Category: Business

This briefing covers the main issues raised at the meeting between the Association of Scotland’s Self-Caterers (ASSC) and the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee:

• The distinction between amateur and professional short-term letting activity
• Short-term let regulations and the ASSC’s proposal for mandatory registration
• Financial support for larger self-catering properties.

Distinction between amateur and professional short-term letting activity

• Scotland has a longstanding tradition of offering short-term lets to visitors to our country for generations. It is not a new phenomenon, with businesses being part of their local area for many years, and is a mainstay of our tourist economy, particularly in rural, remote and island communities.
• However, the growth of online accommodation platforms like Airbnb has led to some confusion in the political and media debate in terms of short-term let regulation, with ‘Airbnb’ being used as a convenient catch-all term. While many traditional short-term let businesses may utilise such online platforms as a route to market, it is vitally important to distinguish between professional and amateur activity.
• Traditional short-term letting activity, such as self-catering, is a small business like any other, with dedicated full-time professionals striving to provide positive experiences for guests and visitors. Such businesses are heavily concentrated in rural and island parts of Scotland. Meanwhile, amateur short-term letting is more common in urban areas like Edinburgh with those engaged in the collaborative economy.
• For those in the traditional full-time and professional sector like self-caterers, their business is their livelihood and is definitely not a hobby. They are ordinary people running small businesses to which this is their primary source of income. Therefore, regulatory issues such as the introduction of a disproportionate licensing scheme, at a time when Covid-19 has disrupted their lives and posed significant personal and economic challenges, is a real and genuine concern.
• Given the economic importance of this industry, both for Scottish tourism as a whole and the individual operators and their families, any regulation taken forward to restrict short-term lets must be evidence-based and use empirical data to substantiate any claim regarding overprovision in a specific locality.

Short-Term Let Regulations

• The Scottish Government’s proposed short-term let regulations are the biggest issue facing the self-catering industry at the current time. Even in a pre-Covid context, these regulations would pose significant difficulties for the sector. The ASSC are extremely disappointed by the way in which the regulations have been taken forward. Contrary to commitments made by the Scottish Government before the election, the Working Group has not responded adequately to the concerns raised by industry and the updated regulations contain no substantive changes which will support the traditional self-catering or B&B sector, the two groups most affected by any legislative changes.
• The ASSC and other tourist stakeholders have constructively engaged throughout the process but proposals for an alternative mandatory registration scheme – which crucially deals with health and safety – were dismissed by officials. The ASSC proposals had unprecedented cross-industry support and would help secure the Scottish Government’s policy objectives in a more cost-effective and proportionate manner, adhering to Better Regulation principles.
• The regulations which were withdrawn in the last parliament, were widely recognised as not being fit for purpose, have not been improved – indeed, in many instances, provisions have been added. As a consequence, the ASSC expect a similar level of uproar as seen in the previous session, perhaps even worse, given the assurances made that the Working Group would take cognisance of tourism sector concerns. Many will view the Working Group as a sham exercise and this has the potential to seriously damage relations between the Scottish Government and tourism businesses.
• It is vitally important to see the regulations in a holistic context, not just as an issue for the housing/LG directorate, but one for tourism, economy and Covid recovery. The ASSC appeal to you to use your influence and that of the Tourism Directorate to help support small tourism businesses like self-catering challenge a disproportionate licensing scheme, given the damage it will cause to our sector as it seeks to recover from Covid-19.

ASSC Proposal for Mandatory Registration

• An onerous licensing scheme is the last thing the self-catering sector needs at this challenging time. The ASSC’s survey work demonstrates that around half of our self-catering operators would close their business if this came to fruition.
• The sector is adamant that the licensing will produce a materially negative impact on Scotland’s important tourism industry at a time when it can least afford it. It is not too late for the Scottish Government to change course and back Scottish tourism for a sustainable recovery. In place of a disproportionate and blanket licensing regime in Scotland, the ASSC have proposed a more targeted and bespoke response – the introduction of a registration scheme, with mandatory health and safety criteria, rather than licensing, as the most proportionate and achievable for Scotland.
• The ASSC’s statutory registration scheme would meet the policy objectives of the Scottish Government’s The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021 using the powers in the Development of Tourism Act 1969. These powers could be used by VisitScotland or delegated to local councils to implement local schemes. The ASSC recommends that the centralised registrar should be VisitScotland.
• Rather than proposing to completely replace the current draft Licensing Order, we are proposing to amend Article 3(1) to provide that an activity is exempt from the licence requirement if it is in respect of “registered accommodation” AND the “registration conditions” (essentially the existing mandatory licensing conditions) are being complied with. This would have the effect of providing a robust and legally effective registration scheme. So if an owner fails to register or having registered fails to comply with the registration conditions, they would no longer be exempt from the licensing requirement and would therefore be in breach of the Order with resulting legal penalties.
• Statutory registration of tourism accommodation is common in many other tourism destinations. In their detailed proposals, the ASSC have evidenced two registration schemes within the UK, the Isle of Man and Northern Ireland, both underpinned by Tourism Acts, that are examples of existing schemes that work well and where lessons can be learned for the Scottish approach.
• Further information on the benefits of registration over licensing can be found at: https://www.assc.co.uk/wp-content/uploads/2020/09/Licensing-or-Registration.pdf

Financial Support for Self-Catering Properties

• There is a perception that self-catering is ‘booming’ due to the increase in staycations. While smaller properties are doing reasonably well, with a third (33%) open and profitable according to recent ASSC survey work, many are in a difficult/precarious situation, with 32% open at reduced occupancy, 16% operating at breakeven levels, with a further 16% open but unviable.
• Those with larger self-catering properties accommodating +7, affected by household meeting restrictions, are in a dire financial position. The ASSC welcomed the clarity on the indicative dates for easing restrictions but Level Zero does not mean no restrictions and thus larger properties will face strict curbs on their activity until August.
• The Minister for Business, Trade, Tourism and Enterprise has said that the Scottish Government have targeted financial support at areas that need it most (SLTN, 29.6.21). Larger self-catering businesses, who have only had 10 weeks unrestricted trading since March 2020 and will remain unviable until at least 9 August (only an indicative date for ‘beyond Level Zero’), must be considered for such support.
• These businesses are ‘indicatively’ opening 15 weeks after the rest of the tourist sector, with no financial support, which is clearly unsustainable and will have lost almost the entirety of the summer season. This is not about rich people with second homes, this is about people who rely on their businesses for their livelihoods and therefore continue to need financial support to remain viable.
• Acknowledging there are budgetary constraints, the ASSC is not requesting new additional spending to help larger self-catering units. Instead, the Scottish Government ought to redeploy a small part of the underspend from Covid-19 funding to secure jobs until restrictions are fully lifted.