by Kirsty Nicoll, Trainee Solicitor

Further to the article “Fighting Back Against Airbnb” featured in Turcan Connell’s blog in October, this article discusses what may be in store for landlords who frequently let out properties via Airbnb across Scotland. 

The Planning (Scotland) Bill, initially proposed by Andy Wightman, has recently completed stage 2 of its journey through the Scottish Parliament. The proposal seeks to make amendments to the Town and Country Planning (Scotland) Act 1997 which looks likely to lead to some interesting developments, particularly relevant to landlords across the country. 

The Bill seeks to amend current legislation, with one aspect aiming to target landlords leasing properties on a nightly or weekly short-term basis via websites such as Airbnb. In a bid to increase the number of properties available for long-term letting, one of the principal objectives behind the Bill is to reduce the number of properties let out on a “part-time basis”. Parties in support of the Bill are concerned that there are too many Airbnb-esque properties on the market in areas where housing shortages exist.

What has been proposed?  

The crucial part of the Bill to draw to the attention of regular Airbnb “hosts” is found in Part 3, section 11B (as amended at stage 2). This section seeks to change the meaning of “development” in the context of the use of a dwelling house, classing the use of such, for the purpose of a short-term or holiday let, as a “material change” of use. The result of this definition change is that planning permission will be required in future for those seeking to let out their properties on a short-term basis.
These provisions will not affect property owners who advertise a property that is their sole or main residence, nor will it affect properties that are already subject to a residential lease.

As such, those who let out a room (or the whole) of their main residence in Edinburgh over the festival period, should not be impacted by these provisions.

Interpretation and Right to Appeal

Although, as yet, no absolute definition has been given to the wording “providing short-term holiday lets”, one amendment provides Scottish Ministers with the ability to issue further guidance as to its interpretation, presumably at a later date or on an ongoing basis. 

The proposals relating to “third party” and “community” appeal rights were met with some resistance across the property sector. These amendments, suggested at Stage 2 by Rowley and Wightman, respectively, were ultimately rejected due to widespread feelings that such rights could undermine the planning system and cause lengthy delays. In addition, concerns were expressed that investors could be discouraged from making applications where conflict and resistance are “the norm”. As such, those making the applications will continue to have the upper hand in relation to challenging decisions, rather than those directly or indirectly affected.
 

Impact and Implications

If the proposals are passed the implications for some landlords could be rather burdensome; landlords will be required to go through the time intensive process of applying for planning permission (and could likely face objections from neighbours and others along the way), before a decision is reached. It is assumed that putting the power into the hands of local councils will have the desired effect of increasing the number of properties available for local residents. For some landlords, the ease and convenience of instant and flexible online letting may become a thing of the past.

Although landlords and investors appear to be one of the main targets of this legislative reform, there are likely to be some shock waves felt throughout the property sector. For example, estate agents who offer a dedicated service for Airbnb lets could experience a sharp decline in their client base. In addition, councils that are already under pressure may struggle to keep up with an increase in the number of planning permission applications.

The Next Step 

Although the Bill has one more hurdle to cross before receiving Royal Assent to become new legislation, it is looking increasingly likely that the abovementioned proposals will be passed. If at Stage 3 the amendments receive a majority of votes, these will come into force and will be integrated steadily by local authorities. Ultimately these changes will have a profound effect on how “let it yourself” sites, such as Airbnb, operate in Scotland. The timing of the stage 3 debate is dependent upon the Parliamentary diary but is likely to be discussed in early 2019. 

For landlords too, there is a decision is to be made; to Airbnb or not to Airbnb? Having highlighted some potential implications the Bill may have on landlords, this decision will inevitably come down to individual choice. What cannot be overlooked however, are the potential short-term negative effects of these proposals. The anticipated future back-log of planning applications and associated administration costs could result in loss of earnings for landlords, should an application be unduly delayed or ultimately rejected. As such, landlords affected by these proposed amendments may wish to consider their options ahead of the Stage 3 discussion in an effort to beat the crowd, should these provisions become law.

For advice on the law relating to landlord and tenant, please contact a member of our Land and Property team on 0131 228 8111 or at enquiries@turcanconnell.com.