"Where will people live?" How short-term lets are hitting Edinburgh

Written by Liam Kirkaldy on 9 July 2018 in Inside Politics

The growth in short term tourist lets has led to calls for greater regulation to protect city centres

Image credit: Pixabay

Sandwiched between identical 19th-century buildings, Jamie’s flat, in the heart of Edinburgh’s Old Town, is pretty typical for the area. The Royal Mile lies to one side, lined with tourist shops, selling cheap, lightweight kilts and tartan scarves. On the other is Waverley Station and Princes Street Gardens – built on the site of the old Nor’ Loch, a body of water which was drained in the 19th century to allow the city’s expansion.

Inside his flat, Jamie sits in a kitchen below long, exposed wooden beams, stretching across the width of the room. Exposed stone, running along one side of the flat, offers up proof of the history all around.

But a closer look at the tenement provides a clue to more recent changes. On the front door to the stair, home to 15 flats, there’s a row of key boxes – locked containers where keys can be deposited and collected – running up the side. Fifteen buzzers and half-a-dozen dozen key boxes.

Jamie’s building, like many across the centre of Edinburgh, is being slowly taken over by short-term lets. The companies involved – Airbnb, Booking.com, HomeAway, HouseTrip – offer to help homeowners rent out either individual rooms or entire flats, and they have seen a huge boom in recent years, growing alongside the tourism sector to offer travellers the chance to get a real feel for the city.

And business is booming, with the tourism sector generating a combined turnover of £7bn in 2017, employing 211,000 people (12 per cent of Scotland’s workforce), and contributing £3.8bn in GVA terms.

The market for short-term rentals is expanding alongside, with estimates from VisitScotland showing that approximately 17 per cent of all tourist visitors stay in self-catering accommodation.

Yet, as the market has grown, so too have concerns over the effect of short-term holiday letting on house prices, rents and the culture of the city centre.

Figures compiled by the Scottish Green Party suggest there are now 6,200 flats available for short-term letting in Edinburgh, 55 per cent of which where the owner is not present. Meanwhile, according to the Greens, more than a third of the entire flats or homes advertised are owned by professional landlords, who manage multiple properties across town.

Sitting in his Old Town flat, one of just three in the building yet to be handed over to short-term lets, Jamie says he is worried about what the growth will mean for the city.

He told Holyrood: “No matter where you go, whether it’s the medieval parts of the Old Town, the Tudor town, expanding down the Canongate, the Victorian bustle of the New Town, there’s always people, interspersed with businesses. Tourism itself is a new type of business, which seems to be pushing out the people. If people are coming [to Edinburgh] to see a living, working town then what does that mean for them?

“We want people to come to the city – no one hates tourists, they can be a pain, but so can anyone else – but the question is how you can promote tourism while maintaining or developing the local community.”

Jamie’s landlord is also concerned about whether owners, buying flats with the sole aim of turning them over to short-term lets, will take responsibility for maintaining a very old building.

“Owner-occupiers are more engaged with the building,” Jamie says. “They are more likely to pay for the guttering, or pay for cleaning the stair, because they are using it every day, and it could be them next time. Whereas if they are away they’ll be thinking that their guests will forgive them for a dirty stair if they’re only here for a few days.

“If this continues then every time someone wants to sell up, the vultures will circle, and they will offer far more money than a normal domestic buyer would be able to. You’ll end up with businesses with 500 properties across town. And that’s fine, so long as it’s above board and you are paying commercial rates.”

Clearly the business model – made possible by advances in technology – offers a huge opportunity for people wishing to make money out of a spare room, or looking to make much more than they would from letting out a property to long-term tenants.

In fact, a report from the Association of Scotland’s Self-Caterers (ASSC), shows that professional short-term rentals generate over £700m of economic activity within the Scottish economy annually, including £312m on accommodation, and supporting 15,000 full-time equivalent jobs in Scotland.

The ASSC found, from an operator survey, that 57 per cent of respondents reported an increase in the number of rental nights over the last five years, with 41 per cent saying they expect a further increase in the next five.

ASSC Chief Executive, Fiona Campbell, said: “The information and research contained in this excellent paper show how important the short-term rental sector is to the Scottish tourism and wider economies.

