Short Term Let Control Area Proposals for Consultation
Perth and Kinross Council · 31 May 2023
Back to Environment, Infrastructure and Economic Development Committee — 31 May 2023 and its agenda
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PERTH AND KINROSS COUNCIL Environment, Infrastructure and Economic Development Committee 31 May 2023 SHORT-TERM LET CONTROL AREA: PROPOSALS FOR CONSULTATION Report by Head of Planning and Development (Report No. 23/171) 1. PURPOSE 1.1 To seek approval to consult on the principle of introducing a short-term let control area for Highland Perthshire and part of Eastern Perthshire, and to seek approval of consultative draft non-statutory guidance on how planning applications for short term lets will be assessed in Perth and Kinross. 2. RECOMMENDATIONS 2.1 It is recommended that Committee: • notes the short term lets evidence paper (Appendix 1) • approves public consultation on the principle of a short-term let control area for Highland Perthshire and part of Eastern Perthshire; and • approves public consultation on proposed non-statutory planning guidance on short-term lets (Appendix 2). 3. STRUCTURE OF REPORT 3.1 This report is structured over the following sections: • Section 4: Background • Section 5: Context • Section 6: Evidence and Key Considerations • Section 5: Proposals • Section 6: Conclusion • Appendices 4. BACKGROUND Perth & Kinross Corporate Plan 2022-2027 4.1 The Corporate Plan’s vision is for a ‘Perth and Kinross where everyone can live life well, free from poverty and inequality’. Priorities are: • Tackling poverty • In partnership with communities • Physical and mental well-being
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• Children and young people • Tackling climate change • Vulnerable people • Stronger and greener economy 4.2 Access to quality, affordable housing is closely linked to addressing poverty, as housing costs are the main household expenditure for lower income households. Increased competition in the residential market including competition from buyers for second homes and short-term lets operating as a business, can impact on availability and affordability of homes. Affordable housing is becoming an issue for rural business where businesses have cited a lack of local homes for staff as a limiting factor to expansion (Housing Needs Assessments). The same issue is also experienced by public sector services, particularly in education, NHS, social care and the fire service. 4.3 However, short-term lets are also an important part of the visitor economy, encouraging spend locally. The proposals contained in this paper are therefore focussed on controlling the supply of properties being used for short- term let in some parts of the Council area rather than stopping it. Short-term lets issue 4.4 It should be noted that definitions for many of the terms used below are provided as part of appendix 2. 4.5 Some communities, as indicated in paragraph 4.6 below, are becoming increasingly concerned that the increase in short-term lets over recent years is impacting on the availability and affordability of housing locally, and is having a secondary impact on jobs, services and business opportunity. 4.6 Communities have referred to second homes and short-term lets as an issue in several Local Housing Needs Assessments have been conducted recently at the request of the communities, namely: • Pitlochry • Dunkeld and Birnam – PH8 area • Aberfeldy, Weem, Strathtay, Grandtully, Logierait and Ballinluig • Mount Blair Community Council area • Comrie Community Council area These community views are supported by the evidence gathered by officers for this report (appendix 1). 4.7 There are two property types contributing to short-term lets; short-term lets run solely as a business and casual short-term let (for less than 70 nights per annum) that normally operate as private second homes. Currently there are no powers for councils to disincentivise private second home ownership beyond the Land and Buildings Transactions Tax on additional properties and the removal of second homes council tax discount in 2017. This could change from April 2024, because of a new proposal from the Scottish Government to
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give local authorities powers to charge a council tax premium on second homes, should councils wish to do so. 4.8 Planning legislation at present requires owners to seek planning permission where the change of use of a residential property (dwelling house) to a short term let is considered to be a material change of use. The challenge is that this decision is largely a matter for the individual owner, unless the Council as Planning Authority is alerted. It should also be noted that if the change of use occurred more than 10 years ago, it is exempt from enforcement action and therefore is deemed to have planning consent. 4.9 Should a short-term let control area be introduced, all changes of use from residential property to short-term let which occur after the designation of the control area will be deemed as material, regardless of the circumstances, and will require planning permission. 5. CONTEXT Short-term Lets Licensing Scheme 5.1 The Scottish Government introduced a new mandatory licensing scheme for short-term lets in Scotland which opened for applications by new hosts on 1 October 2022. All existing short-term let hosts must apply for a licence by 1 October 2023, and all short-term lets must be licenced by 1 July 2024. As part of the licence application, short-term let hosts are required to have planning permission in place where there is a material change of use. Where a Control Area is in place, all uses of residential properties for short-term let will be deemed a material change of use. Town and Country Planning (Short-term Let Control Areas) (Scotland) Regulations 2021 and Planning Circular 01/2023: Short-term Lets and Planning 5.2 Section 26B of the Town and Country Planning (Scotland) Act 1997, as amended by the Planning (Scotland) Act 2019, came into force alongside the Control Area Regulations in April 2021. This gives planning authorities the option of designating all or part of their area as a short-term let control area for one or more of the following policy objectives: • to allow consideration of impacts on the availability of residential housing to allow consideration of impacts on the character or amenity of a neighbourhood to allow consideration of impacts on different types of building. 5.3 The newly revised Circular which supports the regulatory framework indicates factors that Planning Authorities may wish to consider when assessing the need for a control area. Of relevance to Perth and Kinross, as evidenced in appendix 1, are:
