence. The provision in the order represents a balance between the health and safety aspect and ensuring that the process is smooth. Given that local authorities do not have to create a bespoke process of issuing a letter of comfort to hosts that might be purchasing a short-term let as a commercial entity, we would hope that, over time, it would be a more straightforward process for them. We will continue to work with them and will monitor implementation.

Thanks for that. Craig McGuffie, you have indicated that you want to come in.

Just to clarify, the order could tackle only provisions for short-term licences. Obviously, if there are calls for transfer provisions to be added to other forms of licence under the Civic Government (Scotland) Act 1982, that would require primary legislation, which is part of the reason why our hands are tied.

Okay. Thanks very much for that clarification.

The transfer process does not provide the opportunity for public comment in the same way that a new licence application would. Could that create a loophole whereby operators that have not been able to successfully obtain a licence could more easily access one through the transfer option? Could that advantage large, multiple short-term let operators over smaller-scale operators, given that it would give them the opportunity to potentially buy out smaller operators around Scotland?

There is a broader overview when an application comes through. Jess Niven mentioned the fit-and-proper person test, for example, which is one element of it. If you are talking about a larger organisation taking over single individuals, that would be a much bigger issue. Local authorities would still assess an application during the application process and they would be aware if there was a particular issue along the lines of the scenario that you mentioned. There is enough in the current guidelines to allow local authorities to pick up on any such instances and deal with any issues. I do not think that that would come out of the blue, if you know what I mean. Craig McGuffie wants to come in on that.

The transfer provision allows for an expedited process for the licence to be allocated to somebody else, so although there would not be the same public consultation process, the chief constable would be notified of the licence application. They could object, and a fit-and-proper person test would then be done. If there were no objections, the licence transfer would be granted—there is an expedited process.

Once the licence had been granted, any individual could still make a complaint to the local authority, so if anyone had concerns about a business or an individual short-term let licence holder, they could make a complaint to the licensing authority. Under paragraph 11 of schedule 1 to the 1982 act, a local authority could then take steps to suspend or revoke a licence in response to concerns raised by an individual.

Okay—thank you for that. We will move on. I will bring in Gordon MacDonald.

Good morning, minister. I want to ask about a couple of areas. The first is temporary exemptions. You rightly talked about the pressures in Edinburgh with accommodation during the festival, at new year and so on. There is already a limit for temporary exemptions of six weeks per year. Why was it felt necessary to place a further limit of three times per year for a total of six weeks?

Again, there are a number of things to look at. I will come back to the specific Edinburgh issue. First, there is a broader discussion, which is perhaps not for this committee, about the size of Edinburgh and how much accommodation it can take. I suppose that that is a question for the City of Edinburgh Council to pick up.

The issues are not just for Edinburgh, although the Edinburgh festival highlights the point; other local authorities have events that require accommodation. We looked at the period of time and tried to find a balance. After speaking to the festival and fringe, and to local groups, we felt that the six weeks’ exemption was felt to be inflexible, in some ways, and too restrictive. Again, we wanted to try to provide flexibility, given the number of events. The festival itself goes on for around four weeks, and there are other events that are held in Edinburgh, such as Hogmanay and events as part of the Forever Edinburgh campaign.

In other parts of the country, it would depend on what events were being held. We were listening to feedback on that, and picking up on events that we were aware of, and some that we were not aware of. Again, it is up to each local authority to address the needs. We listened carefully to the festival and fringe, to the City of Edinburgh Council and to other stakeholders about what the picture can look like. We were trying to strike a balance to ensure that we can, if possible, accommodate the people who need to come in.

The key point is giving local authorities flexibility in that regard. That ensures that activity can take place throughout the year, and that we do not have to come back and deal with the issue every year.

To come back to the point about Edinburgh, we will pick up the key points around the festival and fringe, which I referred to, and ask the local authority and other stakeholders how they find the approach. In Edinburgh, that has to take place in the context of asking how big the festival and fringe should be, to accommodate what needs to happen. I know that the festival and fringe have been looking at trying to spread accommodation out, accommodating people not just in Edinburgh but in other parts of the Lothians. Again, we were very much listening to what stakeholders were saying, but it is an on-going process, so we will be looking for feedback not just on the issues in Edinburgh, but from stakeholders in other areas. We were listening to what stakeholders were telling us and were trying to strike a balance.

