Impact of Short-Term Let Licensing on Scottish Landlords

11th August 2025

Scotland's mandatory short-term let (STL) licensing regime came into force on 1 October 2023. It requires anyone offering accommodation for non-residential short stays—whether a room, whole home or unconventional unit—to hold a licence from their local authority before accepting bookings or guests.

Existing hosts who traded before October 2022 could continue operating during the transitional period, but councils have up to 12 months to process these applications. New applicants faced up to nine months of processing time, creating uncertainty over their ability to trade during that window.

Compliance and Administrative Burdens
Landlords must meet safety, hygiene and management standards and pay licence fees set by each council.

In designated control areas (Edinburgh since September 2022; Badenoch and Strathspey since March 2024), planning permission may be required before a licence is granted.

The combined cost of application fees, inspections and potential planning consents has deterred some operators, especially smaller hosts or those part-time letting.

Evidence of Market Contraction
A survey by the Association of Scotland's Self-Caterers gathered 1,367 responses just weeks before the October 2023 licensing deadline. It found that one in three operators had not applied for a licence, suggesting a significant portion risked being forced out of the market.

Industry groups warned that the interplay of the new STL levy and licensing could slash Airbnb-style listings in Edinburgh by up to 80%. Early analysis comparing council licensing data with Airbnb activity for Edinburgh and Glasgow shows a marked drop in available listings and occupancy rates through 2023—most pronounced in Edinburgh, with a smaller but noticeable decline in Glasgow.

Landlord Responses and Market Shifts
A number of hosts have withdrawn properties from the STL market or paused bookings until licences are granted.

Some landlords are reverting to long-term residential lets to avoid regulatory complexity and secure stable income streams.

In control areas, tighter planning conditions have further discouraged new entrants, concentrating STL activity in less regulated regions.

Overall, the licensing scheme has driven a meaningful reduction in STL supply and prompted many landlords to reassess or exit the short-stay market.