Last month, Holyrood passed legislation requiring landlords to have a short-term rental license no later than July 2024.
Edinburgh City Council has also adopted a policy which means that landlords wishing to list properties that are not their usual home will need to apply for a “change of use” through their planning department, although this must be agreed with the government.
Malcolm Pickard, director of Tay Letting, which manages more than 1,800 properties in Glasgow, Edinburgh and Dundee, said regulation of the short-term rental sector is a “tipping point” for many landlords who are concerned costs could rise.
The policy is “likely to have a stabilizing effect” on rental prices, Picard said, as landlords shift from short-term to long-term leases.
Following the decision in Edinburgh, home to a third of all short-term rentals in Scotland, he said there has been an “exodus from the short-term rental market to the private sector” since the Covid-19 pandemic. started when the market was practically destroyed.
Mr Picard continued: “Those who survived this or returned to the short-term rental market were probably hoping for a recovery, but if the Scottish Government approves this move, this move by the city council will be a game-changer for most.
“Since the beginning of the year, dozens of landlords have contacted us to inquire about the transition from short-term rentals to private rentals.
“One property owner who lists two out of three of his downtown apartments on Airbnb plans to privately rent them all because it’s no longer worth it.
“Others have anticipated this move and have decided that short-term rentals are no longer for them.
“Gross short-term rental income is a big attraction for owners, but these new rules likely mean tighter controls on things like gas and electricity safety certificates; registration of short-term lease; water safety certificates; checking furniture and household appliances; and much more, all of which incur additional costs that many won’t be willing to swallow.”
He added: “The continued flow of traffic from short-term rentals to the private rental sector, which of course increases the supply of real estate, is likely to have a plateau effect on rents, which will be good for tenants in the near future.
“However, we have seen this during and after the pandemic, but rental prices have started to rise again as demand has inevitably increased and I expect the same thing to happen again.”
The Scottish government now has to agree with the city council, which has said the new rules will not prevent rooms or the entire house from being rented out while on holiday.
Mr Gardiner said: “If the government approves these new powers for Edinburgh they will bring the clarity we need when planning permission is required to change usage.
“Only now, if we are told that a property has changed its use without planning permission, our enforcement team must look at each case on a case-by-case basis.
“It’s a very long and laborious process.”