Cool heads are needed to tackle the Short Term Lets crisis

Sunday August 20th 2023

Garry Clark Federation of Small Businesses

This View has been written by Garry Clark, Development Manager – East of Scotland, Federation of Small Businesses

Edinburgh’s Festival season brings visitors to the Lothians from far and wide but we are also lucky to enjoy a year-round visitor economy. Whether it is Edinburgh’s Hogmanay, East Lothian’s golf courses, the National Mining Museum in Newtongrange or Linlithgow Palace, there are plenty of reasons to come to our amazing part of the world all the year round.

While many of these visitors are day trippers, huge numbers of people choose to stay here for a few days or weeks to soak up the atmosphere, culture and hospitality that we are renowned for the world over. These people need places to stay – not just in identikit hotel rooms either, they need a diverse range of accommodation that fits with their needs.

From single people performing at the Festivals who need a bed to crash in, right through to a family of five plus their faithful canine who need room to spread out. This mix of accommodation has long included short term lets (STLs), where visitors can rent part or all of a private property for a few days or weeks. As these visitors are catering for themselves, they also support shops, cafes, restaurants and bars throughout the city.

It’s right that these properties are subject to a degree of regulation. If you stay in a B&B or guest house, you know that your host has had to comply with health and safety and fire safety checks, so it’s only fair that STLs are subject to similar checks and balances. Indeed many of the Federation of Small Businesses’ members operating in the accommodation sector have long called for such a level playing field.

However, sensible regulation to help ensure customer safety is one thing. Using these regulations to achieve wider policy goals is quite another. Councils have been given broad discretion in terms of how they apply licensing and planning rules on short term lets and whilst most councils, such as Midlothian, have elected to implement a fairly benign regulatory regime, others, such as Edinburgh, have chosen to apply strict planning and licensing rules. So strict, in fact, that the courts ruled that the City of Edinburgh Council had gone beyond its powers in using the licensing system to effectively do the job of planning.

So what impact are these new rules having? Well, one of the most worrying developments has been that it may result in a fall in the numbers of STL properties available to visitors. Only a small proportion of STLs seem to have so far applied for planning permission and/or licences before the deadline of 30 September. It’s possible that owners are putting their properties to other uses, rather than go through what they feel are onerous and costly burdens, especially in Edinburgh.

The impact of this on our visitor economy would be to reduce choice and limit the availability of accommodation, thus pushing prices upwards for tourists. We already know that Edinburgh is an expensive place to visit and following last year’s Edinburgh Festivals, there were concerns raised that the cost of accommodation was already preventing many potential Festival artists from coming to Edinburgh at all. If STLs come off the market and prices rise further in 2024, the impact can only get worse.

However, it’s not too late to find a solution. The City of Edinburgh Council needs to build bridges with a sector that is vital to our visitor economy – a sector whose trust it has stretched to breaking point through its ill-considered licensing and planning schemes. If the council can work with the sector to help them get through this regulatory process, even if that means an amnesty to get applications over the line beyond the 30th September deadline, then that would go a long way to demonstrating that it values a sector that plays a vital role in establishing the unique character of Edinburgh.

By holding out an olive branch to STL owners now, the City of Edinburgh Council can prevent a visitor accommodation crisis in the city in 2024. With plans to introduce a Visitor Levy on the way too, it’s time to do right by the small businesses that contribute so much to our visitor economy.

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