Scotland: A licensing scheme for short-term let hosts and property managers proposed by the City of Edinburgh Council has been deemed unlawful in a landmark ruling at the Court of Session in Scotland.
A group of four accommodation providers – Ralph Averbuch, Glenn Ford, Louise Brook and Craig Douglas, supported by Ian Muirhead and Anna Calder Urquhart Morris – brought the Judicial Review last month, having raised more than £300,000 via a crowdfunding campaign. In total, more than 1,000 individuals donated to the cause, which has become the largest crowdfunder in Scottish legal history.
The licensing scheme that had originally been proposed would require hosts wanting to use their property / properties as a short-term let to apply for a licence by October of this year, whereby they would need planning permission from Edinburgh City Council or a ‘certificate of lawfulness’ if the property were to be designated as a short-term let for at least ten years.
The petitioners argued that the council’s policy, which includes entire flats within Edinburgh’s tenements for holiday let usage, stating that “secondary letting in tenement or shared main door accommodation is considered as unsuitable”, was tantamount to a “de-facto ban” on short-term lets in the Scottish capital and would “damage a key component part of the city’s economy for no discernible benefit”.
Proponents of the council’s policy have long opposed the proliferation of short-term lets in Edinburgh, calling for regulations to be implemented to return housing supply back to the long-term rental market and to counteract rising house prices in the city centre.
Announcing his verdict, Lord Braid found that Edinburgh City Council’s policy to be irrational insofar as it contained a rebuttable presumption against granting a licence for property within a tenement [or shared main door], and unlawful in common law, in respect of the lack of provision for temporary licences and the stipulation to supply floor coverings in all short-term lets. The court also found that the policy was in breach of the Provision of Services Regulations 2009.
Rosie Walker, partner and head of litigation at Gilson Gray, who represented the short-term let operators who brought the action, said: “The court found that the City of Edinburgh Council’s short-term let licensing policy was unlawful at common law and in breach of The Provision of Services Regulations 2009 for a number of different reasons. Most strikingly they found that it was not for the council, as licencing authority, to decide that a licence should not be granted just because a property is in a tenement.
“Our clients took the brave decision to bring this action against the local authority to protect their businesses and, more widely, to protect an industry that is very important to the Edinburgh economy.
“Short-term accommodation providers create a significant number of jobs in the city and deliver flexible accommodation that hotels and other operators simply cannot – particularly during important events like the Edinburgh Festival. The campaign was the largest crowdfunded legal case in Scottish history, underlining the strength of support for our clients. It comes on the back of years of engagement by the industry with the Scottish Government and the local authority to try to put in place a workable regulatory framework,” she added.
Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers [ASSC], said: “We are pleased this decision from the Court of Session confirms that City of Edinburgh Council’s short-term let licensing policy was unlawful in respect of the rebuttal presumption and contravenes provision of services regulations.
“The fact this was the biggest crowdfunder in Scottish legal history demonstrates the strength of feeling that the council’s licensing plans were an existential threat to the livelihoods of operators. We pay tribute to the determination and courage of the four petitioners, and are extremely thankful to all those who donated and the superb legal team. This was a team effort and they can be incredibly proud of what they achieved.
“The impact of this will not be confined to the capital as the decision has ramifications for licensing schemes across Scotland. The Scottish Government need to go back to the drawing board on short-term let regulation and engage constructively with industry to provide a regulatory framework that works for all stakeholders. The time to act is now and the ASSC has pragmatic, fair and proportionate policy solutions which can assist,” she added.
The ASSC added that the ruling would have wider implications for short-term let licensing regulations in Scotland and that it intended to request an urgent meeting with the Scottish Government to discuss the consequences of the developments in court.
Andy Fenner, CEO of the UK Short-Term Accommodation Association [STAA], said: “This decision is further proof that local and national governments across the UK are rushing blindly into plans to regulate the short-term rental industry, risking unintended consequences that will seriously damage local economies and the hundreds of thousands of people who rely on the short term rental industry for their livelihoods.
“We’ve said all along that a registration scheme should be the first step, so that policy decisions can be based on fact not fiction. Introducing a registration scheme first is the only way to understand the breadth and depth of the holiday let market, and the wider economic contribution it makes.
“The short term rental industry contributed £27.7 billion to the UK economy in 2021. In some areas that rely heavily on tourism, these restrictions could have a severe impact.
“The knock-on effects of rule changes that have already been introduced in Scotland and Wales are yet to become clear. The short-term rental industry is an easy target when it comes to the housing crisis but the focus should be elsewhere.
“Housebuilding has slumped, targets have been abandoned and the nation is littered with empty homes and second homes that never attract a penny of tourism spending,” he added.
Cammy Day of the City of Edinburgh Council told Scottish Housing News that despite his disappointment about the ruling, the council “remains committed to ensuring the whole city benefits from our thriving visitor economy but it has to be managed and it has to be sustainable”.
Meanwhile, Eilidh Keay, chair of the Short-Term Let campaign at tenants’ union Living Rent, expressed her frustration at the decision, saying that it “flies completely in the face of democracy and the will of the people” and the delay to short-term let regulations was a “delay to tackling the housing crisis in this city”.