Short-term lets (not?)

Since our 2018 blog on short-term lets, the Scottish Government has published its report Research into the impact of short-term lets on communities across Scotland (the Report) and section 17 of the new Planning (Scotland) Act 2019 (the Act) will equip local authorities with the power to introduce Short-Term Let Control Areas where they decide that this is in the interests of local communities.  The aim is for the regulations to be in place by spring 2021.  

The Act does not expressly define what a short-term let is but private residential tenancies under section 1 of the Private Housing (Tenancies) (Scotland) Act 2016 and tenancies of a dwellinghouse (or part of it) where all or part of the dwellinghouse is the only or principal home of the landlord or occupier are held not to constitute short-term lets. 

The Report indicated that although there were just under 32,000 active Airbnb listing in Scotland as of May 2019 (a three-fold increase since 2016), approximately half of these listings were in either the City of Edinburgh (CEC) (31%) or Highland Council (19) areas. 

Control areas will be optional.  This will not be a blanket approach across the country.  Instead, certain hotspot areas, such as Edinburgh and Skye (Highland Council), can designate all or part of their areas as control areas. Planning permission will always be required where a property is to be used for a short-term let within a control area.

The current situation is that where it can be shown that there has been a material change of use from a residential property to short-term let accommodation, planning permission is required.  This is on a case-by-case basis and assessed on (i) the character of the new use and the wider area; (ii) the size of the property; (iii) the pattern of activity associated with the use, including the number of occupants, the period of use, issues of noise, disturbance and parking demand; and (iv) the nature and character of any services provided. 

A recent (successful) appeal against the refusal of a certificate of lawful use application by CEC can illustrate the approaches.  The application was submitted on the basis that the existing use for short term residential letting, ongoing since around May 2019, was not a material change of use and consequently did not require planning permission.  The property in question was a two bedroom flat on the ground and basement floors of a four storey tenement building.  The property had its own private access, no services were provided to the occupants and there was a mix of uses within the vicinity of the property including a kebab shop, hairdresser and a financial services business.   Based on the above criteria, the Scottish Government Reporter concluded that the existing use was in keeping with the nature and size of the property and that there was no significant disturbance or impact from the use therefore a certificate should be granted. 

If, going forward however, the property fell in a control area, planning permission would automatically be required.  Same property.  Different result.  At least there would be certainty in knowing that planning permission would be required for properties falling within control areas. 

Local authorities already have the tools to combat short-term lets.  If CEC were to designate only the city centre ward (2,710 active Airbnb listings per the Report, more than the whole of Glasgow) as a control area, other wards within its jurisdiction that are not designated as control areas would still require to be dealt with on a case-by-case assessment.  When considering council resources alongside this approach, an authority may be unable to fight this battle on two fronts.  Managing the influx of a massive number of planning applications could prove catastrophic to planning departments while still having to deal with cases outwith control areas on an individual basis.  This may encourage planning authorities to designate all of their area as a control area or from a budgetary/resource perspective, not to implement a control area at all. 

Following the introduction of control areas, on 8 January 2020 the Scottish Government announced further powers for local authorities to regulate short-term lets by introducing a licensing scheme under the Civic Government (Scotland) Act 1982 also in force from spring 2021.    It will become a criminal offence to operate a property as a short-term let without a licence.  The scheme will include a new mandatory safety requirement and provide councils with the discretion to apply further conditions to address the concerns of local residents.  A new licensing scheme will present similar issues to the new planning controls – namely that of a lack of council resources. 

In addition to the above schemes, there is a commitment from Scottish Ministers to consider the taxation of short-term lets to compliment the Transient Visitor Levy Bill to be introduced later this Parliament. 

These new government measures are an attempt to balance the interests of local communities with the interests of visitors.   There are no overnight solutions for these issues.  Uncertainty remains for the foreseeable future for short-term lets in Scotland. 

Failing to take account of the up to date local development plan

A recent decision by the Court of Session has quashed a planning appeal refusal determined by the Scottish Ministers for failing to take account of the up to date local development plan.   The case emphasises the importance of monitoring assumptions made as part of the planning process.

