20th February 2023

Trudy Morris, Chief Executive, Caithness Chamber of Commerce.  Navigating business challenges and seizing opportunities as we look ahead to 2023.

“It’s mid-February and the wild, although not completely unseasonable, weather of recent weeks has left many of us dreaming of more leisurely and relaxing days ahead. From a secluded cottage for two on the coast to a large country manor big enough for that special family celebration, the rise in popularity of independent property hosting websites have highlighted the quirky and often wholeheartedly unique holiday lets market.

With our famed Highland Welcome and stunning scenery, it’s true that in the North Highlands, we have our fair share of distinctive holiday homes. The dramatic Lighthouse Keeper’s Cottage, perched on the cliffs at Noss Head, and the Scandinavian-inspired Highland Haven with its charming box beds and panoramic views are just two fantastic examples of the self-catering offering in our region.

According to the 2023 travel trends from Expedia Group, travelers are craving authentic experiences, with rustic “Hay-Cations” on countryside farms and the search for lesser-known “Hidden Gems” high on this year’s tourism wish list. With the cost-of-living crisis affecting many household budgets, savvy consumers are looking to save costs by staying in, cooking, and entertaining at home, seeing well-equipped kitchens and abundant family dining space also high on the priority list. This is positive news for self-catering business owners, who like their business peers in the wider tourism and hospitality sector are still very much in recovery from the effects of the pandemic.

This year an update to regulations will see business owners of short-term lets faced with changes to their operational requirements, with the implementation of the new Short-term Lets Licensing scheme. The scheme is mandatory for all short-term let accommodation across Scotland and includes holiday cottages, B&Bs, guest houses, rooms within a home, and unconventional accommodations such as pods and yurts.

An essential component in Scotland’s tourism offering, it is estimated that the self- catering sector boosts the Scottish economy by £867m per annum, supporting 24,000 jobs. In regions such as our own in the North Highlands, short-term lets are a vital element of our diverse tourism landscape. Particularly in rural destinations, these properties not only contribute to our tourism portfolio but also house essential transient workers in sectors such as health care, engineering, and transport. The Licensing scheme aims to ensure all short-term let premises are safe, facilitate Scottish licensing authorities in understanding the businesses operating in their area, and assist with the needs of the neighbouring community.

Business owners are justifiably concerned about business impacts, associated costs, and time scale around meeting regulatory compliances (including safety standards), however we must act now to prepare for the changes and obligations ahead. In partnership with our members Venture North, we are pleased to welcome Gary Somers, a solicitor in the Licensing Team at the Highland Council for an Update and Q&A Session on the Short-term Let licensing Legislation. The event will take place online on 27th February and is free to attend for all Caithness Chamber of Commerce and Venture North members.

As we look forward to all that’s ahead in 2023, I hope a flourishing tourism season will be in store for the North Highland Region.”

The View from the Board – Jennifer M. Simpson, LLB (Hons), DipLP, Notary Public, Director BBM Solicitors

“Since 2022 all new operators of short-term lets have needed a licence to operate and by the 1st October 2023 all existing hosts and operators will need to have applied for a licence or they will be committing a criminal offence and could be fined up to £2,500 (though the Scottish Government has indicated that they will look to increase this penalty to £50,000 during the current session of the Scottish Parliament).

The legislation was put in place to ensure that short-term lets are safe and address issues faced by neighbours. The legislation aims to balance economic and tourism benefits with the needs and concerns of communities. The cost of the licence will depend on the number of occupants and the type of property. In Highland Council areas the fee will range from £320 to £610 (the owner might also be charged an additional fee for any enforcement costs). The range of fees charged is a bit of a postcode lottery with the highest fee of £5869 currently being charged for an up to 21-person occupancy property in Edinburgh.

A property is a short-term let if the guest does not use the accommodation as their only home, it is entered into for commercial consideration and the guest is not an immediate family member of the host. There are a range of exceptions such as providing accommodation to students as part of an arrangement made or approved by an educational institution (such as an exchange student) or for individuals who are living in the property to provide services (such as a live in carer).

The applications process is onerous. There is not space within this article to give and exhaustive list and guidance can be found on the Highland Council website, but hosts will need to show they have complied with fire, carbon monoxide, electrical, gas and water regulations as well as arranging for Portable Appliance Testing and ensuring all furniture complies with the Fire Safety Regulations.

The legislation also allows for Control Areas to be created in areas which are adversely affected by the number of short-term lets. In a Control Area the use of a dwellinghouse as short term let will always be material and therefore require planning permission. The only control area currently being proposed in the Highlands is in Badenoch and Strathspey.

Overall, there are concerns that these regulations will cause significant difficulties at times of high demand in an area (such as during the Edinburgh Fringe festival or large sporting events) and while there are provisions in place for up to 6-week temporary licences to cover big events, the safety criteria still need to be met.

This new requirement will certainly change the dynamic in the short-term let market and the days of easily listing a property on sites such as Airbnb without needing to jump through compliance hoops may well be behind us. It is difficult to say whether this legislation will strike the correct balance. These checks and balances imposed by the licence would appear to make Airbnb and other forms of short-term let properties safer and more accountable places to stay, but whether the costs and formalities will put some potential hosts off and ultimately lead to less accommodation being available at times of high demand in an area time will tell. It is likely welcome news for the operators of hotels and guest houses who already had their own licensing requirements and will now be competing in a more equal playing field.”

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