Appendix 1 - Short-Term Let Evidence Paper Aug 2024
Perth and Kinross Council · 28 August 2024
Back to Economy and Infrastructure Committee — 28 August 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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1 Appendix 1 Table of Contents 1.Introduction ..................................................................................................................................................................................................2 2.Evidence ......................................................................................................................................................................................................6 Tourism ........................................................................................................................................................................................................6 Short-term Let (STL) Licence Data ..............................................................................................................................................................8 Business Concerns .................................................................................................................................................................................... 10 Essential Services ...................................................................................................................................................................................... 11 Unmet Housing demand ............................................................................................................................................................................ 11 Housing Affordability and Pressure study .................................................................................................................................................. 14 Consultation Results .................................................................................................................................................................................. 17 Planning Applications ................................................................................................................................................................................. 20 Evaluation of all Evidence .......................................................................................................................................................................... 21 3. Proposals .................................................................................................................................................................................................. 23 4. Conclusion ................................................................................................................................................................................................ 25 Appendix 1b Arneil Johnson AJ STL Research Report - appended
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2 1. Introduction Through several strategies and plans, and direct engagement, communities have expressed concern that housing is becoming more unaffordable and difficult to find in some parts of Perth and Kinross: the Local Housing Strategy (2022-2027) - 5._LHS_Consultation_Report.pdf (pkc.gov.uk) - the emerging Local Development Plan 3 - The Big Place Conversation - Perth & Kinross Council (pkc.gov.uk) the national park proposal Tay_Forest_National_Park_-_Consultation_Analysis_Report_Final_for_website.pdf (pkc.gov.uk) Community Action Plans: o PH8_Community_Action_PLan_2022-2027_FULL_DIGITAL.pdf (dunkeldandbirnamnews.co.uk) o PitlochryCAP-fin_al-document-with-printer-1.pdf (pitlochryaction.org.uk), PitlochryCAP-fin_al-document-with-printer-1.pdf (pitlochryaction.org.uk) o Highland___Strathtay_Local_Action_Plan.pdf (pkc.gov.uk). Concern has also been expressed that lack of access to affordable housing is impacting upon the viability of local service provision and the current and future growth potential of some businesses. This includes the visitor economy, the positive benefits of which cannot be fully realised due to staff accommodation shortages. The Council currently commits investment Short-term Lets Evidence Paper 15th August 2024
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3 and resources, including direct provision of social housing, to support the vitality of communities, however no single intervention alone will address the issue, and a range of policy responses are required, including the management of the supply of short-term lets. In evidencing the need for change, the following Perth and Kinross Council corporate priorities are of relevance: 1) Tackling poverty - the most direct intervention to reduce poverty is to enable access to jobs and there is a clear link between affordable housing availability and ability to work, particularly in rural areas. 2) Supporting a stronger and greener economy – supporting sustainable growth by creating the right environment to harness the potential of businesses and communities, and again balancing the needs of residents and visitors is important in this regard. 3) Working in partnership with communities – listening to communities’ needs and supporting sustainable communities is central to the Council’s mission and communities have offered a clear view on the imbalance between housing to meet local need and that needed to support the visitor economy. Figure 1: PKC Corporate priorities. Source: Corporate Plan Introduction - Perth & Kinross Council (pkc.gov.uk) It is recognised that tourism is an essential part of the economy across large parts of Perth and Kinross, contributing over £700m last year, and directly and indirectly supporting over 8,000 jobs (STEAM, 2022). As such a priority of the Council is to
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4 support economically, environmentally and socially sustainable tourism development. Emerging economic policies and reviews at regional and local level are therefore supportive of a sustainable tourism economy. The Perthshire Tourism Action Plan 2021-2025 includes four agreed strategic objectives towards the ambition to become a leading sustainable destination in Scotland. To restore the value of tourism to pre-COVID-19 levels, with a particular focus on extending the season for year-round visits. To establish Perthshire as a leading responsible tourism destination in Scotland To increase the impact and benefit of tourism across Perthshire’s communities To make Perthshire a digitally discoverable and enabled destination. But this cannot be at any cost and while National Planning Framework 4 (NPF4) states that it wishes to encourage, promote and facilitate sustainable tourism through Policy 30 Tourism it also references the need for balance: NPF4 Policy 30 e): “Development proposals for the reuse of existing buildings for short term holiday letting will not be supported where the proposal will result in: i) An unacceptable impact on local amenity or the character of a neighbourhood or area; or ii) The loss of residential accommodation where such loss is not outweighed by demonstrable local economic benefits”. The proposal to introduce a short-term let (STL) Control Area for planning purposes is one means by which the Council could support a better balance of tourism accommodation provision and the housing needs of the local community in locations where the current balance is not working to best effect for residents, businesses and services. An STL Control Area would require planning permission to be sought for changes of use of all residential properties to secondary (standalone) short-term lets. In those areas where there is clear evidence of both housing need and density of short-term lets, it would give the council the opportunity to consider residential need along with other planning matters on future applications, supported by the current non-statutory planning guidance and in line with NPF4.
