Court of Session in Scotland finds council short term let licensing policy unlawful

Scotland's Court of Session has found Edinburgh City Council's policy requiring short-term let (STL) operators to be licensed to be unlawful as it was not for the council as licencing authority to decide that a licence should not be granted just because a property is in a tenement.

Lord Braid concluded that the policy, which applies to Airbnb accommodation, is unlawful at common law in respect of the rebuttable presumption, the lack of provision for temporary licences and the requirement to supply floor coverings.

The Court of Session, which is Scotland's supreme civil court, also found that the policy breaches The Provision of Services Regulations 2009 regulations.

Prior to adopting the STL policy, the council adopted an STL Control Area that spans the council's entire geographic area. Within the control area, the use of an entire dwelling as an STL, which is not the individual's principal home, is deemed to be a material change of use requiring planning permission.

Edinburgh's Regulatory Committee later agreed on the STL policy in September, which required all STL operators to acquire a licence by October 2023.

The short-term let operators behind the claim were represented Rosie Walker at Gilson Gray. The operators reportedly raised the highest amount in Scottish legal crowdfunding history to bring the claim.

Commenting on the decision, Walker said: "Most strikingly [the court] found that it was not for the Council as Licencing Authority to decide that a licence should not be granted just because a property is in a tenement."

Walker added: "Our clients took the brave decision to bring this action against the local authority to protect their businesses and, more widely, to protect an industry that is very important to the Edinburgh economy."

Responding to the judgment, Council Leader, Cllr Cammy Day, said: "It's no secret that we face unique housing pressures here in Edinburgh, with a small but densely populated city centre and fast-growing population, and it's crucial for us to strike the right balance between promoting our visitor economy while looking after the people that live here all year round.  

"Our residents have told us that, in many cases, STLs are hollowing out their communities, reducing housing supply and increasing housing costs. We can't forget that many have endured years of disturbance and anti-social behaviour and we will continue to work hard to get this right.

"The court acknowledged our intention to find a solution to this and agreed that it was legitimate to use both planning and licensing policy. We welcome the clarity provided and will now consider our next steps in more detail."

Day noted that she continues to believe that STL controls "would be an important step in the right direction".

Both the Welsh Government and Whitehall have launched consultations on the implementation of mechanisms that allow more local control over short-term let numbers.

Announcing a consultation in January this year, the Welsh Government said a statutory licencing scheme was part of an effort to address the "negative impact" short-term holiday lets can have on housing availability.

Meanwhile, the Department for Levelling Up, Housing and Communities' consultation concerns the introduction of a use class for short-term lets and associated permitted development rights.

Adam Carey