Targeting holiday lets will not resolve housing problems

7th Sep 2023
David J Alexander
Targeting holiday lets will not resolve housing problems - D. J. Alexander

It is claimed that the current targeting of the short-term lettings market is aimed at solving some of the housing shortage issues that exist in Scotland. The policy is that by reducing the number of holiday lets this will free up more homes for Scots to buy and rent that would otherwise be used by tourists.

While many understand that the short-term lettings market may have been allowed too much leeway in the way it operates in terms of appropriate safety regulations and the numbers of properties operating in certain areas these changes have the potential to bring the market to a sudden, grinding halt and have unintended consequences.

A recent leaked Edinburgh City Council document forecast an 80% reduction in the number of Airbnb properties in the capital which is a terrifying prospect for next year’s tourist trade. The Association of Scotland’s Self-Caterers (ASSC) has also produced a survey which found that two-thirds of small businesses are considering leaving the sector because of the Scottish Government’s new licensing scheme. The businesses questioned expressed significant concerns over the costs of obtaining a licence, with individual local authority costs ranging from £250 to £5,869.

The problem is that, while you may transfer some of the holiday letting properties into the private rented sector or even find them put up for sale, you may damage the tourism industry providing the jobs which people need to survive.

Reducing the number of available holiday lets also has the potential to reduce the attractiveness of areas like the Edinburgh and the Highlands as destinations thereby potentially further impacting on the number of people employed in the tourism and hospitality sectors.

There may be more homes available to rent but there will also be fewer jobs for people to do. Regulatory changes such as this need to be approached with caution. Every action has a counter action, and the general rule of unforeseen circumstances dictates that you make major changes at your peril.

If the number of available holiday lets declines according to the predictions, then prices, which in Edinburgh are hardly modest, will skyrocket and make the capital an elite destination for the rich few with fewer tourist businesses and lower employment levels in the sector. Ultimately it will be the employees working in the hospitality and tourism sector who will suffer the most.

There are already signs that holiday letting landlords are selling up or shifting their properties from the short-term to long-term residential market. These landlords say that the requirements for planning acceptance are too costly, restrictive, and onerous.

While this potential increase in the number of properties coming onto the private rented sector is to be welcome, particularly in cities like Edinburgh where demand is higher than anyone has ever experienced before, the concern is that the impact on employment will be devastating.

The main issue with such proposals is that they are trying to resolve a long-term, serious under investment in social housing, coupled with a planning process that often seems to want to limit rather than encourage housebuilding resulting in a sticking plaster policy to cover a gaping wound which simply targets one area of housing to resolve an issue elsewhere without considering the impacts on both.

Looking more widely at the issue may be the answer. The announcement last week that the UK government was going to scrap EU rules on nutrient neutrality to free up planning approval may have annoyed some, but it is at least a partial and immediate solution to increase housebuilding volumes.

There may also be further UK reforms on the cards to shift planning from being on a case-by-case basis and create zoning systems which would designate areas for residential, industrial, commercial etc. and thus pre-approve any plans for new homes in these specific areas.

Given the enormous need to provide new homes in as short a period as possible something drastic needs to be done to resolve these issues and quickly. We need to look for long term solutions to housing needs rather than scapegoat certain sectors to provide the answers.