I received this today – It’s concerning to see the impact on the homes available for rent. 

Purpose
This briefing note provides a summary of the impact of Short Term Lets (STLs) on Edinburgh and an update on the Council current enforcement and proposed regulatory powers.

Main Briefing

Impact of short term lets on supply and housing costs
Recent analysis (using Airbnb data) published in April 2019 by the Scottish Parliament Information Centre (SPICe) has shown that were over 12,000 registered Airbnb properties in Edinburgh in 2018. This figure is a significant increase from research available to the Council where the overall number was calculated at approximately 9000 registered properties in 2017. The increase of Airbnb properties has continued to grow each year from 2009 when there were a total of 8 registered properties in the city. Airbnb reports that 21% of the 9,000 properties (1,890) registered in 2017, operate in excess of 90 days or more, which would indicate they are no longer being used on a residential basis

The research available indicates that short term lets are predominately located within the City Centre and adjoining areas. Analysis from the Chartered Institute of Housing identified that there are two Airbnb lets for every 13 homes within City Centre Ward 11.

Analysis of the housing market impacts in Edinburgh carried out in 2018 showed that the rapid growth in short term lets over a short period was having an impact on both supply and rent levels. There are over 60,000 private rented sector (PRS) homes in Edinburgh, which represent a quarter of the city’s housing. Presently there is an estimated loss of 10% of the PRS sector attributed to short term lets. The loss of traditional PRS properties is more prevalent in the city centre and in the north of the city, with the loss of stock running at up to 30% in some northern parts of Edinburgh.

Across the city, PRS stock levels fell c.5-6% between 2014-2017 which may be attributable to a number of factors including changes in taxation and regulation of PRS. However, it should be noted that over the same period the city saw 2,700 more properties per year listed as available on Airbnb, while PRS stock fell 560 per annum. Research continues to take place to better quantify the loss of PRS properties to short term lets industry.

The speed and size of rent increases within the city continue to be a substantial issue which the city encounters. Research indicates rising rents occurring in those areas bordering a high concentration of Airbnb, suggesting a displacement of demand. In those areas bordering the city centre, rents have increased around 20-27% over the period 2014-17.

Existing powers available to the Council
A Short Term Lets Virtual Team has been created to co-ordinate action using existing powers across several services. The Regulatory Services Manager leads this team, with a team leader from Planning acting as a day to day manager. The following resources in terms of front line staff contribute to the team:

1. Trading Standards;
2. Environmental Health;
3. Private Rented Services;
4. Planning;
5. Community Safety;

The virtual team review all complaints received about short term lets and, where possible, identify and implement a response to address poor practice through any powers available to the Council. The team also encourage good practice and assist in collecting intelligence on how the short term industry responds to this approach.

The team prioritises enforcement activity in relation to those short term lets believed to be operating on a commercial basis.

Most of the cases investigated by the team have involved consideration of planning enforcement action. Since July 2018, 126 new cases have been opened and while 71 are ongoing, 22 have been subject to enforcement action. When investigating the cases, it must be established whether the use of a residential premises for short term holiday lets is a material change of use. The question of materiality is one of fact and degree having regard to a number of factors such as the character of the property, the frequency of arrivals and departures, the number of people occupying the property, disturbance to neighbouring residential amenity. Evidence gathering can be a very difficult process. Case officers must consider each of the above factors. This can involve a number of visits to check levels of occupation and to collect corroborative evidence to support any claims of noise and nuisance.

Since 2018, 22 enforcement notices have been served, 8 have been appealed and all 8 have been upheld by Scottish Government reporters. There has been legal challenges in respect of the reporters’ decisions at Chancelot Terrace and Baxter’s Place. Chancelot Terrace was withdrawn and Baxter’s Place is due to be heard at the Court of Session. During this period there has also been planning appeal decisions against refusals to grant planning permission and certificates of lawfulness for short stay let uses. These decisions have typically allowed short term let uses in main door properties.

The reporters’ decisions have informed an understanding of when a change of use may be material but, also through the planning appeal decisions, when a short stay let use may be acceptable. This makes it easier to know when to take action moving forward and should lead to action being taken more quickly. This is reflected in the fact that 11 notices have already been served in the first 3 months of this year, the same number for the whole of 2018. In addition in-house training is being put in place to ensure that the officers take a more consistent and robust approach to investigations moving forward.

The virtual team is looking at new ways of working in response to the growth of short stay lets. It is trialling the use of an impact warning letters to tackle a large concentration of short stay lets at Western Harbour. Working with residents and the property factor, over 40 letters have been sent out to the owners of the flats in question to highlight the permissions and other various legal requirement they may be breaching and requiring that the use cease. The owners have until the 30 April 2019 to reply but responses so far indicate that the trial may be worth pursuing.

A Checklist of Best Practice has also been produced to inform owners of their legal obligations in terms of permissions, safety at the property and managing visitors. This guidance is aimed at educating owners and prospective operators to their obligations to not only their tenants but also the wider community. This form of self – regulation can have an important role to play in limiting the growth of inappropriate forms of short term let uses.

The planning service has also piloted taking enforcement action against key safes on listed buildings. This resulted in the enforcement notice for the removal of 11 key safes attached to a listed building at 1 Upper Bow being upheld on appeal. The success of this pilot highlights that in certain circumstances it can be appropriate to take action against multiple key safes on a single property.

Ahead of the summer period, the virtual team have been making arrangements to deal with an anticipated increase in the number of complaints. It is hoped this proactive approach will help to identify and tackle the most troublesome cases and provide residents with a satisfactory service.

Proposals for further regulatory powers
Taking into account the issues and proposed actions outlined above, it remains clear that the Council lacks specific regulatory powers which would allow it to effectively respond to all the issues currently faced by the City. Previous research has been reported to a number of committees offering comparison with how other major cities and tourist destinations have dealt with similar issues.

It is clear that, as pressures from the operation of short term lets mount on a city or region, the vast majority of major destinations have resorted to new or additional statutory powers. These powers typically impose a cap on the total number of properties used as short term lets, and/or a cap on the number of days that an individual property can be used as a short term let. The motivating factors are very similar to the issues faced by this council, namely a desire to protect the supply of residential homes and to minimise the disruption to local communities.

The Council has therefore requested that the Scottish Government introduces a discretionary licensing system for operators of short term lets. The Council would expect that each individual local authority could consider the relevance of the licensing system and choose whether to adopt the scheme in its area. At a minimum the licensing system must be capable of the following:

1. A licence will be for both the individual property and the owner or operator of that property;
2. Any owner or operator shall be fit and proper;
3. The local authority shall have the discretion within the licensing system to control or otherwise cap the number of properties licensed either across the local authority area or in specific areas of the local authority;
4. A licensed property must meet certain safety standards, e.g. gas appliances must be safety checked;
5. The location, character and suitability of properties will be relevant;
6. A licence will be required for anyone either operating a property on a commercial basis or in excess of 45 days.

The exact scope of any licensing system would ultimately be the decision of the local authority, and after consultation it is anticipated that a policy would be adopted to set out a local position. It is recommended that the preferred method of introducing a licensing system is by means of regulations introduced by Scottish Government under Section 44 of the Civic Government (Scotland) Act 1982. Amending the licensing system for HMOs under the Housing (Scotland) Act 2006 is the least preferred option, as this could have wider implications for unrelated housing matters, and the licensing scheme under the Act applies Scotland-wide. Failing this the Council would ask for fresh legislation as an alternative.