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• a lack of affordable and appropriate housing for local residents, perhaps indicated by a high share of sale volumes to, and high prices paid by, non-residents; and • a detrimental impact on local amenity, with some businesses, schools or other services that serve, and are reliant on, permanent residents closing or relocating. 5.4 Seeking to manage short-term lets through the planning system has limitations and risks including: • the scope of the short-term let regulations is, by definition, restricted to short-term lets and may not impact on the numbers of second homes, empty homes or purpose-built holiday accommodation; • short-term lets contribute to the operation of the tourism industry, which is a significant economic driver in some parts of Perth & Kinross and is a sector which is still recovering from the Covid pandemic; and • a control area may not result in the release of significant numbers of residential properties back onto the market, as there is no guarantee that any short-term lets which are refused planning permission will not simply revert to being a second home. 5.5 These limitations are explored in more detail in section 6 below. Approval of Perth & Kinross Local Housing Strategy 2022-27 5.6 The Local Housing Strategy (LHS) was approved on 15th March 2023 (report No 23/82). Full details of the LHS can be found on the Council’s website. 5.7 The LHS Action Plan gave an initial response to the short-term lets issue leading up to this report. Action 1.7 seeks that planning policy is developed through Local Development Plan 3 where appropriate for short-term let control areas by: • completing a feasibility study in relation to short-term let control areas; • carrying out community consultation; and • developing and implementing local development plan policy if / where appropriate for short-term let control areas. National Planning Framework 4 5.8 National Planning Framework 4 (NPF4) became part of the statutory development plan on 13 Feb 2023. NPF4 seeks to encourage, promote and facilitate sustainable tourism and directs local authorities to identify those areas where existing tourism provision is having adverse impact. Policy 30: Tourism sets out the factors to be taken into account in assessing proposals for tourism related developments which includes: the contribution to the local economy; impact on the surrounding area; and impacts on communities e.g. by hindering the provision of homes for local people. Specific mention is also made in Policy 30: Tourism to short-term lets. NPF4 is clear that proposals for
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the reuse of existing buildings for short term lets 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. Perth & Kinross Local Development Plan 5.9 There is no specific policy within the existing Local Development Plan 2 (LDP2) which seeks to manage the change of use of residential properties to short-term lets. NPF4 Policy 30 will therefore the part of the statutory development used to assess the principle of such changes of use in planning applications until Local Development Plan 3 (LDP3) is in place. In the meantime, the appended non-statutory planning guidance has been drafted to help businesses and residents understand how planning applications will be assessed in Perth & Kinross. 5.10 Using the planning system to manage short term lets will not necessarily directly increase the supply of affordable housing in the relevant areas. There is also a need to increase supply of new build affordable housing. LDP2 identifies land to meet the assessed needs and demand for affordable and market housing in each of the area’s housing market areas. Looking ahead to the next Plan, and in the context of the new policy framework set out in NPF4, there is significant potential for LDP3 to further support increasing the supply of affordable houses, for example: • policy provision for allowing affordable houses (up to 50 homes) on non-allocated sites where this is part of a local authority supported affordable housing plan; • support for proposals which improve affordability and choice and which address identified gaps in provision; • scope for increasing the affordable contribution where a higher contribution is justified by evidence of need; • specifically in rural areas, support for taking into account identified local housing needs (including affordable housing); and • increased support for new homes in remote rural areas. 6. EVIDENCE AND KEY CONSIDERATIONS 6.1 A Short-term Lets Evidence Paper (Appendix 1) has been prepared to take forward LHS Action 1.7 and to provide a basis for defining a potential short- term let control area. This identifies secondary lettings, second homes and empty homes and seeks to understand whether a short-term let control area could be an effective contributor to more homes in pressured areas. Early engagement with communities for the LHS 2022-2027 identified affordability and availability of housing as the top concern in Perth and Kinross. In rural areas, short-term lets and second homes were identified as a contributing factor.