My understanding is that Glasgow City Council has already indicated that it will not be issuing any temporary exemptions. The reason for that is around basic safety standards and the issue of checking whether the applicant is a fit and proper person. Will those checks not happen where a temporary exemption is in place?

They should take place as part of that. Again, when I had a discussion with the City of Edinburgh Council, we discussed what period of time we were talking about, and Edinburgh’s own interpretation of the scheme and how that worked.

To go back to the local position as against the national position, Glasgow City Council obviously feels that it is in a particular position. I am happy to discuss that individual position with Glasgow, although it has not been raised with me specifically. I am happy to pick that up.

I will bring in Jessica Niven to see whether she is aware of the point that you make, but it has not been raised with me. Nevertheless, that may be Glasgow’s interpretation. Jessica, do you have anything else to add on that? Are you aware of that point?

I think that it would be fair to reflect the wide range of views from local authorities on the use of temporary exemptions. Local authorities have different views about their use; I emphasise that local authorities have the flexibility to attach conditions to licences for temporary exemptions, so they still have flexibility over how and when they use those exemptions.

My next question concerns provisional licences. What is the purpose of a provisional licence, given that a holder of such a licence cannot accept bookings?

11:45  

That comes back to the financing of some of the schemes. I come from a background of working for the Bank of Scotland for 20 years and I know that, when someone is trying to finance a project, the certainty that a bank has around planning and licensing risks is important in, first, whether the financing is available at all, and, secondly, how that financing is priced. The ability to have a provisional licence gives more security to an applicant and to the bank that the applicant is going to get a licence, which means that the applicant is more likely to get the funding and that the funding will be priced at a less risky point—it might be 4 per cent over base instead of 6 per cent over base.

The provision comes from feedback that we got from applicants who want to come into the sector and have concerns about how they will know that they are doing everything right at any particular stage, so that the application goes through the process and they end up with a full licence. The provisional licence helps with the process. It makes it cheaper and easier for people to get into short-term letting. As I said, the provision is based on feedback that we received, and my banking background enables me to understand where applicants are coming from on that point.

Just for clarification, when whatever is being built or constructed is complete and people holding a provisional licence want to apply for a full licence, will they be able to take bookings when they submit the application, or is that possible only when the full licence is granted?

My understanding is that they can take bookings only when the full licence is granted, but I might be wrong. Craig McGuffie can give you more information on that.

Bookings can be taken only when the full licence is granted. The licence does not have any effect until it is confirmed, and it must be confirmed within the three-year period for which it is granted. If it is not confirmed within that period, it is revoked and cannot be renewed. Once the licence is confirmed, it has effect as a full licence for the remainder of that three-year period.

Good morning. Many of us are disappointed with what we have been presented with at this stage and think that the tweaks that the committee is looking at are not effective enough. It is worth reflecting that stakeholders have told the committee that this is

“by far the worst example of policy implementation that we have ever encountered.”

I have a couple of specific questions. First, how is the fact that a provisional licence is available for new-build properties but not buildings that are undergoing conversion compatible with the Scottish Government’s climate change ambitions, which involve encouraging the reuse and renewal of existing buildings?

I am not sure that I quite understand your question. I would dispute your interpretation of the provision. My officials and I have gone out of our way to speak to individual groups. As I said, I have met the ASSC on a dozen occasions, although we might not have agreed on everything, and I have also had a number of meetings with the STA, SOLAR and so on, and have listened to their views.

Maybe I am being silly, but I am having difficulty understanding the climate change aspect of what we are looking at. Can you clarify that?

Provisional licences will be available for new-build properties but not buildings that are undergoing conversion. Why has that approach been taken, rather than including all buildings?

I can take that away and follow it up with you later. I know that we have had feedback on the issue. There might be issues around how easy it is to monitor what is happening with a new-build property compared with a building that is undergoing a conversion. Jessica Niven might be able to give you more information.

I think that the provision as drafted responds to specific feedback about what would be most helpful. However, there is a possibility that we could extend it to conversions to short-term lets in the future. We will monitor the use of that particular part of the draft order.

