Highland bed and breakfasts feeling the squeeze with new licence fees

Hit by Brexit, the pandemic and the cost-of-living crisis, the start of the short-term lets licensing scheme is now the latest hurdle for bed and breakfasts to jump.

With housing supplies becoming increasingly strained by properties used permanently as short-term lets, especially in the Highlands, the Scottish Government introduced regulation to “balance economic and tourism benefits with the needs and concerns of local communities”.

Essentially, local authorities have been empowered to charge fees for a short-term lets licence (STLL) and to regulate health and safety standards in affected hospitality businesses.

While efforts to ease the strain on housing supplies have been broadly welcomed, concerns are being raised that bed and breakfast owners who live in their properties full time will be put under too much strain.

The owner of Treetops Bed & Breakfast in Fort William, John Jarvis-Jones, says the scheme is the last straw for many business owners in his area.

He said: “In Fort William alone, I know of several businesses that are closing or considering closing because of the short-term lets licences. It’s around 88-bed spaces that are disappearing and at a conservative estimate of around £100 a room - you’re looking at over £8000 a night not coming into Fort William.

“And because we’re bed and breakfasts, guests would go out for an evening meal and so there’s a lot of money that’s not being spent in the local area.”

Jarvis-Jones recognises the need for action on housing but says increasing regulation for bed and breakfasts is the wrong approach: “We live in our property - that is the major difference. If I was renting a separate house down the road and I was taking that opportunity away from someone to live long-term, someone potentially working in medical or local services, then absolutely - but in a bed and breakfast or guest house, that is not going to be the case.

“We know there needs to be places to live for doctors, nurses, waiters, police officers and social workers but this is not the way to crack this nut.”

While the Highlands is not the most expensive local authority for a short-term let licence, it is more expensive than many of its surrounding areas - costing £530 for a property that can host 11 or more people.

And as the energy crisis has disproportionately affected the area due to its high reliance on fossil fuels, bed and breakfasts are getting hit especially hard.

The view from one of the rooms in the Treetops Bed & Breakfast (Image: Treetops Bed & Breakfast)

Jarvis-Jones said: “We’ve already got extra costs up here with heating, electricity and distribution costs and now our own council are charging us more than other local authorities. If that gets passed on to the customer, you’ll end up having less business coming around.”

Since Treetops Bed & Breakfast had been trading before the October 1 start date for the scheme, Jarvis-Jones has until next April to apply for his licence and make his payment – which could mean it will coincide with another hike in energy bills.

For Jarvis-Jones, there is no good time for more costs to cover: “At the moment, I am protected on my energy bills until next year when I’ll be in the same boat as everybody else and it will become very, very expensive. If I was hitting STLL at the same time, it’s around £500 for the licence as well as the extra time and money making sure you reach the standards.”

Alongside the licence fee itself, Jarvis-Jones estimates that businesses having to get certificates for energy performance, fire safety and legionnaire’s disease could have to pay up-front costs of around £2000.

READ MORE: 'It's crippling us': Orkney crab factory shares its experience of the energy crisis

On top of the rising costs of food and energy, Jarvis-Jones warns that Scottish hospitality firms could be priced out of business: “We can't push the figures up too high for guests because people will jump on a plane and go to France or Spain.

“We’ve got to make sure we get people from abroad coming here. We’re very good at getting people here from abroad to the islands and to the north. But if it's too expensive, they're going to stay home.”

For Jarvis-Jones, the great shame is that the pressure on the sector could diminish the reputation of Scotland’s world-renowned hospitality: “I worry that STLLs will turn people away from Scottish hospitality. People know they can come to Scotland and people will look after them. This is what the world knows and loves about the Scottish people."

A Scottish Government spokesperson said: “Whilst short-term lets bring benefits to hosts, visitors and the Scottish economy they need to be balanced with the needs of residents and local communities. We are taking action to ensure all short-term lets are safe and local authorities have powers to tackle local issues. The principal component of our licensing scheme is a mandatory set of safety standards, which many hosts, including home sharers and BnBs, will already be following as a matter of compliance with existing law or best practice.

“Local authorities determine their own licence fees and fee structures to recover establishment and running costs specific to their area. In the Highland Council area fees range from £320–£610 for licences that can be granted for up to three years, with lower fees for home sharing and home letting. These fees are broadly in line with the indicative average licence fees set out in our Business and Regulatory Impact Assessment to cover a three year licence. Where they are outside this range it will generally be for larger properties.”

The Highland Council was contacted for comment.