Tommy Sheppard

MP for Edinburgh East

Submission to Short-Term Lets Consultation

short-term-lets

I know that short-term lets are a big concern for a lot of people in Edinburgh East. Many people have experienced anti-social behaviour from a flat let out for a stag weekend. Many others are feeling the impact that short-term lets are having on the housing market, both buying and renting, as homes are turned into unregulated and lucrative mini-hotels. This is driving up rents and house prices because homes are being taken out of housing supply at a time when Edinburgh's population is growing. Online platforms such as Airbnb have caused the number of short-term lets to mushroom because it's never been easier for visitors to find cheap accommodation.

This kind of 'disruptive' technology often leaves existing regulation not fit for purpose which leaves policy makers needing to catch up. The Scottish Government and the City of Edinburgh Council are moving decisively to deal with this new landscape. I wanted to make my own views known - this is my contribution to the Scottish Government's Short-Term Lets Consultation.

 

  1. Are you aware of any additional data on the impacts of short-term lets (over and above that set out in Annex A – The Short-Term Rental Sector, Housing and Tourism in Scotland and briefly summarised above) which the Scottish Government should take into account when considering proposals for regulation?

No.

 

  1. Should a regulatory framework distinguish between sharing, swapping and secondary letting?

Yes. The three categories are not intuitively named. However, the thinking behind the division into three distinct types of short term letting is basically sound.

What the consultation calls ‘sharing’, i.e. the letting of one or more rooms in an individual’s home while that individual remains still resident clearly will generally not generate most of the worst problems that the other two categories of short term letting can. Because the owner continues to live in the property throughout the time of the let, they will usually act as a warden, ensuring that guests do not behave in a way that will disturb neighbours and that any damage to property by guests or general repairs needed will be dealt with appropriately and timeously. Because the occupier is almost always there and because they will be coming into contact with their neighbours over a long period of time, it is in their interest to ensure that guests behave appropriately. Presentee hosts are much easier to hold accountable than absentee ones. Additionally, ‘sharing’ ensures that a property is not taken out of housing supply as the occupier continues to live there. Indeed, renting out a room can be a vital source of income to assist with staying in a much-loved home. When discussing ‘short-term lets’ through this submission, the definition will not include this type of letting.

‘Swapping’, as the consultation awkwardly calls it, can result in antisocial behaviour by guests because the host is not present to ‘supervise’ their conduct. However, again, it prevents a home from being removed from housing supply. This is a fairly common practice in Edinburgh with a long history, particularly prevalent during the month of August when there is always a big spike in visitor numbers for the Fringe, International Festival, etc.

‘Secondary Letting’ – effectively fulltime whole house rentals – is the category which overwhelmingly causes the greatest number of problems and has been far and away the most common reason of the three that constituents have been in contact with my office. There is no oversight of guests’ behaviour, damage by guests and general maintenance to communal areas is often overlooked by the absentee host and the house is removed entirely from housing supply. All of these are intensified where multiple properties in a particular stair or street become fulltime (or near fulltime) whole house rentals.

 

  1. Should the rules be capable of being different depending on the type of accommodation? For example, to distinguish between tenement flats and detached houses.

Yes. 68% of Edinburgh housing stock is comprised of flatted dwellings and likewise the majority of housing stock in Scotland’s three other major cities. Short-term letting in Tenements and modern blocks of flats introduces specific issues because of: a) the higher density of residents living in a small area; and b) the need for some areas to be owned, maintained and accessed communally by multiple owners. Where hosts are absentee, as in ‘Secondary Letting’ scenarios, communal maintenance responsibilities are far too frequently neglected. Higher density living amplifies the impact of antisocial or thoughtless behaviour by guests – sounds are much more likely to be heard by those in a neighbouring flat than by those in the next door detached house.

 

  1. Do you have any comments on any other aspect of the definition of short term lets?

No. The proposed definition of ‘available for use for letting for a cumulative period of 28 days or more in any rolling period of 365 days’ on a short-term basis seems reasonable.

 

  1. Do you have any comments on the positive or negative impacts of short-term lets?

There are no doubt some economic benefits to short-term lets (STLs) and the sharing economy but the housing landscape of Edinburgh and the sheer saturation levels of short stay accommodation Edinburgh currently hosts produce negative effects which far outweigh these.

As indicated in previous answers, there are a number of different types of serious negative impacts of STLs.

Guests are in a holiday mindset – they arrive intending to have a good time. Often that involves keeping irregular hours and perhaps drinking more than usual. These are behaviours that are well managed by hotels. However, where guests are staying in a property which neighbours a resident’s home, this will often manifest itself as antisocial behaviour to the resident, who may have to get up early in the morning for work or other commitments or who may just wish to enjoy the peace and quiet of their own home. This is particularly amplified in flatted accommodation because of the higher density of residents/guests in a smaller area.

A steady stream of guests entering communal but private areas, such as a tenement stair, can feel very intrusive and can diminish the sense of security for residents who can no longer be sure who should be in a private communal area and who should not.