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6.2 As highlighted in the Evidence Paper, until all short-term lets are registered through the licensing scheme, pre-existing information on self-catering and second homes were used as proxy datasets which contribute to secondary lets (the letting of a non-principal residence). Analysis indicates that Highland Perthshire and northern areas of the Eastern Perthshire area have a relatively high concentration of both self-catering and second homes. These areas coincide with the communities that have been identifying pressure on housing, business opportunity and service provision in combination with falling school rolls as evidenced both in the Housing Needs Assessments and through community engagement. Analysis demonstrates that the pressure threshold of ‘Potential Housing Stock’ which is being used as self-catering and second homes combined is 10%. Appendix 3 outlines the areas above the 10% figure spatially. 6.3 The full details of how this analysis was undertaken is in the Evidence Paper. The analysis will be updated once the extent of licences and licensing applications is available. This will be after the deadline for licence applications closes on 1st October 2023. This refined analysis will verify the proxy data used in the analysis and indicate whether the short-term lets licensing scheme has had an impact on the number of short-term lets. Balance of sustainable tourism and housing supply 6.4 It is essential that any control area policy framework balances the positive contribution of short-term lets to the tourism sector and local economies, particularly in some rural parts of Perth and Kinross, against the potential adverse impacts on the character and amenity of areas and the impact of further reducing the supply of permanent housing. It is acknowledged that there is a balance to be struck within some communities between those who rely on an income from their short-term let, and those who are concerned that more residential properties should be retained as permanent homes for local people. 6.5 A control area will not operate as a complete ban on short-term lets, rather as a means of limiting new permissions to those where the loss of the residential property is outweighed by the economic benefit to the local community as required by NPF4. As highlighted above at 5.4, a short-term let control area cannot control second homes which are equally prevalent in some areas, and which often make much less of a contribution to the local economy than short-term lets occupied by visitors to the area. The introduction of a control area will also have no effect on the numbers of purpose-built self-catering units which are being operated as short-term lets, given that these will already have planning permission. 6.6 The pre Covid growth target for tourism in Perth & Kinross had originally been 3% per annum in the value of overnight stays, on the baseline year of 2018.