“We hope that stakeholders from across Scotland, particularly those who have drawn prejudicial conclusions about what we do, will take the time to read it and consider its findings.”

Yet a sense remains that, while the growth may be great for those making the profits, the expansion of short-term letting could spell bad news for those looking to own their own home, or find cheap rents in the city centre.

Lorraine, based in Leith, lives in a building with a mix of people renting and owner-occupiers. “You can see these key locks popping up everywhere – I see more in Leith Walk all the time. I’d thought it was something that happened in other stairs, but then the other day, someone who was renting put up two boxes, for the one flat, without any acknowledgement of the neighbours. I actually got instantly angry. It’s out of your hands, and you feel like no one told you.

“It’s just really frustrating. We’ve lived here for more than 12 years and before that my mum lived here, and you can definitely tell the difference. We’re thinking about moving, and it’s because of the mix of things, but I’m a bit worried because I don’t want to sell the place to someone that’s going to turn it into an Airbnb. I’d rather it went to a family. I know you can’t stop progress but it still feels like a shame.”

Both Lorraine and Jamie differentiate between people renting out a room in their flat for a few days – or letting out the whole thing when they go on holiday – and those who buy flats simply to rent them out on short-term rental websites.

And clearly there is a wide spectrum of short-term rentals. Abigail has been a host, using Airbnb, since 2013. Self-employed, she told Holyrood that renting out one or two of her spare rooms is a good way of supplementing her income, while also allowing her to meet new people from all over the world.

In fact, while some may view short-term lets purely as a business opportunity, she says renting out a room has helped her make lasting friends from places ranging from the Netherlands to Australia.

“One guest was a producer who was working in Edinburgh during the Festival and needed somewhere quiet to stay,” she told Holyrood, “and we’re still in touch now.”

She has even had neighbours in her stairwell book a room in her flat for when relatives come to visit. “It’s great for them, to have another room off their flat,” she laughs.

Abigail meets her guests at the door, rather than relying on using one of the key deposit boxes favoured by some hosts. She also rarely rents out more than one room at a time, and makes sure to check those coming to stay will make respectful guests.

“I warn them that I have cats, and I think that’s actually a really good way to try to check if they are a good fit or not. In fact, some of the people have moved to Edinburgh now – they cat-sit for me sometimes.”

But, while hosts such as Abigail obviously make an effort to minimise any disruption caused by having guests to stay, while also taking great care to ensure the flat meets safety standards, others may be less scrupulous.

In fact, it is not live-in hosts – who rent out a spare room while continuing to live in the property – that concern campaigners, but an apparent rise in landlords buying flats with the sole aim of turning them over to holiday letting websites.

Kirsty became increasingly concerned by the growth of short-term lets after seeing the flats around her being bought up. She told Holyrood that over the last few years, three flats have all been bought for renting them to tourists.

“I walk through the town and see those boxes, no one lives there anymore. There’s probably one or two people, still dotted around, but I really feel for them.

“We have had either one or two [short-term lets] in the building, but even one is enough to bring a huge number of people into your home. Even one that is rented out for 90 days a year, if people stay for two nights then that is 45 groups. A one or two-bedroom flat being let out to four people at a time, that’s 180 people, even in 90 days, that are being given the key to your front door, to your garden, that have access to your shared spaces.

“Even before you get into late night noise, wheelie suitcases and early morning flights, it is such an intrusion into your privacy and your security. You come home and see a new car parked outside, which is a signal that there will be a new group of people in your home. Coming in late at night, inviting more friends over, handing keys over – my immediate concern is the effect on people’s lives.

“Where I live, there’s a real sense of community – people look out for each other – but in the Old Town, that is being lost. I can see that happening where I live as well – there won’t be a community left. And where will people live if we are turning all these properties into holiday lets?”

These concerns are not limited to Edinburgh or Scotland, with cities across Europe hurriedly trying to adapt to a rapidly changing market. Barcelona, held as a model by campaigners, recently launched a crackdown on illegal, unlicensed apartments, while issuing heavy fines to operators which advertise unlicensed flats.

