The full-service law firm found that 566 of the 632 applications submitted for assessment since the new licencing and planning regimes were introduced in October 2022 were then rejected – a refusal rate of 90%. All short-term let hosts and operators must have a licence by January 1st, 2025.

Source: City of Edinburgh Council

According to the City of Edinburgh Council’s rules, if an entire dwelling is being offered by a new operator as a short-term let, planning permission is required before applying for a licence. This is also applied to existing hosts who let out a property that is not their main home.

A certificate of lawfulness is required instead of planning permission for properties that have been used as a short-term let for more than 10 years, without any enforcement action, and there is no material change of use. The refusal rate for certificates of lawfulness for existing short-term lets was much lower, but is still 25%.

The introduction of legislation by the Scottish Government meant local authorities had to bring in new licencing regimes for short-term lets. From September 5th, 2022, the entirety of the City of Edinburgh Council area was designated a ‘short-term let control area’, meaning the use of a dwelling that is not a principal home as a short-term let is now deemed a material change of use and requires planning permission.

In the second judicial review of December 2023, Lord Baird ruled that the new rules could not be applied retrospectively, making the council’s requirement for all landlords of entire property short-term lets to seek planning permission unlawful. He also took issue with the council’s short-term lets application form, saying it “actively discourages” anyone from applying who did not have planning permission or an application in the pipeline, despite this not being required in every case.

Karen Gatherum, solicitor and licencing specialist at Gilson Gray, said: “The number of rejected planning applications for short-term lets lays bare the disconnection between the licencing and planning processes because of the way the legislation has been written. Securing a licence was made out to be the difficult part of the process for short-term lets operators and received most attention, but planning has turned out to be the issue – 90% of the planning applications made have been rejected.

“The figures underline why you should seek out professional planning and licencing advice before submitting an application for either. And, if you are thinking about buying a property to let out on a short-term basis, then you may want to seriously reconsider. It is taking up to nine months to determine licences and up to six months for planning – during which time you’ll be unable to operate and, in all likelihood, you will be rejected on one side of the process. It’s a system that has been set up to fail.”

Anyone providing short-term let accommodation must have a licence or they face a ban and fine of up to £2,500. Submitting a planning application to operate a short-term let costs £600 per 100m2 for each property, depending on the local authority, along with having to provide a variety of certificates and accreditations, each with their own costs attached.

One Edinburgh resident obtained his home letting licence to continue letting out his city centre flat for short-term visitors. Originally from overseas, he spends up to 10 weeks per year abroad because of work and business commitments. While his flat remains his primary residence, he was served with a planning enforcement notice for advertising it to let for several weeks during the summer, which was deemed to be a material change of use.

Gilson Gray stressed that as this is not a secondary letting, it should not fall under the requirement to have a certificate of lawful use or planning permission.

He said: “I’ve been letting my flat out since June 2022 for the periods while I’m away on business or returning home, with no issues before the introduction of the new system. When it came into effect, I applied for and was granted a home letting licence from February 2024 to continue operating on that basis.

“However, at the beginning of May 2024 – less than 80 days after receiving my license – I was served with an enforcement notice by the Council requiring me to cease all short-term letting activities by May 30th, because I need planning permission to operate. This generated an immense amount of stress since the Council didn’t give enough time to appeal. I appealed to the DPEA following the official channels, but it was unsuccessful.

“The whole experience has been very frustrating – I am happy to play by the rules and thought I had gone through the right process. But, the guidelines seem to be applied in a different way than what they actually say. On one hand, the council grant the license, but with the other they removed it.

“The licencing process was much more straightforward, but planning has felt more like they want to create obstacles and barriers, and they are not interacting with other departments. I have spent a lot of money trying to make this work, but it feels like it is a long and deliberately complex process designed to make you give up.”

Karen Gatherum added: “More often than not, it’s not big businesses we are talking about who are being rejected – it’s individuals letting out properties while they are away on business or holiday and single parents who are letting out a bedroom so they can afford to stay in their home.

“These cases should not require planning permission, as there is no material change of use – but many of them are being served with enforcement notices. There needs to be a clearer communication and consistency about the process, who it affects, and in what way.”

Amanda Cupples, Airbnb general manager for Northern Europe, said: “Edinburgh’s draconian approach to regulating short-term lets has failed to ease the affordable housing crisis. Instead, housing costs and hotel prices have hit record highs – rising higher and faster than the rest of Scotland – and guests have been priced out of visiting the city and attending its major cultural events. Data shows there is no upside to Edinburgh’s outlier approach to regulation, and we encourage the city to explore a more inclusive way forward.”

Council leader Cammy Day told Scottish Housing News that the council’s short-term let controls are a “step in the right direction”.

He said: “I continue to firmly believe that Edinburgh’s thriving visitor economy needs to be managed and sustainable. And that our short-term let controls have been an important step in the right direction.

“Scottish Government planning policy requires that when determining short term let planning applications we look at the loss of a property as a home and weigh that against local economic benefits as well as looking at if there are unacceptable impacts on local amenity or the character of a neighbourhood. We also look at each planning application individually.

“In terms of licensing, our new regulations have been in place for over a year and early signs are promising that they are helping to keep visitor accommodation safe and well-managed in Edinburgh. We’ve always said that it is important to monitor their impact and so we recently asked businesses and visitors how they’ve found the changes. We’re considering all of the feedback we received at the moment and we’ll report back to the Regulatory Committee in the coming months.”