January 2021 - Page 10 of 11

ASSC Activity – January 2021

Posted on January 7, 2021May 14, 2024 by Melanie Allen

We appreciate there is a lot of news and information to grasp as we have entered a new year whilst in lockdown – so here is an overview of where we are and what we are working on as we face new challenges.

We remain committed to supporting you to keep self-catering businesses viable and our outlook positive in 2021…

The ASSC are currently engaged in ongoing discussions with policymakers about self-caterer access to various funding support packages provided by the Scottish Government – this includes Discretionary Funding, the Strategic Framework Business Fund, as well as the recent bespoke funding measures announced by the Scottish Government in December 2020.

In recent days, we have spoken with MSPs in mainland and island regions, as well as Scottish Government Cabinet Secretaries and leading industry stakeholders. Progress is slower than we desired but please be assured that we are working tirelessly to get answers and conversations remain ongoing.

We understand that this is a deeply challenging, frustrating and anxious time and we will endeavour to get clarity from the Scottish Government on funding arrangements for self-caterers as soon as possible.

Overview of Activity

Clarity on Financial Support
Business Bank Accounts
Level 3 Funding
Properties that Accommodate Multiple Households
Mortgage Holidays
STL Licensing and Control Zone Proposals
STL Legislation Impact on B&Bs
Repairing Standard
Impact of Licensing on Business

Clarity on Financial Support:

Following our news piece on the response to the Chancellor’s Announcement on 5th January, we are now liaising with the STA and other industry bodies to press for clarity on all available funding mechanisms and specifics on the roll out of the Strategic Framework Business Fund, any additional financial support due to the lockdown and further detail on the £7M Financial Support Package for Self-Catering announced before Christmas.

Business Bank Accounts:

We have received a huge amount of representation regarding the requirement for a business bank account in order to be eligible for the Strategic Framework Business Fund.

There is no legal requirement for Sole traders and Partnerships to operate a business bank account, as everything is owned outright by the proprietor. Accountants may recommended that sole traders operate a separate bank account for their business operations as it helps ensure all income and costs are captured correctly when preparing accounts. On this basis, many small businesses have not historically held a business bank account (B&Bs and self-caterers amongst them).

A business bank account was not required as part of the original Small Business Support Fund.

We are liaising with MSPs, the FSB, Chambers of Commerce and the STA to highlight this issue and urge Scottish Government to provide clarity on disparity on criteria with which local authorities are processing funding applications.

Level 3 Funding:

On 7th December, Kate Forbes responded to a letter we wrote to her on 22nd October. In it she said that “Businesses, such as self-catering which are still able to operate but have reduced custom due to restrictions on households meeting indoors and / or travel restrictions due to the tier system, would not qualify for the business support grants. This is because eligibility (depending on rateable value) is targeted at businesses required to close by law or at businesses that remain open but are required by the regulations to modify their operations. Self-catering businesses, that are in Level 3, with reduced visitor numbers due to the travel / gatherings restrictions are currently not eligible for Business Restrictions Fund support.”

Scottish Government guidance can be found here.

Accommodation providers in Level 3 are closed due to circumstance. We have been briefing MSPs and industry stakeholders to lobby for this to be rectified

Properties that Accommodate Multiple Households:

It is becoming more and more apparent that this lockdown is likely to go on for some time. We have little confidence that we will be able to welcome guests before spring. However, for properties that accommodate multiple households, the likelihood of being able to operate is highly unlikely for a considerable time to come. We are seeking further urgent financial support for operators which accommodate multiple households.

Mortgage Holidays:

We are asking if Scottish Government could put some pressure on FCA and banks to extend mortgage holidays beyond the original 6 months.

With zero income, many self-catering properties and B&Bs will be unable to service mortgages on their business properties.

Given that many have a mortgage that covers both their personal dwelling and business properties, if they default on their mortgage due to loss of income, they will potentially lose their home too. If banks could be amenable to extending mortgage holidays, it would be hugely appreciated by many, in the absence of further funding being available.

Short-Term Let Licensing and Control Zone Proposals:

In October 2020, the Scottish Government published their consultation on short-term let regulation which focuses on the introduction of a licensing scheme and planning control areas. Rea d more..

Leading tourism and business stakeholders have drawn attention to the negative impacts of the proposed short-term let regulations for the economy and tourist industry, especially in light of the pandemic, and have recommended a postponement. However, the costs to local councils of implementing short-term let licensing and planning control areas also needs to be properly considered. This has been made more difficult in the absence of a Business Regulatory Impact Assessment on the proposals. Read more.