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5 It would therefore not be a blanket ban on short-term lets and would not be applied retrospectively to existing properties operating lawfully (in planning terms) as short-term lets. It would allow the planning service to consider the balance of benefits to support sustainable tourism development within vibrant communities, by potentially protecting future new build housing from being used for short-term letting. As mentioned above, the proposal is only one of several tools supporting sustainable communities. Other initiatives include: Council Tax second homes supplement Legislation was introduced in April 2024 was introduced to allow Councils to increase the second homes supplement to 100% to address second home ownership. Perth & Kinross Council has exercised this option. Rural Homes Working with Scottish Government to release funding for homes for rural key workers Working to identify land suitable for affordable housing for short-term and longer-term land supply. This land supply will support Council and community led housing development opportunities. Empty Homes Working with Empty Homes team and Housing Enablers to channel funding and efforts to bring suitable empty properties into use.
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6 2. Evidence Tourism The visitor economy has been impacted by recent economic challenges and although has not quite returned to the peak of 2019, recovery appears to be relatively strong in the face of current economic circumstances. Despite lower levels of visitor numbers (2.32 million) and stays (397,000 non-serviced accommodation) than 2019, the economic value of the sector as a whole and the value of the non-serviced tourism accommodation* in 2023, at £307million, was higher than 2019 (Figure.2). Employment in the non-serviced accommodation sector has not returned to the 2019 peak with 2260 full time equivalent jobs in 2023, 21% down on the 2019 peak. Tourism growth strategies are focussing on actions to extend stays and out-of-season visits as well as higher per visit spend. *Non serviced accommodation - Self-catering, lodges, glamping pods, camping (tent pitches), caravanning (static pitches)
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7 Figure 2: Source: PKC STEAM REPORT FOR 2012-2023
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8 Short-term Let (STL) Licence Data Analysis presented to Committee in May 2023 was reliant on proxy data from booking platforms and second home Council Tax registrations. A commitment was made to update this using the short-term let Licence Register data. Applications for properties already operating (existing) STLs were required to be submitted by 1st October 2023, although applications continued to be submitted after this deadline. From this data the distribution of STLs is mapped in figure 4 below. The larger tourism “resorts” are clearly defined and bigger clusters of individual STLs can be seen in locations such as Pitlochry and Perth city centre, with low numbers in Kinross-shire. Across the Housing Market Areas, Highland has the largest proportion of STLs at 53% of all short-term lets in Perth and Kinross and represents the importance of tourism in this area. 17% of all currently operating STLs are in Greater Perth HMA, 14% in Eastern, 13% in Strathearn, and 2% in Kinross (HMA). Figure 3: Indicating the count of existing STLs in each Housing Market Area. This data formed the basis of research conducted in by consultants in late spring 2024 into affordability and housing pressure and the role of concentrations of short-term lets across Perth and Kinross and is discussed later in this paper. According to licence registrations data there has been continued growth of new, secondary STLs, at a rate of 8% per annum since the STL licence legislation was introduced in October 2022. This indicates that the introduction of the STL licensing scheme has not had a downward impact on the number of STLs accepting its principal purpose is to manage amenity.
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9 Figure 4: Map of Short-term let applications on 1st Nov 2023 showing the distribution of existing secondary, STLs including purpose-built premises but excluding unconventional dwellings i.e. chalets, yurts etc. Legend STLs by Postcode Housing Market Areas
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10 Business Concerns Local Housing Needs Assessments conducted in 2021 and 2022 highlighted business challenges resulting from staff recruitment and retention due to housing availability (figure 5 below). Business responses indicated concerns on current and future business in locations where tourism a key part of the economy. Figure 5: Business survey collated from HNAs 2021-2022
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11 Essential Services Since 2021, there has been several reports to various departments in the Council of essential services being temporarily impacted by staffing issues linked to accommodation shortages, in these instances across Highland Perthshire, affecting: o NHS - temporary closure of Pitlochry Community Hospital Inpatient services o Reserve fire services in Dunkeld – issue reported to Community Planning Committee o Education service in Kinloch Rannoch – reported to Housing Services Although the impacts were not permanent, these could be early warning signs of future longer-term difficulties. Unmet Housing demand Public and stakeholder engagement for the Local Housing Strategy showed that 71% of respondents in Highland Housing Market Area (HMA) have concern over sufficiency and affordability of housing and 48% in Eastern (Strathmore & the Glens) HMA, as outlined in figure 6 below.