Conversions have not been picked up as an issue, while new-builds in particular have been. I am happy to pick up that particular point, and we will continue to monitor the on-going feedback. Again, we have not had that fed back from local authorities on a large number of occasions, either—feedback tends to be on the new-builds—but I am happy to pick up on that point.

The committee has also heard concerns that the amendment order could mean that two different short-term let licence schemes will be running simultaneously. What assurances can you give the committee that the amendment order will not create that situation?

This is not the first time that we have looked at the issue. I have been on the committee throughout the passage of the legislation and this partial review, if we can call it that, and the minister has outlined that there will potentially also be an expert group established. We know that the City of Edinburgh Council has already had a specific legal issue around the provision and we do not want to create more complex situations than we have already seen.

I do not think that the order will do that. One of the key things that I talked about with the expert group was on-going dialogue. We speak to SOLAR on a regular basis, as do officials—almost weekly. I will continue to meet ASSC. I have mentioned reviewing the situation in Edinburgh once the festival is over. You and I have discussed in other forums what that will look like, and I will be happy to involve you in discussions at that stage. The other issue is meeting providers, such as Airbnb and other groups, so that there is on-going dialogue.

I suppose that it comes back to the original decision on whether it would be a national or a local scheme. I think that it was decided that it would be best if it was a local scheme for a number of reasons, one being that that would take in local circumstances. There will always be variances within the scheme, as there are variances within planning. Outwith short-term lets, there will always be variances in terms of planning and other licensing schemes—there will always be that element.

The whole purpose of coming here today was to try to simplify and feed back on some of the points that have been raised. Obviously, the scheme is still in the transitional stage, as has been mentioned, so we will continue to monitor it. The expert group has been brought together to look at that. I also speak in the advice group, which includes VisitScotland and other stakeholders.

A wide range of discussions have gone on in the past and a wide range of discussions will continue. I am pretty confident that, despite the variances that you will see among local authorities—which are similar for any other licensing or planning scheme—that clarity will be given. Of course, we will continue to monitor that.

I am not sure about having the transitional phase four weeks before the festival starts and then looking at it afterwards, given the damage that it will potentially have caused. We know from many people—Jason Manford being one of them—that the scheme has seen prices rocket such that people on a budget who want to come and showcase their talents in the festival just cannot. Statistically, we will need to see, but the damage will be done. I have made those arguments to you already.

On that point, Mr Briggs, discussions on the scheme have been on-going for a number of months. I pulled together discussions on the feedback that we were getting. We had a meeting with the festival organisers and the Edinburgh Festival Fringe and local authorities, and everybody was quite happy with the outcome of that particular meeting. The City of Edinburgh Council required some clarity and we gave them that clarity. It comes back to what we all know, which is that, every year, prices rocket in Edinburgh because of the festival.

There has been on-going dialogue and debate in Edinburgh about whether the festival is too big for Edinburgh and what the scale of the festival should be. You and I have had that discussion. Should more be done to try to work with other local authorities to take some of the demand that is there? There is a much broader piece of work that Edinburgh needs to do with the festival, the fringe and the Scottish Government to look at how big the festival should be, how far we can spread it and what impact it has.

I understand the point that you are trying to make, but we need a much broader analysis of issues with regard to the festival. Every year, prices go up and there are shortages, but a much broader piece of work needs to be done. Again, I am happy to speak to colleagues in the Government and in local authorities and, indeed, to yourself about that, but as I have said, we need a much broader analysis to give us a much broader perspective on what we need to do. After all, this has been an on-going debate in Edinburgh as well as in other parts of Scotland for a long time now.

I agree with that, but I would just note that the regulations were put in place for health and safety reasons, not for planning and licensing purposes. You might be saying now that the decisions are about reducing the size of the festival—or about looking at that, even—but that is not where the regulations originally came from.

On that point, Mr Briggs, I am not saying that this is about health and safety. How people interpret these things and how the matter is assessed as part of the broader debate are separate issues. Health and safety considerations are incredibly important, given the thousands of people who come to Edinburgh, but there is no doubt that we need a broader—and separate—discussion about the amount of provision that exists.

