Short-term let licence fee increase ‘essential to ensure sustainability’ of service, SIC says

SHETLAND Islands Council says a decision to increase short-term let licence fees was made in order to better reflect the operating costs of the service.

A review also highlighted that the previous charges were “significantly lower” than those elsewhere in the country.

It comes amid some local providers being concerned at a rise in short-term let licence fees, with rates in some cases doubling.

CEO of the Association of Scotland’s Self-Caterers Fiona Campbell also said earlier this week that the increase was “deeply concerning and requires clear justification from Shetland Islands Council”.

However, the move to introduce new fees was approved by councillors almost a year ago – back in February 2025.

Legislation introduced by the Scottish Government regarding the licensing of short-term lets – such as Airbnb rentals and self-catering cottages – came into force in 2022.

The scheme was put in place to ensure basic safety standards are met across all short-term lets operating in Scotland, and to address concerns of local communities by providing some discretionary powers to licensing authorities.

Locally, Shetland Islands Council’s environmental health team manages the process.

The new charging process in Shetland takes into account the number of guests, and not rooms like it used to.

For home sharing/letting the fee is £200 for three years for one to six guests, and £320 for seven-plus guests.

For secondary lets it is £350 for one to six guests and £500 for seven and above.

When the fees were introduced by the council in 2023/24, they ranged from £94 to £208, all based on the number of bedrooms.

These were described at the time as being in the lower end of the scale when it came to short-term let fees in Scotland.

There was then an increase in the fees in 2024/25 of between 5.1 per cent and 6.9 per cent.

But for 2025/26 the council decided to change the charging structure to reflect the number of guests staying in a property, while increasing the fees.

However, the council pointed towards increased running costs in areas such as administration, particularly as demand has exceeded expectations.

A spokesperson for Shetland Islands Council said: “We have reviewed and updated short-term let fees to ensure they more closely to reflect the actual costs of delivering this service, and that our approach and fee level are aligned with other local authorities.

“Since 2022, fees have increased annually and a comprehensive review was carried out in 2024.

“This review highlighted that our previous charges were significantly lower than those being applied elsewhere, prompting a move to a simplified and fairer fee structure.”

The spokesperson said the move to fees being based on the number of occupants brings the SIC in line with most Scottish local authorities.

“These changes were made following careful consideration during budget setting and discussions with finance,” they added.

“Demand for short-term let licences has exceeded expectations, with over 500 applications received compared to the 340 originally forecast.

“Officers have also spent more time than anticipated seeking additional, often missing information, correcting incomplete applications, ensuring compliance and addressing complaints, which has added to service delivery costs.

“These changes have not been made lightly. They are essential to ensure the sustainability of the service and fairness across all areas.”

The SIC also sought to note that the charges are different from non-domestic rates.

ASSC CEO Fiona Campbell said the rise “comes at a particularly challenging time for self-catering operators, who are already facing an eye-watering rise in business rates alongside a growing regulatory burden”.

“Inevitably, such costs may have to be passed onto consumers, potentially damaging Shetland’s appeal as a visitor destination,” she added.

Speaking earlier this week, Campbell encouraged the SIC to reconsider the fee increase and “engage constructively with the sector to find a fair and sustainable approach”.

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