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12 Figure 6 LHS Engagement concerns regarding housing 2022-02-15 PKC LHS Early Engagement Results.pdf
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13 These concerns were evidenced directly in a Local Housing Need Assessments that were conducted by the Community Housing Trust between 2021-2022 as part of feasibility work for rural affordable housing (figure 7 below). The surveys were completed in locations of concern over housing supply and affordability. The surveys have quantified significant housing need, in market and affordable housing tenures. Figure 7: Collated surveys of Housing Need surveys 2020-2022 Settlements Low Cost Rent LCHO Market Rent /Purchase options Total Affordable New Build Aberfeldy and surrounds 55 71 71 197 Pitlochry 34 18 35 87 Blairgowrie & Rattray 34 17 not surveyed 51 Dunkeld & Birnam 22 19 40 81 Mount Blair/ Strathardle 19 12 14 45 Comrie 15 45 42 102 TOTAL 563 Affordable Housing Demand
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14 Housing Affordability and Pressure study A Perth and Kinross wide study of affordability and housing pressure was conducted in spring 2024 as part of this STL Evidence Research Report by housing research consultants Arneil Johnston (attached as Appendix 1a). The study assessed the role of various indicators including short-term lets and compared various factors of housing pressure across Housing Market Areas and in targeted locations (hotspots) where concentrations of STLs suggested a targeted analysis would be of value. Analysis of affordability (graph 2.6,p.23) indicates that the lowest levels of affordability are Comrie, with 89% of resident households unable to afford the average market house price, 88% in north Eastern HMA and 85% in Highland HMA. A summarised analysis across all the Housing Market Areas is outlined on page 70 (slide 20) of the appended report. The table demonstrates in both weighted or unweighted scores that the highest pressure of all areas and on all indicators is in Highland Market Area with STLs having the greatest impact in this market. Housing pressure is twice as great in Eastern as in Greater Perth HMA but more moderate, whilst the moderate pressure in Kinross-shire is not due to STLs. Pressure in Strathearn is more significant but due mainly to affordability reasons with a more moderate impact from STLs. Housing pressure analysis on more targeted areas ‘hotspots’ also outlined on Page 70 (slide 20) indicates higher pressure in the northern part of Eastern in both weighted and unweighted scores, scoring high in all indicators of pressure, including Short-term Lets. This analysis in targeted locations explained that the unweighted score of 16 for the whole of Eastern HMA, indicating lower pressure, is a result of the southern part of the housing market area, tempering the overall score for the HMA. Scores on all indicators are low for Perth City hotspot including STLs, indicating that concentrations of STLs are too low to contribute to housing pressure in Perth City. In relative terms, it is noted that the housing pressure in Comrie and Crieff is greater than the Perth city hotspot, and while this is not insignificant, these areas currently have relatively few STLs which will have a lesser impact on housing pressure.
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15 Having identified levels of housing pressure, the study also assessed the potential for future housing provision as a mitigator of housing pressure in terms of unconstrained land available for housing. Figure 8 below, maps the distribution of unconstrained land suitable for housing and Graph 3.3 on page 29 of the appended report, demonstrates the proportion in each housing market area (mis-labelled Effective Land Supply). Greater Perth has 55% of suitable land whereas the potential for areas outside Greater Perth to mitigate housing pressure through new build housing is clearly constrained where Strathearn has 16%, the majority in Crieff at 10%, Comrie with 1%. Eastern has 13% of suitable land but none within the north Eastern hotspot area. Kinross has 9% of land and Highland has just 3% of unconstrained housing land.