Finally, councils have told the committee that the order’s commencement date will not give sufficient time to update policies or administrative and information technology systems, and it has been—quite rightly—suggested that that might lead to possible misinterpretation and the sorts of problems that we have seen across councils, especially here in Edinburgh. What assurances can you offer councils that there will be sufficient time to update systems, given that the order will come into force on the day that it is made?

There are a number of points to make in that respect. Again, it comes back to those really important discussions that we have had with SOLAR. There have been lots of discussions with that organisation prior to today; lots of discussions are on-going; and there will be lots of discussions with it beyond this. I will bring in Jess Niven to talk about the operational discussions that have gone on, but I have certainly had meetings with SOLAR on this matter, and if any clarity is required or if any issues arise with regard to outstanding applications, we will obviously continue to work with the local authorities on that. However, we are continuing to have discussions on the matter. Jess, do you want to add anything about the almost day-to-day operational discussions that go on with local authorities?

Of course, but perhaps I can first make one or two points about the previous question, with regard to Edinburgh. As Edinburgh is a short-term let control area, the circumstances there are quite different to those in the rest of Scotland. Moreover, Edinburgh is exercising its ability to apply for temporary exemptions and is attaching conditions to those, too. I just wanted to make the committee aware of that.

As for giving councils the time to implement the proposals, we have been working with and talking to councils pretty much on a daily basis throughout the scheme and, since last October, we have been doing so in a more stepped-up way. Councils have been consulted on what is in the statutory order, and many have already started to make preparations for implementation. We also expect quite a low take-up initially of the provisions in the order, and we will work with councils on ensuring that they are able to handle things. I would advise anyone wishing to take advantage of the provisions in the order to contact their local authority initially and ask about the best way of achieving that.

Thank you.

Emma Roddick, do you have any final questions specifically on the order?

I just have one question for the minister. One local issue that has been raised with me and on which I have corresponded with the minister is the loophole with regard to premises licensed to sell alcohol not requiring a short-term let licence. I highlighted the fact that a number of premises in my region are now licensed to sell alcohol but have no intention of serving it, just to get around the order. I appreciate that he is seeking to strike a balance between the needs of business and the needs of communities, but why has the order, which addresses industry asks, been introduced before any tightening of the clear issues that communities, which are unable to comment on these practices, have raised?

We have been made aware of the point about alcohol licences and I will bring in Craig McGuffie. Craig, do you want to comment on what we are doing in that respect?

Someone who has an alcohol licence needs a layout plan, and there are other conditions that they need to comply with that should give some protection to individuals who are looking to stay in the property. There is some regulation of the state of the building and the layout of the premises in the alcohol licence that maybe is not in the short-term let licence. I suppose that the exemption was created to avoid any degree of overlap.

12:00  

Are you looking at whether further action is needed around the use of alcohol licensing as a loophole for accessing a short-term let licence?

Craig, do you want to come in, and then I will come back on that point?

We certainly look at that to see whether there are circumstances where a premises with an alcohol licence may be in such a condition as to be a danger or a nuisance to somebody who stays there, and whether the provisions in the alcohol licence are enough to create a safeguard. If not, we could consider whether the scheme could be extended. At present, the scheme is not extended to premises that already have an alcohol licence, on the basis that an operating plan and a layout plan are already provided for those premises, which the council is aware of.

We are in discussions with SOLAR about that and feeding back to it on what is coming through. Emma Roddick is right that the issue has been raised by her local authority, but we are in discussions with SOLAR about how we could address that.

Okay. Thanks, minister.

Thanks for picking up that important point, Emma. We move on to the wider issues that have been raised in written submissions.

Good morning, minister. I hope that you are feeling better. I feel your pain, after my recent brush with Covid.

I am getting there.

How do you respond to the concerns that have been expressed by short-term let operators that the proposed changes in the amendment order are not sufficient to deal with the challenges that they see in the sector as a result of the licensing scheme?

Can you be more specific? Having met the ASSC and others, I know that there are other things that they wanted us to include at this stage, but I do not know whether there is anything specific that you are referring to.

You have referred to the industry advisory group, which you meet with regularly and which made a number of recommendations that are not included in the order. I would like to hear the Government’s thinking on why it has chosen not to include those recommendations in the order.