In terms of the next steps in parliament, the Delegated Powers and Law Reform Committee will review these SSIs for any technical or drafting issues and then the Local Government and Communities Committee will scrutinise them from a policy perspective. The Local Government Committee have issued a call for evidence on the regulations, open until 22 January 2021.

The ASSC has a number of concerns about the draft SSIs and will continue to make representations on your behalf to both the Scottish Government, the Short-Term Let Delivery Group as well as the parliamentary committees, and we will keep you updated with relevant developments.

Read More Here on how you can submit your comments on regulation proposals.

STL Legislation Impact on B&Bs:

It transpires that the ill considered Short-Term Let legislation also impacts B&Bs:

Andrew Mott, Chair of the STL Delivery Group, has confirmed:
“home sharing is defined in the Licensing Order (sch. 2, para 13) and includes bed and breakfast activity. B&Bs are not listed as excluded accommodation at schedule 1”.

We are of the understanding that the Delivery Group did not consult with the B&B sector which we believe would be a basic duty given the impact of the regulations.

We have pulled together some information regarding the impact on B&Bs that are now within the scope of the regulations:

Its really important that B&B Operators are aware of this issue: Please share with any of your B&B contacts

The deadline to submit evidence to the Committee is 22nd January.

We have shared this with the B&B Association, Scotland’s Best B&Bs, VisitScotland, DMOs, FSB, Scottish Land and Estates and across all ASSC Channels.

Repairing Standard:

Mandatory Conditions for the licensing scheme will include meeting Repairing Standard Legislation and Energy Performance Certification legislation. However, following extensive discussion, self- catering was excluded from Repairing Standard (The Housing (Scotland) Act 2006 (Modification of the Repairing Standard) Regulations 2019). It was never Scottish Government’s intention that self-catering should be part of the Repairing Standards, as there is no Tenancy. Self-catering offers a Licence to Occupy, not a tenancy, hence also being excluded from Private Residential Tenancy legislation. This exemption will be withdrawn. The SSI was therefore poorly drafted to assume a Tenancy.

This is yet another unintended consequence of the regulations, with operators potentially being liable for up to £5,000 in order to meet the minimum standards of EPCs going forwards, should they be introduced in Scotland. This was not identified in the BRIA.

Impact of Licensing on Business:

No account has been taken of our survey results suggesting that 49% of professional operators will leave the self-catering market, as licensing will render businesses unviable (even by what may be considered to be a nominal fee: compare Liquor Licensing with a small self-catering operator. The cost of the fee alone is disproportionate to turnover, let alone profit). 33% of these would leave the property empty or use it for family & friends, thereby not returning these properties to the housing market.

We still assert that the 2019 consultation lacked rigour, was biased, and did not provide a robust evidence-base. The Indigo House research involved speaking to 583 affected residents, 63 community groups, some Airbnb hosts and 5 professional self-caterers, in five areas of Scotland that have a perceived problem.

They only agreed to speak to the professional self-caterers because the ASSC made that happen, under duress. They did not conduct research in Argyll & Bute or Moray Speyside, for example, and we ask the question, why not? This did not deliver a balanced outcome and businesses were not well represented as it suggests in the Scottish Government’s BRIA.

Information for the B&B Sector on the Scottish Government’s Short-Term Let Regulations

Posted on January 6, 2021November 21, 2023 by Melanie Allen

* This has been superseded (note 10th September 2022)

Guest Houses and Boarding Houses are exempt from the incoming Short-Term Let regulations, as these fall under Use Class Order 7. However, if a B&B falls under Use Class Order 9 (residential), which the vast majority do, then they now fall within the scope of the regulations.

Andrew Mott of the Scottish Government’s Short-Term Let Delivery Group has confirmed to the ASSC that B&Bs are included in the accommodation types to fall within the scope of the regulations:

“Your understanding is correct: home sharing is defined in the Licensing Order (sch. 2, para 13) and includes bed and breakfast activity.

B&Bs are not listed as excluded accommodation at schedule 1. Guest houses are excluded (para 1(d) of sch. 1). Change of use from a house (class 9 in the Use Classes Order) to a guest houses (class 7) generally requires planning permission. So the exclusion applies to properties that have planning permission to operate as a guest house. A house (class 9) can be used to offer bed and breakfast without planning permission where no more than two bedrooms are used for this purpose or, in the case of premises having less than four bedrooms, only one bedroom is used for that purpose. A flat cannot generally be used to offer bed and breakfast without planning permission.

