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Residents of Tusculum, a house converted into six flats in North Berwick, claimed they had been denied the right to object to the flat being used commercially by East Lothian Council.
And they accused holidaymakers who use the property of being “inconsiderate of the needs of the owners.”
In an appeal to Scottish Ministers one resident said the flats, which were created in the stunning sandstone building complete with private gardens in1949, had a condition attached that prevented them from being used for business purposes and the short-term lets breached this.
However the appeal was rejected after the Scottish Government Reporter ruled there was no third party right of appeal.
The row broke out after the owner of flat 4 in the property, which can be accessed from York Road and Links Road, in the town , was granted a Certificate of Lawfulness.
Agents for Jane Kitching – who advertises the property for rent as ‘Jane's flat at Tusculum’ – said she had been using the flat for short term holiday rental for nearly 30 years except for a four year period when her parents lived there and that she lives in North Yorkshire.
They asked East Lothian Council’s planners to confirm its use with the certificate, which was granted in May.
The two bedroom property is marketed on Airbnb and with a minimum five-night stay on offer for £1,041 including service and cleaning fees.
In an appeal statement to Scottish Ministers it was claimed neighbours only learned of a “long term deception” two years ago after they were told the flat was being used by the owner’s family and friends.
They said: “Only recently (in the last two years) has the holiday let use of the flat been confirmed because it is now advertised through Airbnb.”
The statement went on to warn that the flat access was unsafe because of an “an antiquated lift with manually operated open trellis gates”.
It said: “There is nothing to prevent a child from accidentally put an arm through the gate when the lift is in motion and receiving serious injuries.”
And it claimed the flat owner had avoided scrutiny by applying for the certificate rather than being told by the council to apply for planning permission.
It said: “The outcome of this was a successful application for a certificate of lawfulness which circumvented the usual scrutiny , inspection and consultation which would have been the case if a normal planning application had been made.
“This prevented the other residents from voicing their opposition to holiday letting of Flat 4. It is this lack of scrutiny and corroboration that is the basis of this appeal.”
Dismissing the appeal, however, the Scottish Government’s appeals division told the residents “there is no third party right of appeal”.
A spokesperson for East Lothian council said: “We can confirm that this matter was determined through the correct process.”