A severe shortage of short-term lets is expected as most landlords have yet to apply for a licence under stringent new rules.

Owners must supply paperwork by a 1 October deadline and many have decided to leave the sector as they find the process too onerous, according to the Association of Scotland’s Self-Caterers (ASSC).

The ASSC says an estimated 61% of its members have yet to begin the process of applying for a licence.

The system is being introduced as performers and visitors to the Edinburgh Festivals complain about the cost and availability of short-term accommodation.

Fiona Campbell, chief executive of the association, said the introduction of licensing would be “catastrophic” and some members had already decided to stop trading rather than comply with the new regime.

She said: “Given its costly and onerous nature, people are already leaving the sector in their droves and we expect this trend to continue despite our warnings to the Scottish government, who remain complacent about another policy disaster set to unfold.

“Businesses have no confidence in the system and that’s reflected in our recent survey, which shows that 61 per cent have yet to apply for a licence.

“In a country renowned for its hospitality, many visitors will be left sorely disappointed due to the scarcity of accommodation and increased cost of holidays due to this botched, cackhanded scheme.”

Under the changes, anyone providing a room or home for rent has to apply to their local council and get their premises licensed. They must also show evidence of their buildings and public liability insurance as well as up to date energy performance, fire safety, gas and electricity compliance reports.

The Scottish government has introduced the legislation to ensure that all self-catering and short-term letting properties meet safety standards, tackle anti-social behaviour and meet the concerns of residents who fear their communities are being disrupted by the constant churn of visitors.

A breach of the legislation is deemed a criminal offence and can lead to a fine of up to £2,500.

Edinburgh City Council, which is a keen advocate of the licensing regime, has approved only 111 applications from an estimated 4,000 properties in the city listed on Airbnb alone. The council has decided not to appeal against a recent court ruling which forced it to amend its policy.