Anybody with half an eye on the short-term rentals industry will know that hosts and property managers in Scotland have been suffering.
Since October 2022, new hosts have been required to apply for a short-term let licence before accepting bookings or receiving guests. This licensing scheme is mandatory for all short-term rental accommodations across Scotland, including holiday cottages, bed and breakfasts, rooms within a home, and unconventional accommodation such as pods and yurts.
And – to complicate matters further – the rules and fees are different depending on where you operate. Each local council has published a short-term let policy that sets out the mandatory conditions – plus any additional requirements – for their area. Councils also have the power to designate control areas to manage high concentrations of short-term rentals. Edinburgh became Scotland’s first designated short-term let control area on 5 September 2022.
With more than a year of data to work with, Airbnb has been crunching the numbers and published new analysis of Scotland’s short-term rental rules. And the analysis is pretty damning: according to Airbnb, the licensing system is harming tourism and limiting economic opportunities for local families. It is also providing a huge boost to hotels, who have been able to hike their rates – thanks in part to limited competition from short-term rentals.
Soaring rental prices
Data from the Office for National Statistics indicates that prices have surged in Scotland's rental sector. Long-term rental prices have gone up by 6.8% – which indicates the licensing scheme has not immediately resulted in improved rental affordability.
Hotel prices surge
Edinburgh hotel prices have risen by 9% in 2024, as part of an overall increase of 82% since 2019. Visiting Scotland is becoming out of reach for many – especially families and groups who need multiple hotel rooms, while local people and businesses that rely on tourism are suffering the consequences.
Licensing scheme impact
The licensing scheme is restricting flexible earning opportunities for families and hurting small businesses that rely on visitors to Scotland – especially outside typical tourist hotspots. As of April 2024, Edinburgh Council has granted only 29% full licences for short-term lets, raising concerns about the city’s ability to accommodate visitors, especially during the upcoming peak summer period and festivals.
Small businesses are suffering
Catherine Sutherland, an Airbnb host from Edinburgh, said: “The regulations were poorly thought out and are hurting the tourism sector. There is now a limited supply of short-term lets in Scotland, meaning people are struggling to find affordable accommodation and are effectively blocked from visiting Scotland.
“The process to get a license is challenging and takes a long time – I submitted my application in September 2023 and it was only approved this April. I am renting out rooms in my home on Airbnb but those seeking a licence to rent out entire properties as short-term lets are facing much longer waits. Not only this, but people are having to pay upfront costs which can amount to thousands of pounds for some, with no guarantee that their application will be approved, causing a huge amount of stress. My only income comes from short-term lets at my home-share on Airbnb and another property which I co-host. Small businesses like mine are suffering.”
Amanda Cupples, General Manager of Northern Europe, Airbnb, said: “Data shows that Scotland’s short-term rental rules are not translating into benefits for local families. Since the licensing scheme has been in place, hotel and rental prices have increased, tourism is expected to suffer, and families have lost a vital source of flexible income. Airbnb has worked with governments across the world to balance the benefits of short-term rentals with local housing concerns, and we hope to work with Scotland on policies that benefit everyone.”
The Association of Scotland's Self-Caterers (ASSC)
The ASSC – lead by Fiona Campbell – is doing a sterling job of standing up for the short-term rentals industry in Scotland. The ASSC is the leading professional community for self-catering in Scotland, supporting individuals and businesses in the sector. Head to the ASSC website for details of lobbying efforts, plus a host of valuable resources.
Have you been affected by the situation in Scotland? Let us know in the comments or email james@holidaycottagehandbook.com.