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No, there will not be a cap. It will be down to the local authorities to decide that, as they know their areas better than we do. For example, the City of Edinburgh Council will know the requirements during the festival period, and it will be for it to decide the appropriate response, which I am sure that it will do in a sensible way. The council wants to ensure that there is enough accommodation for people coming to the festival and the fringe, so I am sure that it will operate the system in a way that enables demand to be met.

I am happy to engage with the committee on that. We could follow up nearer the time with some thoughts about how that might work. We want to be open and transparent about that process. We would welcome the committee’s involvement in that.

We considered registration as part of the 2019 consultation, and we have also considered the proposals that the Association of Scotland’s Self Caterers made earlier this year for registered accommodations to be exempt from the licensing scheme. We do not believe that registration offers the same protections as licensing does to guests, neighbours and local communities. To be robust and effective, a registration scheme would need to involve many of the same requirements as the licensing scheme. We understand that the policy intention of those proposals for registration would be to ensure compliance with broadly the same mandatory conditions as are set out in the licensing scheme. However, we did not see a draft registration scheme, and it is not clear how such a scheme would be enforced.

My main point is that I do not think that registration would include any provision for a fit and proper person test, or additional conditions to be attached to the registration. Those are important components of the licensing scheme, which a parallel registration scheme would potentially undermine. That fit and proper person test is important, not least from the point of view of safety. The committee heard concerns from Police Scotland about possible criminal activity.

The alternative was given full consideration, but we believe that the licensing scheme as proposed is proportionate—not onerous—and provides a level of protection for those who use short-term lets.

The licensing scheme seeks to ensure that every short-term let across Scotland meets basic safety standards. Those should be the same whether the let is in Edinburgh or the rural Highlands. That is important for urban and rural areas, and for businesses large and small. There needs to be a level playing field.

During the consultation and in on-going correspondence we have heard from residents in many places across Scotland including Glasgow, Ayr, Applecross in the Highlands, Loch Lomond and the Trossachs national park, the Isle of Harris, North Berwick, St Andrews and West Linton, among others. They have highlighted a range of concerns about short-term lets including the impact on local housing supply, noise and antisocial behaviours. Those are not just urban issues.

Delivering national consistency on safety standards is also important, and allowing and enabling local authorities to use additional powers beyond the core elements as they see fit to meet the needs of local communities. As I said earlier, we have committed to working with local authorities to review the levels of short-term let activity in the hotspot areas in the summer of 2023 to see whether any further measures are required.

Control areas came into place in April, and the City of Edinburgh Council has consulted widely on that. If it wants to move forward, it would need ministerial approval to make the whole of Edinburgh a control area. Highland Council has moved forward with just Badenoch and Strathspey, which it sees as an area of particular concern. Local authorities can use the powers if they want to and see that as a proportionate response to local issues, but they are not required to use them. I think that that is the right balance. It gives local authorities the ability to use the powers, if they so wish, and the control areas require ministerial approval.

Extensive consultation has taken place. Work has been done on the provisions and substantial changes have been made. It is right to go ahead with this across Scotland. We want everyone in Scotland who uses short-term lets to have the same basic protections and assurances and we want a level playing field for hosts, too. It is not fair that some hosts have put in place all the measures that they should have when others have not done so. That is not fair to hosts who have done the right thing. It is important to create a level playing field across Scotland.

The review is important. It will give us the opportunity to consider whether more needs to be done and examine the operation of the licensing system. As I said, I am happy to involve the committee in that.

I will respond to a couple of the points that members made.

As a Lothian member, Miles Briggs will be well aware of his constituents’ concerns about short-term lets. Through Andrew Mitchell’s evidence, the City of Edinburgh Council was supportive of the measures to help to deal with some of those concerns.

Elena Whitham talked about balancing the concerns of stakeholders and communities. That is absolutely right. We have tried to do that through the proposals. We have made a lot of changes to them in response to many of those concerns.

Mark Griffin talked about Police Scotland’s evidence. It was important. I also recognise his point about the review in 2023.

Paul McLennan mentioned cost recovery and the fact that responsible operators have nothing to fear from the licensing scheme. That is absolutely the case.

I will not respond to all the points that Fergus Ewing made because it would take too long but I will respond to a couple of them. I will not repeat all that I have said but, as he knows, when the Government introduces legislation, it has gone through a series of legal tests.

Some of the points that Fergus Ewing made do not recognise the fact that much of the scheme is based on the 1982 act, under which applications are approved unless there are good reasons for refusal. Some of those reasons are set out in paragraph 5 of schedule 1 of the act. The legal position is that the scheme is compliant with the ECHR provisions on the right to possessions.

It is important to introduce regulation in a proportionate way that has been the subject of careful scrutiny. The scheme is being introduced by way of an existing well-used statutory framework that is well understood by local authorities.

