The largest crowdfunded case in UK history was ruled unlawful as Edinburgh tried to crackdown on short-term lets – but what does this mean for property owners looking to let across Scotland?
Edinburgh City Council may have failed to ban tenement flat owners from letting out their entire apartment during the Fringe Festival season, but property owners are still in the dark over short term lets as licensing is here to stay and will have an impact on their plans.
The Scottish Government advised that the purpose of introducing the licensing regime, where owners need to apply for a licence from your local council before offering short-term lets, was to ensure all properties are safe and the people providing them are suitable. On this basis, each local council would have the authority to establish a short-term let licensing scheme and to decide whether to introduce additional planning control areas.
However, last week a judge at the Court of Session ruled the regulations proposed by City of Edinburgh Council are unlawful because they breach existing laws on what licensing authorities could do under the law. This is because they proposed a ban on allowing entire flats within tenement blocks to be used for short-term letting, unless their owners could demonstrate why they should be exempt.
To be clear, this decision has not brought the licensing regime to a stop. It simply restricts local authorities from not granting a licence because the property is situated within a tenement. Accordingly, it is likely that we will still see a very different picture in the short-term letting sector at the Edinburgh Fringe between 2023 and 2024.
In a letter to MSPs, Edinburgh Festivals said the crackdown on short-term lets would make the capital “increasingly unaffordable and unfeasible for festival participants and visitors”.
Nevertheless, Councillor Jane Meagher, Edinburgh City Council’s housing convener, has said that the capital faced "housing pressures like nowhere else in Scotland", saying of holiday lets: "Now, more than ever, Edinburgh needs these properties back as homes – and we want to work positively with those landlords who are ending short-term letting but who are considering longer term lease arrangements.”
According to Councillor Meagher, overnight 1,000 extra places to live could be created for residents who have no home this winter, if just one in 10 holiday lets switched to Private Sector Leasing with the Council. “Leasing with us could drastically support capital residents during one of the most financially difficult times on record for UK households,” she said.
Since the regulation of short-term letting under the then Planning (Scotland) Bill was first proposed in 2019, I have been advising clients who have been purchasing second homes or residential investment properties that this legislation was in the pipeline but requirements were unclear and would be considered on a case-by-case basis. Meaning it would be dependent on location and type of the property concerned.
It seems that the situation has not changed and that those clients and future purchasers are still left in an uncertain position where they are taking a risk on how the legislation could potentially impact their plans.
This most recent case shone a light on Edinburgh but the licensing regime impacts all of Scotland and each local authority can implement licensing differently. It’s important for property owners considering or currently offering short term lets to take expert legal advice if they need to know more about what any changes in legislation means for them.