The use of houses (class 9) as B&Bs is a form of home sharing and we have always intended to include this activity within definition of short-term lets. Our 2019 consultation paper proposed excluding “licenced hotels and B&Bs and self-catering properties on their premises”. We have excluded (para 1(e) of sch. 1) restaurants with rooms and inns, for example, where they are already licensed specifically to offer accommodation under the Licensing (Scotland) Act 2005.”

On 20th January, Housing Minister Kevin Stewart confirmed this in a written answer to Oliver Mundell MSP:

Oliver Mundell (Dumfriesshire) (Scottish Conservative and Unionist Party): To ask the Scottish Government how its proposed short-term let regulations in response to the COVID-19 pandemic will impact on bed and breakfast businesses, and what consultation there has been with the sector.

Kevin Stewart: “The use of houses (class 9 in the Use Classes Order) as bed and breakfasts (B&Bs) is a form of home sharing and these will require a licence. Guest houses (class 7) are excluded from the definition of a short-term let and will not require a licence.

“The principal component of our licensing scheme is a set of mandatory standards which apply to all short-term lets, and will help to protect the safety of guests and neighbours across Scotland. Many hosts, including B&B operators, will already be following these standards as a matter of compliance with existing law or best practice.

“In developing our regulatory proposals, we have directly engaged with and heard from a wide range of stakeholders covering a range of interests. The Scottish Bed & Breakfast Association responded to both our 2019 and 2020 consultations on short-term lets.”

You can see more detail here.

Background

The Scottish Government has published their response to their short-term let consultation and are proceeding with regulations despite the unprecedented difficulties faced by the tourism sector in Scotland due to the impact of Covid-19.
They are taking forward regulations which will allow for the introduction of short-term let licensing and planning control areas. The regulations will be damaging to the tourist accommodation sector and will entail unintended consequences, including for B&Bs.
Pursuant to Section 2 (1) of the SSI B&Bs, now fall within the definition of a Short-Term Let. B&Bs are not listed as ‘excluded accommodation’ Under Section 1 of the Schedule to the SSI.
We are of the understanding that the Delivery Group did not consult with the B&B sector, which we believe would be a basic duty given the impact of the regulations
The SSI cannot be amended but should now be recommended for annulment before further damage is done to the B&B sector particularly throughout the fragile rural economies of Scotland.
To assist with the scrutiny of the regulations, the Scottish Parliament’s Local Government and Communities Committee are requesting written evidence from stakeholders. The Committee will either vote to endorse or reject the regulations and then report to parliament.
If the parliament approves the new rules, they will come into force on 1 April 2021. Local authorities will have until 1 April 2022 to establish a licensing scheme and existing operators will have until 1 April 2023 to apply for a licence.

Problems with Regulation

Truncated Consultation Process

The Scottish Government’s consultation did not follow the usual three-month practice but was instead condensed it into little more than four weeks, going against the Scottish Government’s own best practice advice.

Timing – impact of Covid-19

The Scottish Government’s consultation document from October 2020 – some seven months after lockdown –made no reference to the impact of Covid-19 on the tourism sector. Covid-19 has been devastating for Scotland’s tourism sector, with a large drop in tourist numbers and cancelled bookings as a result of various coronavirus restrictions.
The Scottish Government have ignored industry and businesses voices who sensibly called for a postponement of the regulations, as has occurred with other similar pieces of legislation such as the tourist tax.

Lack of a Business Regulatory Impact Assessment (BRIA) to accompany consultation

No BRIA or partial BRIA was published to accompany the Scottish Government’s consultation. The BRIA was only later published on 14^th December. The approach taken in this consultation has not met the Scottish Government’s own Better Regulation principles, nor has it fulfilled best practice. As the Law Society of Scotland pointed out, the omission of a BRIA at the time of the consultation “makes it challenging for fully informed representations to be made.”

Specific Issues for B&Bs

The Scottish Government’s Short-Term Let Delivery Group did not suggest that B&Bs would be included in the scope of the regulations. However, having asked the question in December 2020, after two days the ASSC received confirmation that “home sharing is defined in the Licensing Order (sch. 2, para 13) and includes bed and breakfast activity. B&Bs are not listed as excluded accommodation at schedule 1”. See: ASSC Letter to Fergus Ewing 21.12.20
consult with the B&B sector which should be a basic duty given the impact of the regulations.
As set out by the chair of the Delivery Group, “homesharing is defined in the Licensing Order (sch. 2, para 13) and includes bed and breakfast activity. B&Bs are not listed as excluded accommodation at schedule 1.”
That means B&B operators will be captured by the new regulations, resulting in costs for businesses at a time when they can least afford it.
Mandatory Conditions for the licensing scheme will now include meeting Repairing Standard Legislation and EPC legislation, despite B&Bs being previously exempt from both pieces of legislation. This is yet another unintended consequence of the regulations, with operators potentially being liable for up to £5,000 in order to meet the potential minimum standards of EPCs, should they be introduced in Scotland (with a requirement to meet a minimum EPC rating of D or C for a property to be rented out, or up to £5000 spent to improve the rating). This was not identified in the BRIA.