An application for planning permission in principle was made for a residential development of 600 units, including affordable housing, commercial space, a public park and a new primary school near Bridge of Allan.

When the application was submitted, Stirling’s Local Development Plan (“LDP”) did not allocate sufficient land for housing  to provide a 5 year supply.  As such, the relevant LDP housing policies would be considered out of date and Scottish Planning Policy (“SPP”) would apply. The SPP provides a presumption in favour of development which contributes to sustainable development as a significant material consideration.

However, the development was proposed on land lying within the North Stirling Green Belt and the LDP contained policies protecting the green belt from development.

The planning officer recommended the application for approval due to the benefit of the development outweighing the effect on the green belt; the SPP favouring sustainable development; the significant weight to be attached to the SPP which outweighed the policies of the LDP; and the impact of the development being mitigated by a proposed Section 75 Agreement and the imposition of planning conditions.

However, the application was refused on 23 March 2016.  The Council determined that the benefits of the development would not outweigh non-compliance with the LDP and the proposed mitigation of the impact of the development on the greenbelt, flooding and transport would not be sufficient.

An appeal was submitted and was called in by the Scottish Ministers and a Reporter was instructed to examine and report on the appeal. During the appeal process, a new LDP was being progressed which sought to provide a sufficient 5 year land supply for housing.  In his report to the Scottish Ministers, the Reporter made certain assumptions about the incoming LDP and stated that:

On the assumption that the proposed replacement development plan should identify sufficient sites, the land supply shortage may be resolved before development commences on site; … and … There is also an expectation that the proposed replacement LDP, currently under examination, will properly address the shortfall before any housing is built on this site if the appeal is allowed.

The Reporter estimated that the number of units which could realistically be provided by the proposed development within the 5 year land supply period would be 175 which was some way short of addressing the 896 unit shortfall.

The Reporter concluded that the development would only address the housing land shortfall in part; the harm to the green belt must be given considerable weight; that this would not be outweighed by the SPP presumption in favour of sustainable development; and to approve the development would be prejudicial to the emerging LDP which would set out the location of sufficient housing land for a 5 year supply.  As such, the Reporter recommended refusal of the appeal.

However, when the LDP was approved for adoption on 3 May 2018 the new LDP still did not provide a sufficient housing land  supply with a shortfall of 169 units. Despite this being brought to the attention of the Scottish Ministers in a report prepared by its officials on 17 May 2018, the Scottish Ministers issued their decision on 18 June 2018 refusing the appeal, stating that they accepted the Reporter’s recommendations and conclusions and adopted them for the purpose of their own decision. 

By doing so, the Scottish Ministers adopted a decision which was based, in part, on a material consideration regarding the emerging LDP to provide sufficient housing land supply which had later proved to be incorrect. 

The applicant appealed the Scottish Ministers’ decision to the Court of Session and Lord Carloway, delivering the opinion of the Court, determined that it was incumbent on the Scottish Ministers, as the decision maker, to take into account all relevant material considerations.  In this instance, the Scottish Ministers in adopting the Reporter’s recommendation, had (1) taken into account a material consideration which had become irrelevant; and (2) failed to take into account a material consideration that the approved emerging LDP did not provide a sufficient housing land supply.  Therefore, the decision to refuse the appeal was quashed. The Court of Session can only review the legal validity of the appeal decision and cannot substitute its own decision.  It therefore falls upon the Scottish Ministers to reconsider the appeal.  They will have to be more careful next time.

Holiday lets in Edinburgh – has the bubble burst?

Fancy a city break anyone? Who could resist a few days in an iconic European city that also happens to be a UNESCO World Heritage Site?

So, where to stay – one of Edinburgh’s many hotels or perhaps a flat is more appealing? There are lots of options to consider. Interestingly, the concentration of Airbnb’s in Edinburgh is four times greater than in London, Paris or New York, but could three recent enforcement notice appeal decisions (1, 2, 3) point the way towards a clampdown on the operation of Airbnb’s and short term holiday lets in Edinburgh?

The appeals related to three separate properties in the same block located in the heart of the tourist centre and lying in close proximity to Princes Street Gardens and the Castle. All three properties were one bedroom flats, with sofa beds in the living room, thereby allowing occupation by up to 4 adults. In summary, the enforcement notices stated that the flats were being used for short term commercial visitor accommodation, without having obtained planning permission and, accordingly, required the alleged use to cease within two months.

