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14/12/2018

Legal landscape: Why Scotland is considering regulating the Airbnb market

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The sheer number of Airbnb lets is reducing the availability of residential property in Edinburgh and elsewhere in Scotland, says Rory Alexander. Is it time to introduce mandatory planning permission for short-term lets?

Over the past few years, the changing needs of consumers have been met with the rapid rise of sharing economy start-ups and apps such as Uber, Deliveroo and Airbnb – all of which aim to serve time-poor, money-rich consumers who want things on demand.

However, as much as this has been good news for consumers and for those brands looking to disrupt the market, those who are managing policy and regulation around these areas are struggling to keep up with the pace of change.

We only need to look at laws on Airbnb to see this. Homeowners all over the country have jumped on the chance to make extra income by offering their home, or part of it, to tourists looking for an authentic yet cost-effective travel experience. It was reported earlier this year that £675 million has been earned by UK households since July 2016 from the rental site, an average of £3,000 per host.  

“It was reported earlier this year that £675 million has been earned by UK households from Airbnb since July 2016 – an average of £3,000 per host”

It’s hard not to see the attraction for people to do this, especially as on the surface it appears so easy, and it doesn’t seem like there are a lot of hoops to jump through to generate additional income.  

But this could become a lot harder in Scotland with the recent proposal by the Scottish Greens that would require homeowners to obtain full planning permission for all Airbnb and short-term lets through the Planning (Scotland) Bill, which is being considered by the Scottish Parliament.  

For many it is difficult to believe that something like this isn’t in existence already. And that’s partially true. At the moment planning permission is only required sometimes, depending on the type of property you have and the way in which it was used before changing it into a short-term let. Planning permission is required in situations whereby becoming a short-term let amounts to ‘a material change of use’ of the property.

What are the relevant factors when considering if there has been a material change of use? Well, this can be anything from the increase in the numbers of people staying, frequency of arrivals and departures and frequency and intensity of noisy or otherwise unsociable activities.

Currently, the number of Airbnb lets in Edinburgh is proportionately four times greater than in London or Paris. The rise of short-term lets has also affected the number of available residential properties in the capital, as well as in rural areas like the Highlands.

With these figures in mind, it’s easy to see why people would be concerned about the effects on the local community. The introduction of a requirement to apply for planning permission would allow planning authorities to consider these types of factors and look at the bigger picture in terms of effects on those living near these types of properties before granting consent.  

The City of Edinburgh Council has been particularly vocal in its support for increased regulation of the sector given the situation in the city. It believes that a licence should be required for anyone either operating a property on a commercial or professional basis, or doing so for at least 45 days a year. It would also give the council greater control to cap the number of properties licensed across the area.

With no set regulations at the moment, many people who are considering this as a source of income are still unsure where the current situation puts them.

The answer is that the devil will be in the detail once the Planning (Scotland) Bill becomes an act. In the meantime, consideration should be given as to whether planning permission should be applied for if a material change of use will occur from residential to short-stay accommodation.  

There’s no doubt that for many, even with new regulations on the horizon, the positives will still outweigh the negatives when it comes to Airbnb and short-term lets.

One thing that can’t be denied is how great it is to see that Scotland and the UK still continue to attract a healthy number of tourists, no matter what type of accommodation is on offer.

Rory Alexander LARTPI is planning and local government partner at Scottish Law Firm Morton Fraser

Photo | iStock

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