Landlord News

Short-Term Let Licensing in Edinburgh - One Month Review

The Short Term Let licensing laws commenced just over one month ago throughout Scotland.  The new rules meant that any owner wishing to use their property for Short Term Letting beyond the 1st October 2023 would need to have applied for, or being granted, a ‘Short term Let Licence’.

All 32 local authorities had set-up their own individual licensing schemes by that date, but the real number of operators and potential applicants was very much an unknown as the new laws came into being.

Focusing on Edinburgh, or more specifically, The City of Edinburgh Council local authority area, this blog assesses what has happened in the first month, and what is due to happen in the coming months too.  The blog also concentrates on properties which are fully available throughout the year, these being known as ‘Secondary letting’ properties, as opposed to ‘Home Sharing’ or ‘Home Letting’, where the property is the operators own principal residence.

Number Of Short-Term Let Properties

Initial estimations of the number of affected properties in Edinburgh ranged between as low as c.4,000 up to an improbable c.18,000.  Most market commentators put the number at somewhere between 8,000 to 12,000, the higher being the council’s own reasonable upper expectation level.

The application process requires operators to complete an extensive application form, including submission of all relevant safety certificates (gas, electric, EPC, etc) and appropriate Public Liability Indemnity Insurance.  In theory, these are all elements which should have been in place regardless of any licensing scheme requirements, and one of the key reasons cited by the Scottish Government for such legislation being necessary.

Undoubtedly, many operators would have had a last-minute scramble to pull some items together, but most responsible operators would have had a full suite of documents and processes in place.

Licence Application

The application process is relatively straightforward, notwithstanding the relatively high cost of doing so.  Compare Edinburgh’s licence fee for a typical two bedroom (4 guests) property at £1,089 versus it’s neighbouring local authority in East Lothian at £390 for the same size property.

A compounding factor in Edinburgh is that the city was designated a Short Term let ‘Control Area’.  This means that any owner looking to apply for a Short Term Let licence must firstly apply for Planning Permission for a ‘Change of Use’ to Short Term Visitor Accommodation.  Herein lies the biggest issue, and one yet to be fully resolved.

Why? Well, the council planning guidelines state that any property which shares a communal front entrance door, i.e. all tenements and blocks of flats, is deemed to be an unsuitable environment for short term letting and any planning application for a change of use is ‘unlikely to be supported’.  In other words, no permission, and hence the subsequent licence application would also then fail.

There is a caveat here that if an operator can provide evidence of having operated for more than 10 years, they can apply for, and should be granted, a Certificate of Lawfulness in lieu of Planning Permission, on the basis that the time passed means it has already changed use by default.

Latest Situation

So, as at the 30th October which is the latest version of the public register, there are 3,615 applications, or just over 30% of the council’s expected potential number.  Not a good start, given anyone who hadn’t applied before the 1st October deadline, must now wait until their licence is actually issued, whereas those that had applied before that date can continue operating whilst their application is being processed.

However, of the 3,615 applications listed on the public register, 23 have been ‘Withdrawn’, 301 are listed as ‘Incomplete’, and 3 are ‘Invaild’. 

Of the remaining 3,288 left, a further 1,536 are either ‘Home Letting’ or Home Sharing’.

This leaves 1,752 properties which have applied for full ‘Secondary Letting’, or less than 15% of the initial expected council figure.

Not surprisingly, 1,459 of these did not submit their application until the last 10 days of September.  Many owners with ‘flatted dwellings’, who have not been operating for 10 years and are not expecting to gain a licence and have contacted us recently to look at switching to Long Term letting, have admitted that their plan was to apply for the licence, then continue operating for as long as it takes for their licence to be rejected, then switch.  Most have said they hope that the processing will take at least 6 months to take advantage of the Christmas Festivals market, but all depends on the alacrity of the council’s licensing and planning departments.

The application fee is non-refundable so this is a potential gamble if their application is processed and rejected quickly.

The public register hasn’t yet listed every application property type, (on the downloadable excel sheet, click ‘data’ on the taskbar, then ‘filter’, then use the drop down arrows on the data fields to select) so it’s unclear how many are flatted dwellings which may yet be rejected due to lack of planning consent. 

Options For STL Operators

However, there may be some hope for these operators on the near horizon as the validity of the council’s planning guidance and ‘unlikely support’ mentioned above, is due to be the subject of a Judicial Review at the Court of Session on the 8th November.  Operators will be hopeful of seeing a decision similar to the previous JR which ruled that the council’s initial licensing policy, which would have automatically rejected applications for flatted dwellings, was unlawful.

It seems that this is the last chance saloon though and if it fails, it’s likely that the original potential 12,000 properties may end up being less than 1,000. 

Indeed, one month in, and the number of licences granted to Edinburgh properties for ‘Secondary Letting’, where the property is listed as being available all year round, is just 24 (twenty-four, in case you though that was a typo!), or 0.002% of the initially expected potential figure.

It will be some time before the true final picture emerges, but it’s already clear that this part of the city’s tourism sector has been terminally wounded.  It may help ease the housing crisis slightly if the under-pressure Private Rented Sector sees some of these properties transition to long term letting, but if this was the real Govt policy intention then the PRS needs much more than a token shot in the arm at the demise of its close relative.