There are a number of points. One is about trying to strike a balance. For example, we talked about the temporary exemptions and other issues that were raised. That has been the most pertinent issue, in terms of bringing things forward. Obviously, there were discussions about how far to go at this stage—we are still in a transitional stage, which is important. We agreed that we would discuss that particular point with the expert group.

Exemptions and provisional licences were the things that were raised as priorities in the feedback, not just from the ASSC but from other groups. At the moment, those are the most important things that we need to pick up on. Going forward, through the expert group that I talked about and the on-going engagement with stakeholders, we will continue to look at the issues. If we need to bring something back, we will certainly do so. We will also be cognisant of what the committee says. It was felt that those were the most important points that had to be raised.

There is a broader discussion, and it is not just with the stakeholders—it is also with the likes of SOLAR and so on. It was always going to be a balancing act to consider the key things that we need to take forward. We will continue to discuss the issue. There has been on-going dialogue all the way through, and there will continue to be on-going dialogue. As I referenced, the expert group will continue to consider the issues once the scheme is fully operational and in place.

We have included the most important things that we need now, but we are not knocking back the issues that stakeholders have raised. We will continue to discuss the issues with the stakeholders and with SOLAR and others.

Pam Gosal has a supplementary question.

Good morning, minister and officials. Minister, you have mentioned throughout this conversation that you have been working with and listening to stakeholders and that you have consulted the ASSC. However, Fiona Campbell from the ASSC has said that the amendment order has not been informed by stakeholder opinion, and that it “falls far short” of what is necessary to ameliorate the scheme, which is materially damaging to small accommodation providers and the wider tourism sector in Scotland. Do you agree with that assessment?

A number of stakeholders would balance that view. For example, the STA welcomed the provisions and said that they are striking the right balance. There has to be a balance of opinions. I understand that the ASSC represents about 5 to 10 per cent of the sector. I have probably met Fiona Campbell more than I have met anybody else in past year or so, so I have listened. We do not always agree—Fiona and I would agree on that point—but there is a balance to be struck. The STA, which represents a number of short-term lets, has said that we struck the right balance, and it looks forward to continuing engagement. That is always going to be the case, whether it is ASSC or the STA.

The key thing will be the evidence on the impact that the amendment order will have on the tourism sector. We have seen an increase in short-term let accommodation and in visitor numbers for Scotland, which is encouraging.

Of course, we always listen to the ASSC, but we also listen to the STA and other stakeholders. There are different opinions on the issue, and that is why it is really important that we have an on-going dialogue. As I said, the STA welcomed the amendment order and thought that it was the right balance for the number of organisations that it represents. We have struck the right balance with the provisions that I have brought forward at this time, but I think that it is important that we continue to listen to the sector. I have done that all the way through, and I will continue to do it as we move ahead. It is the way I operate. Whether it be the cladding bill or the housing bill, I will be as collaborative as I possibly can be and listen to as many people as I possibly can.

There are different opinions within the sector, but that does not mean that any one opinion is more important than the others. They are all important, and that is why I will continue to engage with the committee and stakeholders as we move ahead, while making sure that what we are doing does not impact on the tourism figures that are coming through.

It is encouraging to see the number of visitors to Scotland in the past few quarters returning after Covid and in what is still a difficult time for tourism because of the on-going cost of living crisis. The tourism figures that are coming through are encouraging.

Fiona Campbell knows that I will continue to engage with her and the ASSC, as well as with the STA and other stakeholders, such as SOLAR, the industry advice group and the expert group that is being pulled together.

Thank you, minister. We must not lose sight of the fact that Fiona Campbell is talking about the scheme materially damaging the sector. There is definitely something there to listen to, but I am glad to hear that you are in conversation with her, and that you will continue that.

Of course.

In previous exchanges, you have talked about the Government taking forward these changes as they are felt to be the most urgent changes that need to be made. You have also said that there is a difference of opinion in the sector about what is the most urgent and pressing issue. Do you have a timescale for when the Government plans to address the other issues that are being raised that you perhaps do not see as being as urgent?

There are a number of things there, Mr Griffin. One question is whether we decide to go down the legislative route for the other issues that have been raised. Something might require an SSI or guidelines, and we will continue to discuss that. We have brought forward what we have brought forward to try to address all the key issues that were raised when I was in committee and between when we brought the scheme and where we are now.