There is a substantial body of anecdotal evidence from my constituents that absentee hosts are considerably less diligent in attending to general maintenance of their property and especially communal repairs which arise. Absentee landlords often never visit their short-term let investments, contracting cleaners to prepare the property between guests, creating another degree of separation between the owner and any problems which might be occurring.

Huge numbers of properties are being removed from residential rental supply. Recent research indicates that there are now more properties in Edinburgh city centre available as STLs than are available in the mainstream residential rental market. This is hollowing out city centre communities such as the Old Town, leaving residents in the highly alienated position of having different neighbours every few days. It is also having a significant knock-on effect on rents as investors can earn substantially more from letting their property on a short-term basis than long-term. This is also contributing to making buying a home in Edinburgh unaffordable. As levels of short-term letting is markedly higher in highest density areas, such as Leith, Abbeyhill and the traditionally more affordable areas of the city centre, such as the Southside and Old Town, where there are high numbers of one- and two-bedroom flats, this is having a disproportionate impact on the lower end of the rental market – i.e. those looking to rent or buy but who can least afford it. Similar effects have been reported in rural areas such as the isles of Skye and Arran.

 

  1. Do you have any examples of other positive or negative impacts of short-term lets?

As outlined in 5.

 

  1. Do you have any comments about the impact of short-term lets on the housing market?

As outlined at 5, there is a clear and substantial impact on housing supply, particularly in central Edinburgh and other areas such as Leith and Abbeyhill which are located close to the city centre and have high quality, tourist-friendly amenities such as bars, restaurants and other attractions. This of course has a consequent effect on all other areas of the city as people who would otherwise have sought to live in the city centre and similar neighbourhoods are displaced into them, causing property prices and rents to rise across Edinburgh. The quotations in the consultation paper at 4.12-4.14 from DJ Alexander and Shelter are clear testament to this. Coupled with Edinburgh’s rapidly growing population, it is contributing to demand far outstripping supply. It is becoming unaffordable for workers in key sectors to live in our capital and this could have very undesirable economic consequences.

  1. Do you have any comments on the restrictions imposed on short-term lets by planning law?

Enforcement through the planning system is the approach largely being pursued by local authorities currently. My office has been in touch with local planning enforcement officers in relation to a number of cases and it is clear that planning law is not proving to be an effective tool. This is in no way a criticism of the council officers tasked with this – investigations appear to be highly resource intensive and very slow and seem frequently to require the Council to instigate legal action to close down an unauthorised short-term let. As well as this, the planning enforcement approach seems to be entirely reactive to and reliant on complaints from neighbours. For this reason it seems only to be those STLs generating the highest levels of antisocial behaviour or the most complaints which receive the attention of planning enforcement. As the City of Edinburgh Council states in its submission to this consultation, ‘it is likely the current system captures only a very small portion of the properties that would be deemed to be requiring planning permission for change of use if they were assessed’. The current approach is not fit for purpose.

 

  1. Do you have any comments on powers to tackle antisocial behaviour caused by short-term lets?

While I receive concerns from constituents about the impact on housing supply, rising rents and depopulation of settled residents in central neighbourhoods, direct experience of antisocial behaviour – such as from stag parties, etc. – is the most common cause of complaints in relation to STLs that my office sees.

It is my understanding that all recent applications to the City of Edinburgh Council’s Development Management Sub-Committee for change of use from residential to short-term let where the property forms part of a tenement or block of flats have been refused because of the impact on neighbours’ residential amenity, including in terms of suffering antisocial behaviour. This is obviously a welcome step but, as the Council acknowledges, it is only a minority of prospective short-term let owners who seek a change of use and planning enforcement is not currently able proactively to investigate the majority who have not.

Where the Council has undertaken investigations and has found sufficient evidence to commence enforcement action, it has been relying on tools designed for the conventional long-term letting sector – Anti Social Behaviour Notices (ASBNs) and, ultimately, Management Control Orders (MCOs). MCOs in particular require a lengthy and resource intensive legal process before being utilised. Again, this suggests that the current suite of powers available to local authorities is insufficient to tackle the negatives consequences of STLs.

 

  1. Do you have any comments about complaint systems for short-term lets?

This is strongly related to section 9 above. There are over 12,000 STLs operating in Edinburgh and the existing tools have proven to be cumbersome and excessively resource intensive, the experience of complaining is far too often fruitless and frustrating for residents. It is not uncommon for residents to experience waits of 9-12 months for an outcome to their case, if they have been lucky enough that sufficient evidence has been uncovered by an investigation.

 

  1. Do you have any comments on safety issues related to short term lets?

Currently STLs do not have to meet the same fire safety regulation standards that hotels or even Homes in Multiple Occupation (HMOs) do. This puts both guests and neighbouring residents at unnecessary potential risk.

 

  1. Do you have any comments on eligibility for non-domestic rates?

There are understandable concerns that STLs which have undergone change of use from residential to short-stay self-catering accommodation could be eligible for the Small Business Bonus Scheme, particularly where it is the only premises owned by a trader or company and has a low rateable value. This would result in the loss to local authorities of Council Tax revenue without that being offset by Non-Domestic Rates.

