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. Read 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.