Short-term Lets – the confusing case of house swaps.
In my previous blog I discussed whether the new short-term licensing regime covers house swaps and house sitting. House swaps are where two parties agree to swap their home for a period of time (usually for a holiday). House sitting is where two parties agree that one will occupy their home for a defined period of time (usually when they go on holiday) and the other agrees (typically) to look after dogs, cats, hens, and water plants whilst they are away.
Both activities have been going on for many years and as far as I am aware, there have never been any issues of public concern raised. Both activities are facilitated by online platforms such as Homelink UK and Trusted Housesitters.
This blog is stimulated by an article that appeared in the Times today which suggests that house swaps could be exempted from the requirement to be licensed as early as next year.
So what is going on?
Firstly, if you want to understand what follows properly, you need to read my previous blog first.
As I argued there, house swaps appear to be within scope because they involve a commercial consideration (defined in the Order as including benefits in kind such as reciprocal use of accommodation). This is reinforced by the Policy Note which states explicitly that house swaps are within scope.
In response to Hannah Gordon, who published a story last week about house sitting
A Scottish Government spokesperson told her
“As house-sitting does not involve payment for services, or other commercial considerations such as benefits in kind, it is therefore informal arrangements between individuals and there is no requirement for a short-term let licence.”
When challenged about house swaps, the spokesperson said that they didn’t know why house swaps were included and then, when pressed further told Hannah “thats what I’ve been told to tell you”.
House swaps are also an informal arrangement between individuals but appear to be explicitly within scope of the legislation.
Except, as I argued in my previous blog, whether house swaps, house sitting or any other kind of informal agreement is entered into for commercial consideration or not is irrelevant if the over-arching qualification for a short-term let, as one entered into “in the course of business”, is not met. Article 3 of the Order is reproduced below
Definition of short-term let and short-term let licence
In this Order—
“short-term let” means the use of residential accommodation provided by a host in the course of business to a guest, where all of the following criteria are met—
(a) the guest does not use the accommodation as their only or principal home,
(b) the short-term let is entered into for commercial consideration,
(c) the guest is not—
(i) an immediate family member of the host,
(ii) sharing the accommodation with the host for the principal purpose of advancing the guest’s education as part of an arrangement made or approved by a school, college, or further or higher educational institution, or
(iii) an owner or part-owner of the accommodation,
(d) the accommodation is not provided for the principal purpose of facilitating the provision of work or services by the guest to the host or to another member of the host’s household,
(e) the accommodation is not excluded accommodation (see schedule 1), and
(f) the short-term let does not constitute an excluded tenancy (see schedule 1),
“short-term let licence” means a licence granted for the activity designated in article 4
The term “in the course of business” is not defined in legislation but, as set out in the previous blog, includes where there is a written agreement according to Scottish Government Guidance.
The Shona Robison Directive
The matter is further confused by a letter I have seen that was sent by Shona Robison to Local Authority Housing Convenors in March 2023. The key revelations in this letter are as follows.
Home swaps are in scope
QUOTE Although there is usually no payment of money between the parties, home exchanges are within scope of the licensing legislation because the legislation defines commercial consideration as including money or a benefit in kind (such as reciprocal use of accommodation).
This claim that home swaps are in scope rests on one of the qualifying criteria in Article 3 but ignores the question of whether they are “in the course of business”. If they are not, then it is irrelevant whether there is any commercial consideration or not.
QUOTE While we estimate there are only a relatively small number of these exchanges taking place in Scotland every year, Home Link has told us that, due to short-term let licensing, most of its members will likely no longer be involved. The loss of these exchanges would be an unintended consequence of the licencing [sic] scheme.
But the house swaps are, in the words of Shona Robison, within scope and (setting aside the question of whether such swaps are in the course of business) the legislation is explicit in Article 2.
This is an intended consequence, not an unintended consequence.
QUOTE From speaking to local authorities we’re aware that you share our view that it is important to focus resource on encouraging existing hosts to apply well in advance of 1 October 2023 and to processing licensing applications in a timely manner. I am therefore not proposing to bring forward any further amendments to the legislation at this time. This is on the basis that we will update our guidance to local authorities to set out a light touch approach for local authorities to follow which would offer temporary exemptions for home exchanges.
So instead of removing home swaps from the scope of the legislation in March 2023, the Minister decided instead to update the guidance and to encourage local authorities to offer temporary exemptions for home exchanges. The latest guidance for local authorities is here.
I cannot find any update on temporary exemption for home exchanges.