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This was revised, however, with the ambition of restoring the value of tourism to pre Covid 2019 levels by 2025. The latest available research (2021) indicates that the tourism economy has not recovered from the impact of the covid pandemic as yet and is still vulnerable to the new challenges of the cost-of-living crisis at the Perth & Kinross level. ‘By 2019, the annual value of tourism activity since 2010 had reached a total of £668m. Tourism activity and related spend in Perth & Kinross was substantially affected by Covid-19, but is recovering (+43% since 2020), whilst still remaining down (-44%) on 2019 pre-Covid levels’ (Source: Perth & Kinross Council STEAM Tourism Economic Impacts 2021 Year in Review p.4). 6.7 The growth in the short-term let sector in Scotland is indicative of the diversification of the accommodation sector away from traditional accommodation types (hotels, B&B etc). This has had the effect of lengthening the tourism season by accommodating shorter breaks in the ‘off- season’ for domestic and younger customers, and longer ‘tours of Scotland’ for international visitors (Visit Scotland, Key Facts on Tourism 2019). 6.8 In terms of accommodation trends, non-serviced accommodation had made a relatively better recovery compared with serviced accommodation but was still down by 36% on visitor numbers with the economic impact down 29% compared with 2019 (Source: Perth & Kinross Council STEAM Tourism Economic Impacts 2021 Year in Review, p.6). 6.9 As registration for short-term lets licences has not yet closed, it is unclear what impact the introduction of the licensing scheme has had on businesses and the numbers of short-term lets in Perth & Kinross. There is potential scope for the additional requirement for a planning application for all changes of use to short-term let, as would be required within a control area, to have a further impact. Experience in other local authority areas 6.10 To date, the City of Edinburgh and Highland Councils have each designated a short-term let control area. The entire City of Edinburgh Council area has been designated although this is currently the subject of a judicial review by the Court of Session. In the Highland Council area one ward is designated, Badenoch & Strathspey, which is co-terminus with the Highland ward in Perth and Kinross. Planning applications for short-term lets in Perth & Kinross 6.11 The Council’s Development Management webpages give guidance to applicants when planning permission is needed for a change of use to a short- term let. Table 1, indicates the number of applications received. As with the
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licensing scheme, applications for planning permission are currently being monitored for trends. Table 1: Number of Short-term let planning applications up to April 2023. 7. PROPOSALS Short-term let control area 7.1 Committee members are requested to consider the following 3 options for the control of short-term lets: • Option 1 – Rely solely on the existing legislation and policy framework (Circular, licencing scheme, and NPF4). • Option 2 – Introduce non-statutory planning guidance to assist with the interpretation of the existing legislation and policy framework but without designating a control area. • Option 3 – Introduce a short-term let control area for the Highland and part of the Eastern Perthshire areas together with non-statutory planning guidance to inform decisions on planning applications both within and outwith the control area. 7.2 With regard to options 1 and 2, NPF4 policy 30, as indicated earlier, includes specific reference to short-term lets. This requires planning authorities to take into account the impact on amenity and character should they become aware through an application or enforcement action. The second consideration is the loss of the property as a residential property. A limitation is that, again, only those proposals which are considered to be a material change of use require planning permission. This in turn means that the impact on the loss of the property as a residential property cannot be taken into account. 7.3 The advantage of introducing a control area as set out in option 3 means that all proposals for the change of use from a residential property to a short-term let within that control area will require planning permission. Recommended option: Option 3 7.4 The multiple benefits of the short-term let sector to the tourism industry are acknowledged. The Evidence Paper, however, indicates that there are Wards with applications Approved Applications Refused Applications Certificate of Lawfulness Awaiting Decision Ward 2 Strathmore 5 N/A N/A N/A Ward 3 Blairgowrie 8 N/A 1 N/A Ward 4 - Highland 14 N/A 5 8 Ward 5 - Strathtay 9 1 2 4
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significant concentrations of self-catering lets and second homes (both of which contribute to the short-term let figures) in Highland Perthshire and parts of Eastern Perthshire. The introduction of a short-term let control area for this particular geographical area is therefore considered appropriate as one of a range of measures to help address the shortage of housing, in particular affordable housing. For clarification, control area designation will not mean an automatic refusal for all changes of use to short-term let. However, it will allow full account to be taken of the potential impact of the loss of residential accommodation and residential amenity in every case; as well as a presumption against some specific types of proposal. Non-statutory planning guidance 7.5 It is considered that additional planning guidance is needed to support the introduction of a short-term let control area and to help inform planning decisions across the wider Council area until LDP3 is in place. As there is no policy basis in LDP2 specifically on the control of short-term lets, any such guidance can only be non-statutory. 