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16 Figure 8: Distribution of unconstrained housing land per Housing Market Area Legend HLA– unconstrained land Housing Market Areas
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17 The consultant’s STL Evidence Research report considered the contribution to housing market pressure of STLs and where the intervention of a STL Control Area could protect future housing supply, reduce demand in the housing market from commercial accommodation uses, and positively impact housing affordability. The consultants’ recommendations were to include Highland, the northern part of Eastern, as well as Crieff and Comrie postcodes in a STL Control Area with their justification being that all those areas have housing pressure and STLs are a contributor to even lower levels of pressure. However, these recommendations have not been accepted in their entirety and the reasons are set out in the ‘Evaluation of Evidence’ section below. Consultation Results The aggregate consultation results in figure 10 below illustrates that most responses were in favour of the principle of an STL Control Area at 53% for, and 41% against not in favour. When views were broken down by respondent type, there was an almost equal split with 70% of residents agreeing and 73% of business owners disagreeing. Responses on behalf of organisations were split equally between agree and disagree. The same pattern of responses was expressed for the proposed location of the STL control area (Highland HMA and the northern half of Eastern HMA) with 46% supportive and 43% not in favour. 11% were uncommitted either way. The consultation asked for an indicator of location of the respondent with a postcode area. Over 200 (67%) responses came from postcode areas within the proposed control area location. Of these, most responses were in favour of the principle at 76% of residents and 57% of organisations in support. 75% of residents and 80% of the 7 organisations representing the control area were in favour of the location and are illustrated in the consultation report in appendix 2 of the 28th August Economy and Infrastructure Committee Report, page 14. Again, business responses from postcode areas within the proposed control area were not in support, with 69% not in favour of the principle.
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18 Figure 10: Consultation responses to principle and location of the proposed STL Control Area
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19 Figure 11: Consultation responses to principle of the proposed STL Control Area by respondent categories Organisations included Community Councils (3) Community Development Trusts (2) Trade orgs (5) Groups of residents (2) Political Groups (2) Q. To what extent do you agree with the principle of a short-term let planning control area?
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20 Planning Applications Figure 12: Number of Short-term let planning applications 2021 - June 2024 Figure 12 relates to the planning applications for short-term lets since September 2021, when the STL licence scheme was introduced. 15% were for Certificates of Lawful Use of existing lets for previous development with permission or continued use over 10 years. 13% represented commercial or agricultural diversification, 9% for conversions and Change of Use for primary residential properties and 73% for change of secondary residential properties. The evidence suggests there is a significant number of STL owners who believe what they are using their property for is not a material Change of Use and therefore they do not believe they require planning consent, have been operating as an STL for more than 10 years, or are unaware of the need to consider Change of Use permission. Wards with Approved Refused Certificate of Awaiting applications Applications Applications Lawfulness Decision Ward 1 Carse of Gowrie 1 1 1 2 Ward 2 Strathmore 1 1 0 2 Ward 3 Blairgowrie 15 1 4 0 Ward 4 Highland 23 14 18 4 Ward 5 Strathtay 10 5 4 1 Ward 6 Strathearn 14 0 4 2 Ward 7 Strathallan 17 1 2 0 Ward 8 Kinross-shire 11 1 2 1 Ward 9 Almond & Earn 2 1 0 4 Ward 10 Perth City South 1 3 0 0 Ward 11 Perth City North 3 0 0 0 Ward 12 Perth City Centre 33 8 3 0 TOTALS 131 36 38 16
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21 Evaluation of all Evidence The evidence of the growth of STLs, locally evidenced housing demand, and business challenges suggests that the balance of economic benefit of the visitor accommodation sector and housing need is not working without further intervention. The consultation responses also demonstrate the extent to which tourism is a vital part of the economy in some parts of Perth and Kinross and that a balanced approach is needed to manage the available housing stock more effectively. Although the housing pressure study in the appended consultant's report recommends a comprehensive approach, suggesting an STL Control Area in locations of both relatively high pressure (Highland HMA and the north Eastern ‘hotspot’) and more moderate pressure (Crieff and Comrie) where the number of STLs play a part, the recommendations set out in the research report are not fully supported. Closer examination of the concentrations of STLs (outlined in figure 12 below) in the Comrie postcode area show a lower percentage of STLs at 2%. Second homes are a greater contributor to housing pressure in this area at 3%. As such, other controls such as the Council Tax supplement may be more effective. In the Crieff area STLs are also not a significant contributor to housing pressure being approximately the same as the Perth and Kinross average. In contrast this is not the case with Highland and north Eastern HMAs, with STLs well above average concentrations at 9% and 13% respectively. This is distinctly higher than in other parts of Perth and Kinross, as illustrated in figure 13 below. The consultation on the principle and boundary of a control area found that most respondents from the Crieff and Comrie postcodes areas were not supportive of a control area whether resident or business, with 40% in favour and 60% against overall. More detailed analysis did not contradict the overall distribution of responses. The Council’s strategic approach is for sustainable tourism development using a balanced approach, acknowledging the benefits visitor accommodation can bring to local economies. It is therefore recommended that an STL Control Area would be appropriate in the more limited geographic area of the Highland HMA and the northern part of the Eastern HMA to help manage the future balance of availability of residential homes and short-term lets.