Moreover, of the 32 local authorities in Scotland, at least 13 have stated that they do not intend to grant temporary exemptions. Even if this were an appropriate means by which to exclude (temporarily) home swaps from the scope of the legislation, it cannot do so. If you live in Aberdeenshire, for example, there will be no temporary excemptions for 3 years (page 14 here).
Conclusion
I am not convinced that home swapping and house sitting are in scope of the legislation as it is unclear whether they are “in the course of business”. This term is not defined in legislation and it is this over-riding qualification in Article 3 of the Order that Ministers urgently need to provide guidance on (there is none).
If either of them are in scope (as the previous blog argues that they could be), then Ministers should not be pretending that this is an unintended consequence. In the case of house swaps, it is an intended consequence.
Many people across Scotland who undertake house swaps are now being left in a state of significant uncertainty. Should they apply for a licence for home letting? Should they apply for a temporary exemption as suggested by Ministers but an option not available across most of Scotland? Should they carry on regardless and ignore the apparent need for either? Should they take legal advice on what “in the course of business” means”?
As far back as March 2023, we now know Ministers acknowledge there was a problem but, as far as I can tell, this has never been admitted to Parliament. The latest update by the Minister to the Local Government Housing and Planning Committee is here.
My advice to anyone who wishes to engage in a house swap is as follows.
House swapping is not “the provision of residential accommodation provided by a host to a guest in the course of business“. You do not need a license or a temporary exemption. You will not be committing a criminal offence. Crack on.*
*For the avoidance of doubt, this statement does not constitute legal advice
I await the first court case involving an insurance company.
Hi Andy
as i have said before insurance holds the answer. car boot sale tell your insurance your selling goods from the back of your car .we all know the answer s d p not for hire or reward yada
Is there a legal distinction between having ( i ) a live-in house-keeper and ( ii ) a more temporary house sitter or baby-sitter who is paid for the hours he/she works?
Are not the two arrangements both, in principle, ones made “in the course of business” (i.e., a business arrangement)? Do either require any kind of legal licence? Do they differ in principle from Air B&B. A live-in housekeeper’s money wage may reflect the fact she is living free of a money rent payment. But there is, nonetheless, a benefit in kind that is concealed in the lower wage she may be paid.
In principle, is this not the same as a house swap where there are reciprocal benefits that are valuable to both parties but not monetised? (Cf. “LETS” arrangements whereby joiners work for plumbers in a form of non-monetary barter to avoid income tax, or has this been outlawed?)
What you’re describing is commercial trade barter eg Bartercard and earnings in £ trade pounds must be reported as trading income.
LETS schemes are non-commercial voluntary barter schemes using ‘soft’ currency without enforceable performance. Professionals rarely get involved as there’s only so much Reiki one can take.
Whenever barter is split by a time delay the result IS a monetary system.
Well done, Andy, for punching yet another hole in this dim-witted and dysfunctional piece of legislation. The whole saga of the development of this STL legislation would make a great case study for those studying law or business management as an example of how to get things so wrong. Every mistake one can think of has been made by the Scottish Government and its civil servants!
Meantime, the UK Government has stated that it will NOT go down this route, but are looking at light-touch registration only. The EU is developing policy on an EU wide registration scheme – NOT licensing! The Scottish Government seems intent on destroying a key part of the Scottish tourism industry, just to save face.
Will this legislation provide the much needed affordable accommodation – NO! However it will result in the further hollowing out of local communities (rural and in cities).
So, we have news today! Home exchanges no longer need a STL licence. I can reinvestigate this for my retirement travel plans.
But the detail is lacking….
1. ‘A reciprocal home exchange would be considered home letting and would require a licence if it is in the course of business.’
So, does a home exchange which works on a points (not cash) basis as many of these house swap schemes do, count as reciprocal or not?
2. ‘No licence is required where home-swapping is not in the course of business. Whether an individual’s use
of their property is in the course of business, and therefore requires a licence, will depend on the circumstances of the case.’
So, what IS in the course of business? More than a certain number of home swap days each year? Home exchanging your second home (no, I don’t have one). Collecting points to use to get a stay in someone’s else’s home you are not directly swapping with? Or is it only if there is a cash benefit to you?
I feel I need clarity. Does anyone else?
I agree – there is no clarity about what “in the course of business” means. Scottish Government’s interpretation of this is just their intepretation. Only the courts can provide a definitive ruling. I would advise you crack on and continue doing what you were doing. As long as no money is changing hands I would say you are OK.
Home exchange ruling in Scotland now overturned! Win, win for fellow exchangers!
I’ve exchanged over 160 times worldwide since 1987.