7.6 Parts of both Perth & Kinross and Highland Council areas fall within the Cairngorms National Park. The short term let issue has been discussed with the Park Authority and it was noted that policy alignment with Highland Council where possible would be beneficial. 7.7 It is proposed to consult on planning guidance (Appendix 2) to assist in the assessment of planning applications for the change of use of a residential property to a short-term let. The proposed planning guidance sets out the circumstances under which the change of use to a short-term let will be supported including, in simplified terms: • where local economic benefit (as required by NPF4) can be demonstrated. • where a long-term empty property will be brought back into active use • where the short-term let is part of a diversification scheme for a business within the same landholding • where the short-term let has been established for at least 10 years • where the property has its own door to the street or garden, to reduce impact on amenity of neighbouring residents. Consultation 7.8 It is proposed to consult on the principle of designating a short-term let control area for Highland Perthshire and part of Eastern Perthshire as defined in Figure 1. Comments will also be sought on the draft planning guidance. Comments will be collected through the Consultation Hub for an 8-week period from 2nd June - 28th July. Responses will be analysed and reported back to Committee after the summer recess. 7.9 Should the Committee be minded to proceed to formal designation of a control area, in line with the Control Area Regulations, the Council must:
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• publish notice of the proposal to designate a control area submit the proposal to the Scottish Ministers and obtain their approval; • subject to Ministerial approval, give notice of the designation, setting out the area to be covered and the date on which the control area will come into effect. 7.10 Consultation will be open to the general public across the whole of Perth and Kinross and will include stakeholder groups such as: • Community Councils; • the Association of Scotland’s Self-Caterers; • Community development trusts of Aberfeldy, Dunkeld, Birnam & District Community, Comrie, Mount Blair, Kinloch Rannoch, and Pitlochry. • local tourism associations in particular those within the potential control area – The Atholl Glens, Dunkeld & Birnam Tourist Association, Glenshee and Strathardle Tourist Association, Pitlochry Partnership, Rannoch & Tummel Tourist Association, and Visit Aberfeldy; and • neighbouring planning authorities including the Cairngorms National Park Authority and the Loch Lomond & the Trossachs National Park Authority. 8. CONCLUSION 8.1 Affordability and availability of housing is a known pressure particularly in rural areas of Perth and Kinross. Some communities have expressed concern over the levels of short-term lets and the potential impacts on the local business as well as housing pressure, and evidence would support their concerns. 8.2 Legislation now provides the Council an opportunity to control the number and suitability of new short-term lets through a short-term let control area in those parts of the Council area where a need can be demonstrated. The wider economic consequences and implications, however, must also be carefully considered, noting that while short-term lets are responsible for part of the housing pressure, second homes are also a significant factor for which there is no scope to control at this point. 8.3 Officers believe there is sufficient evidence to support the potential designation of a control area under the Town and Country Planning (Short- term Let Control Areas) (Scotland) Regulations 2021 and with Committee approval, this will be tested through consultation. Draft non-statutory planning guidance on how planning applications for short term-lets will be assessed will also be consulted on.
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Authors Name Designation Contact Details Stephanie Durning Katrina Walker Planning and Policy Officer, Housing Strategy Team Planning Officer, Development Plans Team (01738) 475000 ComCommitteeReports@pkc.gov.uk Approved Name Designation Date Barbara Renton Executive Director (Communities) 23 May 2023 APPENDICES • Appendix 1 – Short-term Lets Evidence Paper • Appendix 2 – Non-Statutory Planning Guidance on the Change of Use of a Residential property to Short-term Let, Consultative Draft
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ANNEX 1. IMPLICATIONS, ASSESSMENTS, CONSULTATION AND COMMUNICATION Strategic Implications Yes / None Community Plan / Single Outcome Agreement Yes Corporate Plan Yes Resource Implications Financial None Workforce Yes Asset Management (land, property, IST) None Assessments Equality Impact Assessment Strategic Environmental Assessment Yes Sustainability (community, economic, environmental) Legal and Governance None Risk None Consultation Internal Yes External Yes Communication Communications Plan Yes 1. Strategic Implications SHORT-TERM LET CONTROL AREA_ PROPOSALS FOR CONSULTATION - Committee Annex Checklist Community Plan/Single Outcome Agreement 1.1 This report supports the priority within the Community Plan 2022-27 to reduce poverty by recognising the need to consider the impact short-term lets can have on the availability of affordable housing. SHORT-TERM LET CONTROL AREA_ PROPOSALS FOR CONSULTATION - Strategic & Resource Implications (1).docx Corporate Plan 1.2 This report supports the objectives within the Corporate Plan 2022-2027 to tackle poverty by recognising the need to consider the impact short-term lets can have on the availability of affordable housing. 2. Resource Implications Financial 2.1 n/a.