The key here was whether there had been a material change of use from residential flats which had resulted in harm to the amenity of adjoining occupiers. Reference was made in the various submissions to City of Edinburgh Council’s Local Development Plan policy Hou 7 (inappropriate uses in residential areas) and the Council’s non-statutory Guidance for Business. The Guidance provides advice on whether the use of a residential property for short term commercial visitor accommodation requires planning permission and refers to the need for an assessment of (i) the character of the new use and the wider area; (ii) the size of the property; (iii) the pattern of activity associated with the use, including the number of occupants, the period of use, issues of noise, disturbance and parking demand; and (iv) the nature and character of any services provided.

In all three cases, the Scottish Government Reporter refused the appeals having concluded that there had been a material change of use, taking account of the number of arrivals and departures, the likelihood of increased noisy activity late in the evening, increased activity due to cleaning the properties, luggage drop-off in between checking in and out and the increased use of the communal drying area by guests for socialising – all of which would be greater than if the properties were in use by a single household.

Meanwhile, the Green MSP, Andy Wightman, has successfully tabled an amendment to the Planning (Scotland) Bill which would require property owners to obtain planning consent in order to change a main residence into a short-term let property such as an Airbnb. This would only apply to a main residence, rather than second homes and is still to be considered by all MSPs at Stage 3 of the Bill next year.

City of Edinburgh Council believes a licensing regime would be the best way to control short term lets and has asked the Scottish Government to consider introducing this.

So, plenty to consider going forward for owners of holiday lets – maybe book that city break sooner rather than later?

Compulsory Sales Orders: An aid to regeneration in Scotland?

A new Compulsory Sales Order (CSO) power could tackle the blight of abandoned buildings and parcels of vacant and derelict land in town centres and communities across Scotland, according to a report published by the Scottish Land Commission (SLC).

The proposed new power would provide planning authorities with a mechanism to bring sites and buildings that have been unoccupied and/or derelict for an undue period of time, and where this is having a detrimental impact on the surrounding community, back into productive use.

Communities and local authorities already have a number of policy instruments – including compulsory purchase orders – which can be used to help regeneration. However, these policies require a clear plan in place as to how the land or building in question would be used. In many cases, local authorities and communities do not have a specific end use in mind for problematic sites but simply wish to see them used for some productive purpose. Resource constraints may also deter local authorities from pursuing a compulsory purchase action.

Although recent right to buy legislation would provide a potential route for bringing sites back into productive use, restoring some sites would be complex and technically challenging and, often, there is no desire on the part of the local community to take on such a project (see our Real Estate’s team’s recent article).

Whilst the SLC’s suggestion is that CSOs could be part of a toolkit to bring unused land back into productive use, the report states that a CSO would be used as a power of last resort and that councils and land owners should work together to try and find solutions first. As a CSO would involve the state directly interfering with an individual’s property rights by forcing a sale of the relevant property, the public interest in doing so must clearly outweigh the cost to the individual. Examples of the types of sites that might be tackled using the new power include sites such as empty homes, abandoned shopping centres, derelict hotels, gap sites and abandoned or derelict commercial buildings.

The SLC suggests that the real strength of CSOs lies in the role they could play in facilitating constructive dialogue between local authorities and owners of problematic sites. Certainly, in some situations, the serving of a preliminary investigation notice in relation to a site could incentivise an owner to take action.

The Scottish Government has committed to bring forward CSOs during the course of the next parliament and the SLC report is intended to provide the Scottish Government with a robust framework to do so. Clearly, any mechanism which could facilitate the redevelopment of vacant or derelict brownfield sites is to be welcomed, but it remains to be seen how Scotland’s already under-resourced planning authorities would be able to deal with the new opportunities should the SLC proposals be introduced.

Need for up to date local development plans

We consider a recent appeal decision for 601 houses at Overtown which confirms that unless Local Authorities keep local development plans up to date and demonstrate effective housing supply they will lose planning appeals, even on green belt land.

Read the full article