An Inner House judge ruled this month that the council’s decision to designate the whole of the city as a short-term let control area, introduced last year in a bid to tackle high concentrations of AirBnB-style holiday lets – could not be applied retrospectively.

As a result, the council is no longer able to demand that all operators of entire property ‘secondary’ lets seek planning permission as part of their application for a licence, only those who began operating after the control area was introduced back in September 2022.

While the local authority maintains planning permission will be required in the vast majority of cases, the ruling means potentially thousands of applications will have to be assessed on a case-by-case basis to test if the change of use of a property has been ‘material’.

It is understood this could stretch resources in the city’s planning department and lead to significant additional staff and enforcement costs.

The council has yet to decide whether it will appeal the judgement but a cross-party motion tabled by the council’s Labour administration alongside Green and Lib Dem councillors, and backed by SNP councillors, noted that the judgement could have significant implications for the council’s approach to effective regulation of STLs.

Councillors also agreed to ask the minister for local government, Joe FitzPatrick MSP, to seek clarity on the position of the Scottish Government on the principle of retrospectively requiring planning permission for STLs within a control area and to introduce an emergency bill to Holyrood to address the issue.

The motion said failing that, ministers should “consider what changes to primary or secondary legislation or other options might be required so Edinburgh Council can continue with its originally intended approach, as agreed cross-party”.

Planning convener, Cllr James Dalgleish, said: “Although we still have to decide or appeal or not – and I feel very much that’s open for discussion among all the political groups – it is my personal opinion that now is the time to move past this costly tit for tat appeals and counter-appeals and focus on what we need to do to make our policies work for residents.

“As a result of our policies we’re seeing properties that were being used for STLs now moving back into residential use. That could be someone’s new home.

“Because of this policy we can now really tackle issues that are short-term let-related such as anti-social behaviour, which I know many of our residents are worried about.”

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “The ASSC welcomes Edinburgh Council taking cognisance of Lord Braid’s judgement as it has profound repercussions for short-term let policy in the capital and elsewhere in Scotland. However, it should not have taken another grassroots legal challenge from local business owners to arrive at this stage.

“We believe they already possess the necessary tools to fairly and effectively regulate the sector and the ASSC has recently briefed councillors to that effect. The self-catering industry, which contributes so much to the local economy, stands ready to work with Edinburgh Council in a constructive and positive manner as they take forward their next steps.”