Given the already highly lucrative nature of short-term letting, coupled with the fact that many of them cost local authorities greatly through antisocial behaviour enforcement and other services, this is clearly an undesirable outcome. This imbalance is reportedly exacerbated because water charges and requirement for commercial waste collection for non-domestic premises are often not enforced by local authorities. I would welcome appropriate proposed solutions to this from the relevant local government and devolved policy makers. My view is that STLs should be specifically ineligible for the Small Business Bonus Scheme.

 

  1. Do you have any comments on the additional eligibility requirements recommended by the Barclay Review?

Further requirements to prevent sham short-term let status being used to avoid Council Tax liability would be welcome.

 

  1. Do you have any comments on the eligibility of self-catering accommodation for the Small Business Bonus Scheme?

Mainly as outlined at 12 above. To be clear, my view is that STLs should be specifically excluded from the Small Business Bonus Scheme.

 

  1. Do you have any other comments on taxation relating to short term lets?

There are already too many STLs in Edinburgh so any new taxation arrangements should at minimum not make converting residential properties to STLs more attractive.

 

  1. Do you have any additions or amendments to the proposed design principles?

As I have outlined above, I have serious concerns about the effectiveness of the existing planning enforcement system when used in relation to suspected STLs. A self-financing regulatory system which streamlined the enforcement process and allowed local authorities to prevent over-concentrations of STLs would be welcome. Scope for local solutions to problems specific to a particular local authority would also be welcome, given the very distinct challenges in Edinburgh.

 

  1. Do you have any comments on the proposed scope of a regulatory framework?

As outlined above, I would welcome a framework which enables local solutions for specific local conditions. I would support a regulatory framework which governs properties ‘available for use for letting for a cumulative period of 28 days or more in any rolling period of 365 days’ on a short-term basis.

 

  1. Do you have any comments on the controls or conditions which councils should be able to set through a registration or licensing regime?

At minimum these should include fire, gas, and other safety checks to levels comparable to HMOs or hotels. As outlined at 16, it should enable local authorities to manage numbers of STLs to prevent overconcentration.

There should be an STL landlord register, potentially integrated with the main private rented sector landlord register but making it absolutely clear which entries relate to STLs. This would enable neighbours to contact the absentee owner of a property which is causing a problem. Failure to keep these details accurate and up to date would constitute a breach of licence and incur commensurate sanctions.

 

  1. Do you have any comments on whether a licensing scheme and/or market-based approach, and any associated charges, should apply to all types of short term lets and whether conditions and/or charges should vary according to the type of property, its location or the number of rooms?

A market-based approach has patently not worked. A future licensing regime should apply to all type of STLs. The decision over whether there should be incrementation of charges related to size/location/etc. or a flat rate should be one for each council as the licence-issuing authority.

I would be keen to see a new regulatory system incorporate the ability for local authorities to designate certain neighbourhoods as ‘high stress zones’. This designation should be used for neighbourhoods where there is any one of the following factors:

  • Already overconcentration of STLs present
  • Acute housing demand
  • STLs are deemed inappropriate for social or environmental reasons

Applications for a licence to operate a short-term let at properties within these zones would be treated differently. It should be possible to designate any clearly defined zone, from a single tenement stair to an entire area, as a high stress zone. There should be a presumption against issuing an STL licence in neighbourhoods which have been designated as high stress zones. The power to designate a particular area as a high stress zone should rest with the local authority.

It is quite common for a single individual or company to buy a number of properties in order to operate them as STLs. Airbnb, which is of course the most widely used platform for connecting hosts and guests, describes these as ‘superhosts’. In such instances, things have gone far beyond generating a bit of cash from a spare room. Superhosts are running serious profit-making undertakings, which all too often seek to avoid regulation and tax and which are damaging communities in the many ways already outlined. It seems that the larger the operator, very often the more remote they are from the consequences of their business. For this reason, there should be a maximum number of STL licences which a person or company can hold.

 

  1. Do you have any comments on the effectiveness of a days per year limit in meeting the Scottish Government’s objectives?

I support the proposed threshold of 28 days’ availability within a rolling 365 period.

 

  1. Do you have any comments on how regulations should deal with commercial hosts?

A licence should be required for commercial hosts. Appropriate enforcement action and penalties should be implemented where hosts have not secured a licence. Where hosts have previously breached conditions of a licence or have operated without one, this should be taken into account for consideration of future applications with a heavy presumption that they will not be approved.

Enforcement of breaches of licence conditions or operating without a licence must be robust. There must be scope for this to result in prosecutions with appropriate sanctions, such as substantial fines, to be handed down.

 

 

  1. Do you have any comments on who should be subject to enforcement and sanctions?

As outlined above in 21, with the addition of those who have failed to meet the relevant safety regulations or who have not joined the register of STL landlords and platforms who do not require – or do not adequately check – that prospective hosts have secured the appropriate licences, etc.

 

  1. Any further comments

No.

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