More properties could come to market in wake of new short-term let regulations

After the results of a consultation last year revealed wide support for regulation of short-term lets, the Scottish government announced increased powers for local authorities to regulate properties that are let out for short periods of time.

The licensing scheme will include a new mandatory safety requirement that will cover every type of short-term let to ensure a safe, quality experience for visitors. It will also give councils the discretion to apply further conditions to address the concerns of local residents. Councils will be able to plan control areas to ensure that planning permission will be required for the change of use of an entire property to a short-term let.

The local authorities are set to have the ability to implement these changes from spring 2021.

It is possible that this change in regulation will have an impact on the property market in Scotland. Owners of short-term let properties in Scotland may choose to sell in the run up to local authorities gaining these increased powers.

This may increase the supply of homes coming to market, helping to alleviate some of the strong demand for property seen in areas such as Edinburgh in recent years.

Alternatively, the owners of these properties may choose to switch to long term rentals. This will provide a greater supply of homes for tenants. However, in areas with strong demand for rental properties such as Edinburgh, this is unlikely to have a significant impact on rent levels and time to let.

Nicky Lloyd, head of ESPC lettings, said: “The long-anticipated recent announcements about restrictions on short-term lets has come as no surprise, and whilst people are voicing concern on how this might affect the tourist industry, it’s worthwhile considering how it might affect the long term private rental sector.

“It’s likely that a number of landlords currently operating short-term lets will step away from this market over the next 12 months, with properties either being sold or converted to long term rentals. This may result in an influx of properties coming to the rental market and diluting the supply of properties which has been heavily led with demand over supply.

“However, given the number of people moving in and around the city, it is unlikely that numbers of potential properties coming to the long term rental market will have much of an adverse effect.

“It does mean that referencing and understanding potential tenants’ requirements will become more important than ever, in order to avoid people who were only looking for a short let signing a Private Residential Tenancy and serving their 28 day notice immediately.”