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22 Figure 13: Concentrations of STLs as % housing stock by study areas
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23 3. Proposals Following further analysis on housing affordability and market pressure and distribution of registered STLs it is proposed that the introduction of a short-term let Control Area would help to achieve a balance between supporting the visitor economy and housing supply within defined geographies. It is considered that the introduction of a STL planning Control Area for the housing market areas of Highland Perthshire and the northern half of the Eastern housing market area, as illustrated in appendix 4. Short-term let levels have been evidenced as a contributor to housing pressure within this area. This area also coincides with the area consulted on in 2023. Effects of a control area A Control Area would not be a ban on short-term lets, rather it would enable full consideration of every instance of a residential change of use to an STL, allowing the planning authority to consider the best use of residential properties in areas of housing pressure alongside other relevant planning matters such as character, amenity and parking. It would provide clarity that planning permission is always required for a Change of Use from residential to STL and would create parity across all forms of secondary STLs. Currently, only smaller operations in flatted dwellings are explicitly required to apply for planning permission. Further, it would align the planning requirements for STLs with other forms of visitor accommodation. The introduction of a Control Area would clarify to those who are considering entering the market in the future that proposals for new changes of use to STL would be subject to planning permission and may not be considered the most appropriate use of residential dwellings within that area, potentially impacting demand. Lastly, a Control Area within these parts of Perth and Kinross would have the potential to help reduce any displacement impact from the adjacent Badenoch and Strathspey STL Control Area.
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24 Features of a control area The requirement for planning permission within a control area is not retrospective. It would not therefore apply where the change of use occurs before the control area comes into effect. Nor would it automatically apply to changes of use of residential dwellings to STL which are outwith the designated area. In such cases it would still be necessary to determine whether the change of use was material. Any subsequent change to the boundary of an existing control area, or the introduction of a new control area, would require the same justification and statutory designation process. The requirement for planning permission within a control area would be limited to secondary dwellings and therefore would not apply to primary (main) residences. The legislation does not impact dwellings being used solely or primarily as second homes. The planning permission is usually granted on a permanent basis, whereas an STL Licence requires renewal every three years. Potential longer term unintended consequences It maybe that some short-term lets are reverted solely to second homes for private use and therefore less economically active; resulting in a deeper negative impact on locations where there is a high concentration of second homes as well as short-term lets. The introduction of the council tax supplement for second homes may partially mitigate this impact, by reducing the number of second homes through taxation. Displacement of STL demand to locations outside the control area boundary but still within the PKC area is a potential unintended consequence. This could increase market demand immediately outside the control area, therefore consideration should be given to where the boundary is located. This could be a positive in locations where concentrations of STLs and where housing pressure is not a concern such as Blairgowrie, which could benefit from increased tourism accommodation development. In locations where STLs are a lesser contributor to moderate housing pressure, displaced demand could negatively impact housing pressure, such as Comrie and perhaps Crieff. As such it would be appropriate for the Council to monitor the impact of the STL Control Area with regard to monitoring for displacement effects and, if necessary, seek a variation of the Control Area where evidenced and appropriate.
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25 4. Conclusion In areas of high housing pressure there is evidence that this housing pressure is also impacting on local businesses and services, evidencing the concerns of local communities. The Council is working to address other contributors to housing pressure: 1) Affordability Working to deliver more affordable housing in areas of pressure through the affordable housing supply programme, key worker homes funding, and community led housing. 2) Ineffective stock Impact demand for second homes via the council tax supplement. Channelling empty homes funding and efforts to bring properties back into use for homes for rent. To supplement this work and investment, it is concluded that a short-term let Control Area will enable the planning authority to consider the availability of residential homes and the concentration of short-term lets when making planning decisions. In areas where unconstrained land is limited and therefore more difficult to build new homes, the ability to protect future new homes where appropriate will be of value. Appendix 1b - Ardneil Johnson AJ STL Research Report