As of the 23rd February 2022, Edinburgh City Council voted to bring in new regulations, designating the entire city a ‘Short Term Let (STL) control zone’. This is one of the biggest shake-ups in Scotland’s rental property markets in years.



What does the Short Term Let (STL) Control Zone do?



The proposals, which are still to be approved by the Scottish Government, mean landlords wishing to list properties that are not their usual home will need to apply for a ‘change of use’ through the city council’s planning department.


These new regulations are also likely to mean tighter control around things such as gas and electrical safety certificates; short-term rental registration; water safety certificates; furniture and appliance checks; and more, and that all brings with it additional costs.


Although it is yet to be confirmed how this will be implemented, it is likely to mean property owners will have to adhere to much tighter rules in order for properties to be let out legally.



Which cities have Short Term Let Control Zones?


Currently, Edinburgh is the only city in Scotland implementing a change in policy. Scotland’s Capital will be joining the likes of Barcelona, Paris, and Santa Monica, which have all introduced restrictions to govern short term let properties.


However, with a shortage of property for rent, other council authorities will be watching the progress of the STL Control Zone closely to evaluate the impact of the policy.



Private Rental Sector vs Short Term Lets



Short term lets were once something that could be run personally, but in recent years we’ve seen more people using agencies to manage properties.


With added regulation, those fees plus the cost of compliance with what could be very tight regulation will likely prove too costly.


Landlords can already get this in the Private Rental Sector (PRS) with far less risk, hassle and time commitment, not to mention the added wear and tear to property associated with short term lets.


Short term lets have proven to be notoriously vulnerable to fluctuations in the market, from seasonal changes to the Covid-19 pandemic which effectively shut down global tourism for over a year.


Long-term dependable tenants are more likely to take care of your property; cover their own council tax and utilities; maintain communication with their landlord or letting agent, and provide a regular income.


However, landlords with front-door properties that meet the likely requirements for short-term let licences could end up being the biggest winners from the change.


Some such properties will require very few changes to their existing setup and a restricted supply of properties to meet burgeoning demand set by tourists will likely drive prices up.



Are there any benefits of Short Term Let controls?



The supply of rental property has not been able to keep up with demand, so it’s no doubt that something was needed to support tenants looking for a long-term residence


There are also plenty of horror stories out there, with buildings containing up to seven short term lets at once, which can cause significant disruption for longer-term residents.


There is often an additional heightened concern around vulnerable residents when there is a high level of transient footfall which may be reduced by the policy.




Will Short Term Let controls impact rent prices?



If we continue to see a transition from short term lets to the private rental sector – which of course increases the supply of properties – is likely to have a plateauing effect on rents, which will be good for renters in the short term.


However, this has happened before, during and after the pandemic, where rental prices began to rise again as demand increased and this is likely to happen again.



What can Short Term Let landlords do if they are worried about STL control zones?



Letting agencies have seen a sharp rise in enquiries from STL landlords since the start of the year, with many concerned about the impact of the regulations voted through today.


Since the start of the year, dozens of landlords have come to us to inquire about switching from short term lets to private rentals. Many have said that STL just isn’t worth it anymore and have decided to move into the Private Rental Sector instead.


Our advice is to get in touch with a reputable letting agent to discuss the rental potential and stability you could achieve by moving into private rentals looking for long-term tenants.