Tourism businesses such as B&Bs have consistently done the right thing during the pandemic, from closing or limiting the operation of their business in response to Scottish Government restrictions – often at great financial cost – or adhering to government protocols/guidance when the sector was allowed to reopen in the summer. Given the immense challenges facing the industry, when B&Bs have often struggled to receive vital grant funding from the Scottish Government, the last thing the sector needs at this time is the imposition of rushed and costly regulations which will further damage the livelihoods of hardworking professionals in Scottish tourism.

What do Local Authorities think?

Legal and planning stakeholders have highlighted the challenges that the Scottish Government plans will place on local authorities, many of whom did not support the proposals in the consultation process, and the financial impact this will have on already stretched resources.
Find out more.

What You Can Do In Response

You can contact your local MSP highlighting the problems with the regulations, using the information provided above, noting that one of the unintended consequences of this rushed legislation is that it will affect B&Bs. You can find your MSP using the postcode checker tool on the Scottish Parliament website: https://beta.parliament.scot/msps/current-and-previous-msps Please copy us in: communications@assc.co.uk
You can also provide written evidence to the Scottish Parliament’s Local Government and Communities Committee in response to the questions below.

Do the proposed changes strike the correct balance between protecting the long-term sustainability of local communities and promoting tourism and strong local economies?

No – the proposed changes fall far short of striking the correct balance between protecting the long-term sustainability of local communities and promoting tourism and strong local economies.
No – a licensing system is a blunt tool to fix a perceived and localised problem of amateur online platform operators in Edinburgh, rather than being a solution that is appropriate for the whole of the Scotland, nor is it one that makes a necessary distinction between different types of visitor accommodation providers.
No – now is not the time to introduce these regulations given the impact of Covid-19 on the Scottish tourism sector. Instead, as requested by tourism and business stakeholders, the Scottish Government should postpone their regulations in order to give the industry time to recover from the devastating effect of the pandemic.
The prioritisation of this issue during a global pandemic, when related pieces of legislation such as the transient visitor levy have been dropped, and when many in the tourism industry are struggling for survival, needs to be seriously questioned.

Has the Scottish Government’s defined short terms lets in a clear and correct way in the legislation?

No – B&Bs should not be captured by the regulations and this could have been addressed by proper consultation with industry. This unintended consequence is as a result of the truncated nature of the consultation process, the rushed timeline from the Scottish Government to fulfil a political objective, and the failure to properly assess the consequences of the regulations.

Will local authorities have adequate resources, powers and expertise to make a success of their new powers and duties?

No – as detailed by the local authority responses to the consultation, many local councils are concerned about the resource implications of the regulations at a time when their budgets are already stretched, as well as the administrative burden and the lack of specific Scottish Government funding for set-up costs. https://www.assc.co.uk/local-authority-responses-to-the-scottish-government-stl-consultation/
Additional burdens will be placed on local authority planning and licensing teams to manage the requirements of a new scheme at a time when they can least afford it – despite claims that councils will be able to recoup this later down the line through fees. A proper impact assessment of the costs is required and it underlines the case that a postponement of the regulations is desirable.

Further details of the Committee’s work on short-term letting are available here: https://www.parliament.scot/parliamentarybusiness/CurrentCommittees/116756.aspx

and you should email your views to:

LocalGovernmentandCommunities@parliament.scot by Friday 22 January.

Please copy us in: communications@assc.co.uk

Response to the Chancellor’s business support announcement

Posted on January 5, 2021January 5, 2021 by Melanie Allen

Scotland’s Economy: Update

Disappointing news for Tourism Businesses in Scotland

Response to the Chancellor’s business support announcement

(Today the Chancellor made a funding announcement stating that businesses in the retail, hospitality and leisure sectors are to receive a one-off grant worth up to £9,000. The Chancellor also said a further £594 million is being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the grants, that might be affected by the restrictions.)

We have no new information about the eligibility criteria for these support packages at this time. We will keep you updated as soon as further information becomes available.