Holiday homes in Scotland to have taxes doubled?

Taxes on empty or second homes are not the only challenges facing the hospitality industry in Scotland. Anyone renting out in the short term will soon be affected by a license requirement

https://www.gov.scot/publications/short-term-lets/

It looks as though there may be a shortage of accommodation for tourists going forward because whilst larger accommodation providers will comply with the requirements and continue to trade, smaller establishments may not. Friends of mine who offered B&B in their home have told me they will cease trading at the end of this season.

As retirees with pensions they don't need the money and hosted guests on a B&B basis more for the social interaction it gave them than anything else. My friends could apply for a license but there is no guarantee they will be granted one which puts them off applying. The STR license fee on top of insurance costs, a website hosting fee and Airbnb charges has tipped the balance. I'm guessing there will be others like my friends who will feel the same and find something else to do with their time.

Of course they and I understand what the Scottish government is trying to do and for many reasons there should be some regulation with regards short term letting in the country but it does look to be a sledgehammer to crack a nut approach. It will be interesting to see how it all works out.

There is a huge shortage of affordable housing in Scotland and especially on the islands and in the highlands. It's why many young people leave and don't return.

The Short Term Let legislation is already in force and anyone starting a new B&B or letting business has already had to register. Those who can demonstrate they were in already in business have until 30th September to apply for their licence. As someone who runs a very small B&B and only opens for 3 or 4 months in the season and is not reliant on that income it is 90% certain that I will cease trading before 30th September this year. Interestingly I read that the legislation even applies to home swaps as there is deemed to be a 'consideration' in that while you are letting someone stay in your house you are also staying in theirs.

A sledgehammer to crack a nut indeed - and one that won't free up housing stock, because when people like me cease trading we won't suddenly sell our house and move elsewhere. What it means is that there will be fewer rooms and houses to rent for holiday makers and prices will have to rise to cover the increased costs.

That is such a difficult situation for everyone, I think. And I definitely see your point about using a sledgehammer to crack a nut. Isn't the First Minister (Humza Yousaf) fairly new to his position?

We have a similar situation in Duluth - it's heavily touristed and there is a housing shortage as well. Duluth has gone to the opposite extreme and just prohibited short-term rentals, so you cannot have an AirBnb (or any other type) here, although there are plenty of places outside the city that have no such restrictions. Unfortunately, many of the outlying areas also restrict any development - for example, in several townships, you are not allowed to divide up existing acreage (most of which are at least 10 acres). It's causing some problems here since there's really not many places to build housing.

Jacqui, that's interesting about the home swaps - I looked for more information and found the Licensing Guidance and it's true. https://www.gov.scot/publications/short-term-lets-scotland-licensing-scheme-part-1-guidance-hosts-operators-2/pages/8/

What I didn't realize until I read this was that the law applies to owners who only rent out a couple of rooms in their house. That seems to defeat the purpose - I can see the purpose of taxing separate homes that are let as self-catering, but nothing is accomplished by taxing someone who only has one home and just lets a room or two, imo.

Skyegirl, when you say "cease trading" does that mean you will no longer run your business?

Also, how do you like being a host? I've met some who enjoy a chat and meeting people, and oddly others that didn't seem to like running a B&B at all, which seemed odd to me.

BTW, I very much appreciate your contributions to this board. You've really helped a lot of people. Thank you.

BigMikeWestByGodVirginia and Mardee,

We really enjoy being occasional hosts and opening our home to visitors. We took early retirement from government (IRS) jobs in London and moved to Skye. Being B&B hosts enables us to meet people from all over the world and to share our love of Skye with them. We really enjoy being hosts and also practising our rusty French, German and Spanish. As we don't need the money we only do 12 weeks a year spread across 4 months and we rent out just two rooms of our five bedroomed home. But the short term let licensing still applies to us. Because we are not doing this for the money (although it pays for some nice vacations) we will most likely stop offering B&B at the end of this season. There is an upfront cost to the licence but also costs associated with other things such as having the electrical system and all electrical appliances tested, getting the chimney swept more frequently than we otherwise would (although the fire is not lit in summer when we are open), getting plans of the house drawn up, etc, etc.

We have previously done home exchanges and met some fantastic new friends doing that. But the requirement to have a short term let licence for that too, probably means that we can only exchange with people we are already friends with - not via any home exchange website as we've done in the past.

Thanks also for your very kind comments. I discovered Rick Steve's show while watching tv on one of our home exchange visits to America and was intrigued by his view of Europe. It's been a lot of fun to find this forum - which seems much friendlier than the equivalent on trip advisor and to chat with you all.