Barcelona expanded its team of inspectors – who investigate illegal rentals – while also cross-referencing licences of properties advertised online. If caught, property owners can face fines of up to €60,000.

It was concern over the effect of short-term letting on the housing shortage, as well as complaints over anti-social behaviour and a loss of community, that drove the Scottish Green Party to launch its Homes First campaign.

As the campaign briefing puts it: “In many cases, short-term let landlords do not pay non-domestic business rates as their properties are categorised as residential properties. This means that local government is missing out on essential funding whilst rent-seeking absentee landlords are generating profits.”

Green MSP Andy Wightman says he has seen a huge surge in the number of people contacting him to raise concern over the growth of short-term letting in Edinburgh.

“Our view is that the majority of flats that are used for short-term lets are operating unlawfully. They have an explicit bar in the title deeds from operating a commercial business, they haven’t applied for planning consent and arguably, by operating a commercial letting business, they should be compliant with all the things a normal residential landlord would need to be compliant with – gas safety, fire, carbon monoxide and all the rest of it – and in most cases, it’s not evident they are.”

Wightman added: “We have no objection to home sharing in principle, if you want to rent out a room or a flat for a week. Festival lets have long been a part of the Edinburgh housing market and we have no objection to that. If it’s your main home and you are letting it out to make a bit of money, that’s no problem. But they [letting websites] are also hosting commercial letting, and that is a problem – they should have planning consent, and in my view, they should mostly be banned, because the council’s policy at the moment, in planning terms, is that there is a presumption against short-term lets in flats.

“The Old and the New Town of Edinburgh are World Heritage sites, and part of the grounds for being so is not just the history, it’s also that people live in the city centre. That is something precious, to be protected and safeguarded. It’s vitally important. If the centre of Edinburgh became a theme park, arguably, you would still get lots of people visiting, but it would lose a lot.”

Under Green plans – which could be introduced through ministerial powers – planning and licensing powers would give local authorities the flexibility to set their own policies to regulate short-term letting according to local conditions. Councils would then hold power over whether or not to give consent for these lets, and anyone wishing to run a commercial let out of a flat would need specific permission.

Edinburgh City Council now has a working group examining the effect of short-term lets in the city. Claire Miller, a Green councillor for the City Centre ward and a member of the group, told Holyrood: “It’s something that I heard time and time again when I was out door knocking, and it was one of the issues I campaigned on for election last year. Apropos of nothing, people were telling me, ‘this is terrible and we need to sort it out’. The Old Town in particular is suffering but it’s definitely across the city now, it’s not just restricted to the traditionally touristy areas.

“My main concern is about the loss of housing. Edinburgh has a housing crisis, in terms of the availability of housing, and that leads to prices going up. The council has a house-building programme but actually, if you are losing housing stock for various reasons – and this is not the only one – that is not helping. That is the bit I am primarily concerned with, though I am also really conscious that the reason the residents are raising it with me, and are continuing to do so, is because they are concerned about community cohesion, and the ability to live a quiet and peaceful life.

“People always say, ‘well, you live in the city centre, you need to accept a certain amount of noise, and boisterousness and so on’, and I think people that live in the centre do accept that, but they also want some ability to control it. So it is about finding the right balance, which is what I am trying to fight for, so I think we need to bring it back the other way and have more respect for the fact that Edinburgh has a living city centre.”

The report, expected to be published by the working group over the next couple of months, will identify the powers which could be used by the council, so it can take a coordinated approach to tackling day-to-day concerns. But it will also recommend new regulation, allowing the council to take a stronger line, which will require support from the Scottish Government.

Miller said: “We just don’t have the power. There’s no suitable regulation, you can’t regulate a holiday let in the same way you can regulate an HMO flat. So we will need to ask for that.

“But the other angle is planning. There is currently a planning policy in Edinburgh on holiday lets. But what it doesn’t have, is there is no specific use class for holiday lets. We have this bizarre situation where both flats and holiday lets don’t exist in a use class in the Planning Act. The planning department has done its best with the fact that the framework doesn’t specify those types of buildings. They define them as ‘sui generis’, meaning they are in a class of their own, so every single one is in their own class, but it’s not a very effective way of describing it, so we need a separate use class defined for holiday lets within the Planning Act.”

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