Hotels could benefit from restictions on short-term lets - Allan Leal

At a previous workplace, I could see many flats from my desk on Lothian Road in the heart of Edinburgh which were clearly used as high-occupancy short-term lets; for hen and stag parties and groups of foreign tourists who would come and go. You could see rooms with multiple beds, and the cleaners turning these over several times a week.

A great business, but I can understand the frustration and upset this could have caused for other residents and why Edinburgh City Council eventually felt the need to do something about it. The Scottish Government passed the Civic Government (Scotland) Act 1982 (Licensing of Short term Lets) Order 2022 on 19 January 2022. This introduced a licensing scheme for short-term lets which started in October 2022. It applies nationwide, but Edinburgh is particularly affected, with more than 12,000 Airbnb properties alone at one time.

It has been well discussed how much more difficult it may be to operate short-term lets in Edinburgh now that the scheme is in place, with planning permission, gas safety certificates, floor plans and so on all being required.

If, as a landlord, you can get through the requirements, this will do little to resolve the issue of who is using these premises. Having planning permission doesn’t stop a stag party or groups of tourists making noise at unsocial hours. The city relies on the money brought in by just such groups.

Allan Leal is a Partner, DLA Piper

What it does do, though, is put obstacles and fee requirements in the way of those fortunate enough to be able to have the additional space to rent out, with planning seeming to have the most potential to delay the process or to refuse approval outright (although this may be about to become easier following the publication on 1st December of the opinion of Lord Braid in a judicial review brought against City of Edinburgh Council by Iain Muirhead and Dickins Edinburgh Limited).

If multiple landlords come out of the market because it’s too hard or their planning is refused, it leaves a large hole in Edinburgh and Scotland’s short-term accommodation capacity.

However, there may potentially be some beneficiaries from this, as exemptions to the requirements include licensed hotels and B&Bs and aparthotels with multiple separate apartments.

It is not clear yet which if any (or all) of these categories of business will see the most upside, but Edinburgh is definitely a hotbed for new hotels and serviced apartments/aparthotels, with many UK lenders currently only looking to lend against these types of assets here or in London.

A variety of operators and owners are currently involved in hotel projects across the city and with rooms running at around 75 per cent occupancy across the year, there is definitely a need for more space.

Serviced apartments are being developed at Forth House, and hotels are being built or are in the works for the likes of Resident Hotels, Hyatt, Red Carnation, Ibis, Radisson and others, both in the city centre, down to Leith and out by the airport.

These developments bring a variety of jobs to the capital, whether in development, fit-out, hospitality, management or otherwise.

Whilst some may bemoan the number of tourists in Edinburgh during the summer and festive period, hopefully the benefits of the revenue they bring, increased investment and jobs, and possibly some quieter nights for those more permanent residents of flats in the city centre will go some way to softening the blow.

Allan Leal is a Partner, DLA Piper