We will continue to look at the evidence in the figures for short-term lets and the accommodation in the sector. I know that anecdotal statements have been made, but I will continue to engage with the expert group on the evidence that comes through. If I need to, I will introduce legislation or guidelines at a time when I think that it would be relevant to support the sector on that. I have made it clear that I am happy to engage with the committee at any time on what is being brought forward, whether that is through correspondence or whatever.

The approach is very much one of continuing the discussions. The establishment of the expert group indicates that we are really willing to do that. The engagement that I have had will continue, even beyond the transitional phase.

It would be difficult to put a timeline on it as such, but if we collectively feel that we need to introduce amended guidance or legislation, that will be done at the time that I think it would be relevant to do that.

Why we are bringing these things forward now is one of the key questions that have been asked. There are different opinions in the sector about what is important. The STA, as I mentioned, thinks that the measures strike the right balance, but it is an on-going dialogue. I think that they have struck the right balance.

Something else that we have been hearing about through our evidence taking is the interaction between the licensing scheme and the planning system. Short-term let operators have been asking for the approach to be clarified and made more consistent, as things seems to operate differently in different parts of the country. You have spoken about it essentially being a localised scheme with differences in policies. However, is the Government hearing the same concerns about how the licensing scheme is interacting with the planning system in different parts of the country? Are there any plans to issue guidance on that?

There are a number of points to make. As Jess Niven mentioned, Edinburgh has short-term let control areas. That is a planning issue. There is the licensing scheme, too. I know that Edinburgh has faced legal challenges and that it has amended its approach. Edinburgh’s approach was based on its interpretation of policy; it is not my job to tell the council how to interpret that.

That issue was specific to Edinburgh. However, I know that other areas are looking at adopting short-term let control areas. Consideration will be given to those interactions.

Some of the issues that have been raised have been particular to Edinburgh. That council felt that it needed to bring in short-term let control areas. That is a broader issue. It is not part of the licensing scheme. If a local authority decides to look at planning, that is about its interpretation of those aspects. It still comes back to local authorities acting within their own flexibilities in relation to the scheme, but some of the issues have been about the short-term let control areas. The Minister for Public Finance, Ivan McKee, who deals with planning, and I are meeting the ASSC again to pick up that point.

Planning law does not fall within the scope of the instrument. This is about how we interpret what the scheme is there for, which is for health and safety purposes. The broader issue has been discussed.

We have written to the ASSC on a couple of occasions to say that we do not agree with its interpretation of that, but we will continue to meet it. As I said, Ivan McKee and I have a meeting coming up with the organisation on that particular point. I know that that issue has been raised by other local authorities.

I do not know whether Jess Niven wants to come in on that. Actually, I will bring in Andy Kinnaird on that planning point.

I will pick up a couple of points on that. First, the provisions in the Planning (Scotland) Act 2019 on the short-term let control areas were intentionally introduced in a way that allows for local choice and for local authorities to designate different approaches in different parts of their areas.

Secondly, in national planning framework 4, we have a policy within the tourism policy—policy 30 of NPF4—that is very supportive of tourism-related development, but it sets out specific conditions on which it might not be appropriate to grant planning permission for short-term lets. Those are that there is an unacceptable impact on local amenity or that the loss of residential accommodation is not outweighed by the local economic benefits that come with it. That has all been built in so that any planning decisions should be reasonably made by local authorities based on what they want to see happen in their areas.

One of the strengths of the links between licensing and planning is certainty and confidence for the operators, and the recognition that someone could receive a licence but still be in breach of planning control and face planning enforcement action. Therefore, there is recognition that local planning choices can still be made and must be part of the mix. I hope that that is helpful.

12:15  

Thanks, Andy. I suppose that it comes back to local authorities having flexibility on that. I understand why some stakeholders have raised the point, but it is important that local authorities have that flexibility. We have already met the ASSC to speak about those specific points, and Ivan McKee, who is recently in post, and I will meet the ASSC again to discuss this and any other specific issues that it might have.

This is my final area of questioning. Will you outline any initial findings from the Government’s monitoring of the licensing system’s impact, and do you have any evidence that it is achieving its stated aims?