Best wishes
Jacqui (Skyegirl)

In Dublin, they forced a lot of short-term lets off the market at the end of 2019, with the result of far fewer non-hotel choices and the prices doubled. In Scotland, I'd expect similar results. I don't believe property taxes are as high in Scotland as US residents experience, so doubling them may not be a deal breaker. A lottery for licenses will be a much bigger impediment. It certainly puts the idea of buying a vacation home off the dreaming dinner table conversation, which is I guess, the goal.

what a crying shame.

Skyegirl it will be a sadder place without folk like you taking in a few..... sorry.

Jacqui, I agree with Nigel. I do hope that you will continue to be a member of the forum, though. Your posts have helped me so much with my upcoming trip.

Aw thank you! I'll still be around on here and we still have this season to get through. Our first guests of the season arrive in the first week of May. A slow start for us this year as hubby has his final exams for his German degree.

AMann, I agree. Some of my best memories of travelling are the people. When practicable we stay in B&Bs.

I guess I don't quite understand how running a B&B out of your house negatively impacts the housing situation. I'm also curious about the issue with home swapping. Say I want to swap houses for two weeks with an Irish couple. How does that in any way affect the housing situation in Ireland?

The few people I've known that run B&Bs are people persons, which is a big reason they got into the business in the first place. The only thing I'm certain of is hotel costs will skyrocket.

It’s because there is a lack of long term affordable housing. Many Air BnB’s are very short term rentals.

I guess I don't quite understand how running a B&B out of your house negatively impacts the housing situation.

You are not alone in this. My friends and I don't understand it either. They have a couple of spare bedrooms and hosted guests for quite a few years now, more for the social interaction than monetary gain. They weathered the Covid-19 pandemic without any financial problems, unlike a number of other businesses in their area and elsewhere who did not and ended up closing their doors for good. They are responsible hosts who have done everything they can to ensure a safe and comfortable place to stay for their guests.

The stress and uncertainty of the STR license requirement forced them to rethink what they were doing and they decided not to pursue the B&B side of life beyond September. Like Skyegirl they won't move house to free up stock and will stay where they are. Their B&B closure won't benefit anyone so far as we can tell.

sownack. That is exactly the same situation as us! Friends of ours who are not in such a secure financial position need to keep going with their B&B, but the stress and cost of the Short Term Let legislation is a massive problem for them.

Skyegirl it is such a mess. I really wish I had an answer but I don't :-(

I understand what the government are trying to do and agree there should be some legislation because we have all heard of rogue landlords and we all know there is a housing shortage in Scotland. As I said before it's the sledgehammer to crack a nut approach which is the problem.

If only Airbnb had stayed with its original business model which was to help people rent out spare rooms to those who wanted them on a short term basis. Unfortunately it became a bandwagon which too many people jumped on with inevitable results.

Apropos all of this, here's an article from today's P&J:

www.pressandjournal.co.uk/fp/news/highlands-islands/5621875/staffing-crisis-skye-government-may-need-to-step-in/

Jacqui, is this an accurate portrayal of the situation on Skye?

Mike (Auchterless)

yes, it is not just the Highlands and Islands, part of this is the AirBnBisation of places like Edinburgh where properties are being snapped up as soon as they come on the market. Edinburgh is not as bad as some cities but it is slowly emptying the Old Town of housing for local residence and making it less of somewhere tourists want to stay. This has been really, really bad in Prague for example. The Scottish Government is spending money on new houses for rent for locals, if you go on GSV to Jura you'll see a new development being built there.

Plus this had combined with remote working, and if you had the chance you'd rather work from home in somewhere attractive like the Highlands and Islands rather than a big city centre, plus we have the story of bad landlords both for tourists and locals alike renting out subpar accomodation. Where there is money, there are crooks. People remember the crooks, not necessarily the stars.

It is a sledge hammer approach, but sometimes laws are felt they need to be that broad to catch the ones they need to catch to prevent abuses, that said the licence scheme should be as simple as possible to apply and there is a tendency of some councils to add 'extras'. Ultimately though it is about the likes of people turning AirBnB listings from pocket money extras to a full time investment, seeing tenants being evicted to rent out for short term return and so on. However this is not new, problems of second homes in popular areas have been there for decades, the activities of Mebion Glyndwr in Wales spring to mind and there are villages across popular areas in England, Scotland, and Wales that out of season only half the homes are occupied.

Mike,
Yes that's a very accurate picture of the current situation here.

And MC-Glasgow, I also agree with what you say. In a former life I "looked after" the development of government tax policy for large corporate tax payers. While we usually had good intentions, there were sometimes unintended consequences, and I think that's what happening with the Short Term Let legislation. Designed to tackle the dire shortage of affordable housing it has ended up placing a massive burden on tiny little B&Bs like mine. We will likely stop doing B&B but won't sell our home, so no gain in terms of affordable housing stock, just fewer rooms to rent on Skye.

Jacqui (Skyegirl)

@skyegirl the website the Scottish Government has got up is also confusing, some combinations say a licence is needed, others do not.