The rise of websites such as Airbnb and other similar sites has made it easier than ever to rent out a property as short stay accommodation.
The annual income which property owners are able to realise over the course of a year using this model can be substantially more than they would have been able to charge as rent for the same property under a short assured tenancy or other traditional medium to long-term letting model.
According to industry insiders, in tourist hotspots such as Glasgow and Edinburgh the income after expenses can be anything up to triple that of traditional letting arrangements. Not surprisingly, there has been a huge rise in the number of properties being leased in this way.
While the income is obviously attractive, many property owners may be unaware that short term property letting can be a breach of planning law. Together with the increased media coverage on the adverse impact of such renting on local residents, this can potentially lead to enforcement action being taken by their local Council.
When does use of a property as short stay accommodation require planning permission?
At present there is no definitive, straightforward answer to this question.
Firstly, there is a difference in Scottish planning law between flats and houses; whereas occupation of a house as a single household falls under class 9 of the use class order, occupation of a flat as a residence doesn't fall within any of the use classes and constitutes its own sui generis planning use.
The defined class of use for houses permits occupation by a family or by up to 5 residents living together as a household, whether or not as their sole or main residence. The effect of this is that, whereas short stay use of a house is unlikely to constitute a change of use provided that it is occupied by a single household, the same principle would not apply to a flat.
Under the current legislation, the question to be asked when letting a flat on a short term basis is whether the resulting change in the use of the flat constitutes a material change of use. The legislation doesn't set out which factors will determine whether a change of use is material and the courts have treated this as a matter to be determined based on the facts and circumstances of each individual case.
Recent appeal decisions
The change of use question has come up in a number of recent appeal decisions taken by the Scottish Government's Planning and Environmental Appeals Division, which have helped shed light on the factors that will be regarded as relevant. These include:
- The character of the property;
- The frequency of arrivals and departures to and from the property;
- The number of people staying at the property;
- The likely frequency and intensity of noisy or otherwise unsocial activities; and
- The impact on public services such as on-street parking and waste collection
Essentially, the question of whether permission is required to let a flat on a short term basis hinges on whether the short stay use is compatible with, or materially different from, ordinary occupation of the flat as a residential property in permanent occupation. Perhaps surprisingly, the factors listed above, for example the likely frequency of noisy or unsocial behaviour, indicate that the impacts of the change on neighbouring properties can be of relevance.
It is also worth considering whether the relevant Council's planning policies set out the sorts of factors which it considers to be indicative of a material change of use. Although the question of whether there has been a material change of use has been established to be one of fact and degree, it is worth highlighting that the decisions on this point have tended towards finding that the change to short term accommodation does constitute a material change of use in the circumstances.
If short term accommodation is regarded as a material change of use, the property owner could be in breach of the conditions of their mortgage as such conditions invariably require compliance with planning law. There could also be issues for the solicitors who represented the mortgage company when the mortgage was provided as the report on title may confirm that the property has planning permission for its intended use.
The Planning (Scotland) Bill
The Planning (Scotland) Bill, which has passed stage 2 of the Parliamentary procedure with stage 3 debate likely to take place early this year, would, if passed in its present form, change the law as it relates to short-term holiday lets.
An amendment to the Bill was introduced at stage 2 to provide that such short-term lets would involve a material change of use, which would in turn mean that planning permission would be required.
Scottish Ministers would be entitled to issue guidance on the interpretation of "providing short-term holiday lets" and if the Bill is to be passed, clarification as to what would constitute a short-term holiday let would be welcome. The Bill is clear that this change would not cover residential leases or lets where the property remains a person's sole or main residence, so it wouldn't include, for example, an owner who lets out their own property online for one or two weeks a year whilst on holiday.
Short stay letting on council radars
As we pointed out at the start, there has been a lot of media coverage recently around the prevalence of short stay accommodation and resulting concerns about adverse impacts on the amenity of full time local residents and the availability and pricing of housing stocks, particularly in the major cities and in areas popular with visitors.
The massive rise of short term letting through Airbnb and similar services creates challenges for councils and action is now being demanded of them to address the situation. This is likely to result in councils taking more proactive enforcement action against unauthorised short stay use.
Get in touch
If you are looking for guidance as to whether planning permission is likely to be required for a particular use of a property, particularly while the law on this remains subject to change, we are pleased to provide advice.