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Workforce 2.2 The introduction of a Short Term Let Control Area would result in additional planning applications being received by the Council. This will have an associated increase in workload pressures. The Planning service will monitor and manage any increase, and at this time it is not anticipated that more staffing will be required. Asset Management (land, property, IT) 2.3 n/a. 3. Assessments – Highlighted sections to be updated once the new IVA process has been completed Equality Impact Assessment 3.1 Under the Equality Act 2010, the Council is required to eliminate discrimination, advance equality of opportunity, and foster good relations between equality groups. Carrying out Equality Impact Assessments for plans and policies allows the Council to demonstrate that it is meeting these duties. The Equality Impact Assessment undertaken in relation to this report can be viewed clicking here. Final STLCA EFIA.pdf This section should reflect that the proposals have been considered under the Corporate Equalities Impact Assessment process (EqIA) with the following outcome: (i) Assessed as not relevant for the purposes of EqIA (ii) Assessed as relevant and actions taken to reduce or remove the following negative impacts: (add summary points only here) (iii) Assessed as relevant and the following positive outcomes expected following implementation: (The proposal has the potential to have positive impact by increasing the number of homes in the Short-term lets by with potential small impact on affordability. ). Strategic Environmental Assessment 3.2 The Environmental Assessment (Scotland) Act 2005 places a duty on the Council to identify and assess the environmental consequences of its proposals. 3.3 Proposals have been considered under the Act and pre-screening has identified that the PPS will have no or minimal environmental effects, it is therefore exempt and the SEA Gateway has been notified. The reason(s) for concluding that the PPS will have no or minimal environmental effects is that the planning guidance will be non-statutory and sit within the framework of the National Planning Framework 4 which has undergone full SEA.
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Sustainability 3.4 Under the provisions of the Local Government in Scotland Act 2003 the Council has to discharge its duties in a way which contributes to the achievement of sustainable development. Under the Climate Change (Scotland) Act 2009 the Council also has a duty relating to climate change and, in exercising its functions must act: • in the way best calculated to delivery of the Act’s emissions reduction targets; • in the way best calculated to deliver any statutory adaptation programmes; and • in a way that it considers most sustainable. This section should reflect the steps that have been taken to assess the proposals against the Council’s Principles for Sustainable Development. Click here for further guidance. Legal and Governance 3.5 If the Council decides to proceed to the formal designation of a control area then input will be sought from Legal Services. Risk 3.6 n/a. SHORT-TERM LET CONTROL AREA_ PROPOSALS FOR CONSULTATION - Impact Assessments.docx 4. Consultation Internal 4.1 Advice and views have been sought from colleagues in Development Management and the Communities – Place Development Team in the preparation of this report. External 4.2 Initial discussions have been undertaken with neighbouring local authorities – Highland Council and the Cairngorms National Park Authority.
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5. Communication 5.1 Consultation on the principle of designating a short-term let control area, and on the proposed planning guidance will be open to the general public across the whole of Perth & Kinross via consultation hub. It will also be particularly targeted at: • community groups; • community development and housing trusts • the Association of Scotland’s Self-Caterers; • local tourism associations in particular those within the potential control area; and • neighbouring local authorities. 2. BACKGROUND PAPERS 2.1 The following documents were referred to or relied upon in preparing this report: • Perth & Kinross Local Housing Strategy 2022-27 • Town and Country Planning (Short-term Let Control Areas) (Scotland) Regulations 2021 • Planning Circular 01/2023: Short-term Lets and Planning • National Planning Framework 4 • Perth & Kinross Local Development Plan 2 • Perth & Kinross Council STEAM Tourism Economic Impacts 2021 Year in Review • Visit Scotland, Key Facts on Tourism 2019 • Highland Council draft non-statutory short term secondary letting planning policy