22nd September 2026
For anyone in Scotland considering buying a house as an investment and letting it to holidaymakers, there is a question that deserves to be asked before the purchase rather than afterwards.
Will the business model still work if the rules change? That question has become more important as Scotland tightens the regulation of short-term lets.
The latest example comes from Argyll and Bute Council, which has launched a consultation on creating a Short-Term Let Control Area covering Mull and Iona, Coll and Tiree, Islay, Jura and Colonsay, and Lorn and the Inner Isles.
The consultation opened on 21 September and runs until 1 November 2026. If the council eventually decides to proceed, the proposal would also have to be submitted to the Scottish Government for agreement.
The significance for property investors goes beyond those particular islands and coastal communities.
Scotland already has a national licensing system for short-term lets. Since October 2022, new hosts have needed a licence before accepting bookings or receiving guests. Planning permission can also be required where operating a property as a short-term let amounts to a material change of use.
A control area adds another layer.
Within a designated Short-Term Let Control Area, planning permission is required for a new change of use of a dwellinghouse to a short-term let. The purpose is to give planning authorities greater control over concentrations of holiday accommodation where they believe these are affecting the availability of homes and the character of communities.
Scotland already has two such areas, covering Edinburgh and the Badenoch and Strathspey ward of Highland Council.
The proposed Argyll and Bute area shows why councils are looking at the issue.
The council says that up to 42% of housing in the proposed control area is unavailable for permanent occupation. It argues that the concentration of short-term lets is contributing to housing pressures, including affordability, reduced housing choice and difficulties recruiting and retaining workers.
But the council also acknowledges the other side of the equation. Tourism is an important part of the local economy and short-term lets provide accommodation for visitors. The issue is therefore one of trying to balance tourism with the need for homes for people who live and work locally.
For somebody considering buying a property as a holiday let, however, the wider lesson is about risk.
Property investment is often calculated from today's numbers. Purchase price, mortgage costs, expected occupancy, average nightly rate, cleaning costs, insurance, repairs and expected annual income can all be put into a spreadsheet.
But regulations are harder to put into the spreadsheet.
A property that looks attractive because it can generate a good holiday-let income may look rather different if its use becomes subject to planning permission or additional restrictions.
That does not mean that buying a holiday property is necessarily a bad investment. It means that the buyer needs to consider what happens if the original business plan changes.
Could it be let to a long-term tenant?
Would the rent cover the mortgage and other costs?
Would the property still be attractive if it had to operate under tighter licensing conditions?
Could it be sold without a significant loss if the holiday-let market weakened?
And perhaps most importantly, is the property's value based partly on an assumption about how it can be used that may not always remain valid?
This is particularly relevant in rural and island communities, where a relatively small number of properties can represent a significant proportion of the available housing stock.
It is also why investors should not assume that because a property is being successfully operated as a holiday let today, the same arrangement will automatically be available to the next owner.
The Scottish Government says that a new short-term let licence is required for new hosts, while councils can impose additional conditions on licences. Planning requirements are a separate issue from licensing.
For anyone looking at a property purchase, that distinction matters.
A licence is not the same thing as planning permission.
And neither is a guarantee that the regulatory environment will remain unchanged for the lifetime of a mortgage.
It is not just a holiday-let issue
There is a broader lesson here for property investors. Government policy towards second homes, short-term lets, housing supply, council tax and local planning is changing in response to housing pressures in different parts of Scotland.
The changes will not necessarily apply everywhere in the same way. Indeed, the whole point of a control area is that it can be targeted at places where local circumstances justify additional controls.
But that makes local research more important, not less.
Someone buying in a rural or tourist area needs to look beyond the estate agent's description and the property's previous rental income.
What does the local council's planning policy say?
Is the property already properly licensed?
Does its current use have the necessary planning position?
Are there proposals for additional controls?
What would happen to the investment if it had to become a normal residential rental?
These questions may not have mattered as much when Scotland's holiday-let market was largely unregulated.
They matter considerably more now.
For a person buying a home to live in, the calculation is relatively straightforward: do I want to live here and can I afford it?
For someone buying a property primarily to generate rental income, there is another question:
What if the rules change?
That may be one of the most important questions to put into the investment calculation before signing the purchase contract.