There are a number of things to say. When we brought the scheme in, it was partly to get an accurate number of how many short-term lets exist. The business and regulatory impact assessment indicated an estimated number. Figures on the number of short-term let applications in different parts of Scotland have been highlighted in the local press, and it is good for local authorities to have that information when deciding on their broader strategy. That is really important.

There will be an update to Parliament on the number of short-term let licences over the summer period, which will involve looking at what is coming through in each local authority area. The number of applications that came through was encouraging. It is important to remember that the BRIA estimate of around 32,000 applications was made in 2019, which was prior to Covid. Some of the figures that are coming through on the applications are encouraging to see. Statements were made that the system would reduce the number of short-term lets, but I do not think that that is the case, and when they all come through, the figures will demonstrate that.

On tourism, I have some figures in front of me. Average occupancy rates in B and Bs, guest houses and self-catering accommodation are up on the prior year, which is encouraging. There has not been any material drop in that regard. Tourism numbers in the past number of years have also been encouraging. We will continue to monitor that, but the initial figures that are coming through do not show a drop-off; they still show an increase in short-term lets and for B and Bs and guest houses.

In every meeting that we have with the ASSC and others, we have officials from the tourism sector there to feed in on anything that is coming through. We will also meet Airbnb and other providers to discuss what influence they think the legislation has had. They are not seeing anything at this stage, but I will meet them after the summer to sit down and discuss that with them. There is on-going dialogue with the stakeholders, including the providers, to make sure that there is no drop-off, but I have no real concerns at this stage about the update in relation to implementation over the summer.

Part of the challenge was finding out the actual numbers in the sector. We have been given the chance to look at the numbers, as well as the local authority numbers, in order to think about how we balance them and monitor the local authorities’ input.

Minister, if you could keep your answers to the point and very brief, that would be great. Mark Griffin has a question, I have one more question and then we need to move on to the next bit of the work that we are going to do together.

The Government committed to publishing a full monitoring report before the summer, which has obviously been affected by advice around election period publications. Will that be published as soon as possible after 4 July?

Yes—I will bring in Jessica Niven on that particular point. As you are aware, we had hoped to have those figures available for the committee. Perhaps Jess can advise on when it looks likely that that report will be published.

Of course. There is no specific date for that report to be published—it needs to go through the usual process in the Government and then go to the publishers to work through that iteration. However, all the information that accompanies the draft order, such as the business and regulatory impact assessment, has been published, as have the official statistics as of December 2023. That information is out there already, and a publication update will follow. The further information will gather and reflect wider feedback from local authorities and others.

Mr Griffin, perhaps we could write to the committee—if that is okay, Jess—when we have a more accurate date.

Okay.

We have a final question, for which I would like a very brief response, please.

We heard from VisitScotland, in its written evidence, that it believes that

“there is evidence that licencing authorities have misinterpreted the guidance and or used the old 2021 Order not the current 2022 Order as the basis for their policies and practices in some cases.”

Are you aware of that? If you are, do you have a sense of how that occurred, and what are you doing about it?

On that particular point, I note that there are a small number of cases—it is not wide ranging. There is on-going monitoring; I will bring in either Jess Niven or Craig McGuffie on that particular point. Again, they were more involved in the operational day-to-day discussions.

The minister met the industry advisory group in April, and that was something that the group raised: that there may be a mixed interpretation of the legislation. As a result, we engaged directly with local authorities—it is not their point of view that they are following the wrong legislation, of course, but we continue to engage with them to facilitate their use of the appropriate processes.

Okay—thank you for that response. I thank the minister and his officials for the evidence that they have given us today. Thank you so much, minister—I understand that Covid is a challenging experience, having had it myself, and I think that you are doing a great job. I appreciate you being here with us this morning.

Item 5 is consideration of the motion on the instrument. I invite the minister to move motion S6M-13502.

Motion moved,

That the Local Government, Housing and Planning Committee recommends that the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Amendment Order 2024 be approved.—[Paul McLennan]

Do members wish to make any further comments on the instrument?

