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Is Airbnb in it for the long haul, or outstaying its welcome?

Airbnb started with a simple idea.

That plan, to create bed and breakfast facilities for designers visiting San Francisco for a major conference, has grown from an initial purchase of three air mattresses to a global phenomenon reportedly worth $31billion.

Airbnb impact

So how has this booming business affected Scotland?

As at the beginning of this year there were 35,000 active Airbnb listings across the country, which Airbnb says contributed more than £693million to the Scottish economy in 2018.

Airbnb argues too its platform makes rural communities more accessible, and it seems demand could be considerable.

It says, in 2018, three out of the top five Scottish destinations were in the Highlands and Islands: Inverness, Skye and Fort William.

According to VisitScotland, during 2017, the Highlands welcomed 534,000 international overnight visitors, and more than two million domestic overnight visitors, totalling 10.6million bed nights and spending £680million. Not inconsiderable figures by any stretch.

That said, the business is no stranger to criticism, including that it reduces the availability of housing stock; pushes up rental prices; compromises security in properties with communal areas; increases the burden on amenities; and encourages anti-social behaviour.

Letting restrictions

Can these issues be addressed with legislation?

There are no real restrictions in place for those letting out properties on a short-term basis, unless any are laid down in the title deeds, are provided for in by-laws or are stipulated by a lender.

Plus, tenancy agreements often prohibit sub-letting and advertising a property as a short-term let. In fact, a recent Press and Journal article reported Highland Council has taken action in cases of tenancy fraud where individuals have breached conditions by advertising properties through sites including Airbnb.

In 2017, largely in response to pressure from local residents, Glasgow City Council introduced new regulations governing short-term lettings.

These regulations prohibit entire properties from being let out on a short-term basis where the property is within a building with a communal entrance. Letting a room in an occupied house is still allowed.

The authority argues where a residential property is used frequently to provide short-stay accommodation, it’s likely to constitute a material change of use, and planning permission is required.

By its own admission too, applications for change of use in conservation areas will not be looked upon favourably; meanwhile, on the east coast, Edinburgh has recently followed suit, issuing dozens of “impact warning letters” advising short-term lets contravene planning laws.

Enforcement challenges

Enforcement action is complaints-led, therefore if there are no complaints, a property owner may continue short-term letting.

Over the past 18 months there has been increasing pressure on the Scottish Government to introduce regulations to govern the short-term rental sector and provide clarity to operators, users and communities.

In response, the Scottish Government commissioned the Scottish Expert Advisory Panel on the Collaborative Economy and launched a consultation.

Proposals include introducing a register of property owners, similar to that required for longer-term residential lettings; and a limit on the number of nights a property can be let for. Panel members include representatives from both Airbnb and VisitScotland.

Airbnb has also contributed to the consultation and says it’s keen to help find a workable resolution and will shortly embark on a six-month, UK-wide roadshow.

Ultimately though, the Scottish Government says it wishes to “ensure that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with wider economic and tourism interests”.

It remains to be seen whether regulations at local level could lead to national legislation on the issue, and what impact this will then have on both the tourism industry, and the short-term rental industry as a whole.

So, watch this space.

This article appeared in the Press and Journal's Leader publication in November 2019.

Nicola Grant

Nicola works in the firm’s commercial property department in our Inverness office. She acts for both public and private sector clients, and has extensive experience in dealing with a wide range of real estate transactions including acquisitions and sales, re-financing, leasing and corporate support.

Posted, 04 December 2019 by Nicola Grant
Categories: Commercial property | Insights