Local authorities will not set out to try to close local businesses down. What possible motivation would they have to do so? They will use the legislation proportionately to deal with the real issues that local communities are raising, support the good providers, who abide by the rules and the law, and create a level playing field to ensure that the behaviour of providers who do not abide by the law and the rules can be addressed through the licensing scheme.

I think that this is the right balance. The response from local authorities is, in the main, supportive. Also, beyond the core measures in the licensing scheme, it is about devolving power to local authorities to decide whether to take forward those additional powers on antisocial behaviour, littering or noise to meet concerns in their local area. They should obviously do that in a proportionate way.

There is no requirement for local authorities to use the powers to create short-term letting control areas, but authorities that want to do so and that see those as a way of addressing issues in their areas will do so. As I said, two local authorities have proposed control areas. I think that we have struck the right balance. We want basic safety standards to apply everywhere, as they should. Beyond that, local authorities have a lot of discretion about whether to use the additional powers.

First, the evidence that is set out in our business and regulatory impact assessment suggests that the market appears to be recovering towards pre-Covid-19 levels of activity, although we will have to keep an eye on that.

We used the 2019 data, which was established in the Scottish Government’s 2019 research, as a baseline for our BRIA. The BRIA also sets out trends in existing data sources, which include the non-domestic rates roll and data provided from Airbnb. Both those sources show a period of rapid growth in the short-term lets sector over the past decade.

Baseline activity, however, is challenging, not least because properties can appear multiple times on the same platform or on different platforms. The licensing scheme will help to clarify the levels of activity locally and nationally, thereby allowing us to map a more comprehensive picture of short-term let activity across Scotland for the first time, which will be helpful.

Clearly, the number of short-term lets varies from area to area. There is quite a concentration in some areas—particularly in Edinburgh and some rural parts of Scotland, such as the Highlands, where rates can be well above 10 per cent. As I have said, more comprehensive data will be gathered through the licensing scheme.

I recognise what Fergus Ewing has said. However, in looking at the issues in detail earlier, I spoke about local authorities’ ability proactively to put in place requirements for preventing antisocial behaviour. The proposal is about bringing all that together so that, in looking at short-term lets, local authorities can look at issues through the lens of the licensing scheme as well as using existing powers, if they so wish. I gave the example of people drinking for hours. If a holiday let becomes a place where that causes significant concern to neighbours, local authorities could proactively put in place requirements and conditions.

Fergus Ewing spoke about the concern that is felt. I absolutely recognise that the pandemic has had an impact on the tourism sector, but there have certainly been signals over the past few months that the self-catering and short-term let sector in Scotland has been recovering pretty well, with burgeoning numbers of staycations. We will, obviously, have to keep an eye on that.

The Government has recognised the impact of the pandemic on the tourism sector, not least through the 100 per cent non-domestic rates relief for hospitality premises. That relief will continue at 50 per cent next year, as was announced in the budget. There are also all the supports that are given to businesses to consider, including the small business bonus, so it is not a fair accusation to say that the Government has not supported businesses, including in the hospitality sector.

The proposed set of requirements is not onerous. I think that the sector will see that, once the scheme is up and running. A lot has been said that might cause concern: people might think that they will have to pay thousands of pounds for a licence, but they will not. The scheme will be proportionate. Small operators will pay less than big operators and local authorities will be given strong guidance to make sure that the scheme is based on a risk-based inspection regime that is not onerous and should not drive up costs. I reassure the sector of those things and will continue to try to reassure the sector over the next few months, as we introduce the measures.

First, we expect all relevant authorities to use all the powers that are available to them to deal with antisocial behaviour. Existing antisocial behaviour legislation is, however, better suited to handling issues with longer-term residents when follow up and enforcement is more straightforward. I am sure that Willie Coffey has had to deal with cases along those lines, as I have, and he will know that it takes some time to work through the legislative process and to support people in doing that.

The licensing scheme will give local authorities and Police Scotland transparency by letting them know who the owners of short-term lets are and ensuring that they are fit and proper people to hold a licence, including whether they have had issues with antisocial behaviour. Local authorities will have the power to use the scheme appropriately to meet the needs of their area.

Local authorities could also include proactive conditions so that, for example, if people in a big holiday house have been annoying the neighbours by drinking all day and all night, they could include a condition that alcohol cannot be consumed on the property after a certain time. They could do that proactively rather than having to deal with the consequences of antisocial behaviour. It is about giving local authorities the appropriate powers.

Licensing authorities might also wish to include a condition requiring the licence holder to manage their premises in a reasonably practicable way to prevent antisocial behaviour; I have just given an example of how. The draft guidance that was published in June includes a template for additional conditions relating to antisocial behaviour. We expect local authorities to impose proportionate additional conditions only when they are necessary, but if a property has been causing concern, the local authority might want to consider that.