We will abstain today, because we do not think that the Scottish Government has really listened and acted on many of the concerns that we have put forward. We have tried to work with the minister constructively on a lot of this, but it is clear from what we have heard today that the order is a dog’s breakfast. The warnings that I and others have given in the committee have come to fruition, and the legislation is impacting on people’s livelihoods. As much as we hear the minister saying that it has not made an impact, the sector is telling us that thousands of rental properties have been lost and have not necessarily moved into the longer-term rental market.

In addition, it is quite clear that the legislation was poorly drafted. We have had to look towards foster carers, for example, being taken out of the scheme. It is clear that councils have had almost 32 different versions of the legislation in operation, and that has presented legal challenges in Edinburgh specifically.

I hope that there are further opportunities to look at the issues as soon as possible—the minister highlighted the expert group—but I think that there needs to be a significant review of the scheme. Portugal, which seems to be a model that the Scottish Government has used for the legislation, has suspended its scheme because it has damaged the country’s tourism sector and not resulted in any of the policy outcomes that Portugal had said that it would have, and which the Scottish ministers also said there would be. We will, therefore, abstain.

I hope that, as soon as we return in September, there will be an opportunity not only for the committee to do more work on the issue but for the Scottish Government to examine the order’s impacts and introduce more provision. We are now getting to the stage where we are constantly looking at matters in this way. That is not how we should make legislation. This is another bad example of a framework bill.

I will not be voting against the order. I am happy to see it proceed, but I cannot vote positively for it.

The minister mentioned the Scottish Tourism Alliance. Its submission to the committee said that the order was

“a positive first step in addressing some of the issues that have emerged since the introduction of the STLs scheme.”

That was not the full extent of what it said, though. It continued:

“However, it remains the case that a far more significant review of how the Short-Term Lets ... Licensing Scheme is operating in practice is needed if we are to safeguard these businesses and to protect and enhance the visitor accommodation offer”.

It is, therefore, clear that there is disappointment in the sector that the order does not go far enough.

I would not wish to block the small improvements that the scheme has made, but it has wide-ranging impacts that still need to be addressed. The Government has convened its own industry advisory group, which has made recommendations that have not been fully listened to or implemented. I am not quite clear why we need to approach the issue in such a piecemeal fashion, and I am not sure why all the recommendations could not have been implemented.

When the committee made its initial decision on approval of the scheme, it was very finely balanced. I would have much preferred to see the Government taking an approach similar to that employed on the tourism visitor levy. It encouraged local democratic control, in that councils could choose not only how they would implement the scheme but whether they would implement it at all. I feel that some areas of the country do not need a short-term lets licensing scheme at all. I would have preferred there to be much more local say in how such a scheme should be run.

Although the bill makes small steps towards addressing some of the issues that the industry has raised, we should have been conducting a far more comprehensive review and a much more wide-ranging implementation plan. I do not see why we could not have come to that point today.

Does the minister wish to respond to any of those comments? Members should bear it in mind that only the minister can respond; officials are not permitted to speak to this item.

I would like to pick up on the points that were raised, I said that we acted on the most important points from stakeholders. For example, I mentioned the Short Term Accommodation Association’s view.

I will continue to engage with the committee and with stakeholders. I will also reflect on what the committee has said today. Convener, if the committee wishes to have additional information, it can certainly invite me back at some other stage. In the meantime, I will continue with the discussions and reflect on what has been said today. I will also be happy to meet the committee or individual members at a further stage if that is thought to be appropriate.

Thanks very much for that. Continued engagement is always welcome.

The question is, that motion S6M-13502, in the name of Paul McLennan, be agreed to. Are we agreed?

Members: No.

There will be a division.

For

Burgess, Ariane (Highlands and Islands) (Green)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Roddick, Emma (Highlands and Islands) (SNP)

Abstentions

Briggs, Miles (Lothian) (Con)
Gosal, Pam (West Scotland) (Con)
Griffin, Mark (Central Scotland) (Lab)

The result of the division is: For 4, Against 0, Abstentions 3.

Motion agreed to,

That the Local Government, Housing and Planning Committee recommends that the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Amendment Order 2024 be approved.

The committee will publish a report setting out its recommendations on the instrument tomorrow. As that was the final public item on our agenda, I now close the public part of the meeting.

12:29 Meeting continued in private until 12:56.