Scotland's Short-Term Let Regulations Face Criticism as 54% of Operators Consider Quitting

Scotland's new short-term let regulations are facing criticism from industry leaders, with 54% of self-catering operators considering quitting by 2024. Despite challenges, demand for staycations continues to grow, with an 8% increase in bookings year-on-year in 2023.

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Bijay Laxmi
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Scotland's Short-Term Let Regulations Face Criticism as 54% of Operators Consider Quitting

Scotland's Short-Term Let Regulations Face Criticism as 54% of Operators Consider Quitting

Scotland's short-term let regulations, introduced in October 2023, are facing criticism from industry leaders who claim they are damaging businesses and putting Scotland at a competitive disadvantage. A staggering 54% of self-catering operators are considering quitting by 2024 due to these regulations, according to a report from Sykes Holiday Cottages.

Why this matters: The impact of these regulations could have far-reaching consequences for Scotland's economy, potentially leading to a loss of revenue and jobs. Furthermore, the exodus of short-term let operators could also affect the availability of affordable accommodation options for tourists, ultimately influencing the country's tourism industry.

The new licensing scheme for holiday rentals in Scotland allows local authorities to create their own conditions for holiday lets. Landlords must submit health and safety documents to obtain the license, along with a fee. Additionally, local councils can designate certain areas as short-term let control areas, where new holiday lets will need planning permission to operate.

The Sykes Holiday Cottages report, which analyzed revenue data, booking figures, and surveyed 500 holiday let owners, assessed the impact of regulatory changes in Scotland and Wales. The UK Budget also confirmed that the furnished holiday let tax (FHLT) regime would be abolished from 1 April 2025, potentially resulting in an average loss of £1,890 per year in tax for affected owners.

Despite the challenges, 86% of owners in the holiday let market have not considered exiting, and half are considering buying another holiday let in the future. Demand for staycations continues to grow, with an 8% increase in bookings year-on-year in 2023, up 71% compared to pre-pandemic levels. The average turnover of a UK holiday let in 2023 was £24,500, a slight increase from £24,000 in 2022.

The Cotswolds topped the ranking of annual average revenue at £28,500, followed by Dorset and Cornwall at £27,000 and £26,500, respectively. Northumberland and East Anglia are recent entrants to the top 10 list, with annual average revenue of £25,000 and £24,900, respectively.

Graham Donoghue, CEO of Sykes Holiday Cottages, stated, "Staycations have been growing in popularity over the past decade, and right now, demand for our UK holiday cottages is higher than ever... Despite changes, it is clear that holiday letting remains a profitable and rewarding long-term business model." Donoghue emphasized the importance of holiday letting in driving spending, providing direct employment, and supporting independent businesses in local economies across the country.

The report also revealed that 57% of holiday let owners do not have a mortgage on their property and are less likely to be impacted by the removal of the FHLT scheme. Furthermore, 81% of homeowners say residents local to their properties welcome tourism and somewhat rely on it.

As Scotland's short-term let regulations continue to face criticism, the industry remains resilient, with demand for staycations still on the rise. Despite the challenges posed by regulatory changes, holiday letting remains a profitable venture for many owners, contributing significantly to local economies across the UK.

Key Takeaways

  • 54% of Scotland's self-catering operators may quit by 2024 due to new regulations.
  • New licensing scheme requires health and safety documents and a fee.
  • Furnished holiday let tax regime to be abolished from April 2025, affecting owners.
  • 86% of holiday let owners haven't considered exiting, with demand for staycations growing.
  • Holiday letting remains profitable, contributing to local economies across the UK.