Edinburgh economy at risk with fewer short-term lets, £57m loss predicted.
A “punishing” regulatory framework for Edinburgh’s self-catering sector has raised concerns about the potential job losses and lack of resolution towards the city’s housing crisis, according to a trade association. A recent independent analysis revealed that further reductions in short-term lets could have a significant negative economic impact, potentially costing Edinburgh’s economy £57 million.
The study conducted by Edinburgh-based consultancy BiGGAR Economics highlighted that while short-term lets represent only a small portion of the total properties in the city, they play a substantial role in its economy. In 2023, the short-term let sector in Edinburgh generated £154 million in Gross Value Added (GVA) and supported 5,580 jobs. Guests staying in short-term lets tend to spend more on local goods and services, particularly in the hospitality, tourism, and retail sectors.
Commissioned by Justice for Scotland’s Self-Catering (JfSCC) and STL Solutions, the report not only examined the economic and fiscal impacts of short-term lets in Edinburgh but also assessed their effect on housing supply and their wider sectoral impact in supporting business and tourism activity.
Despite accounting for only 0.8% of Edinburgh’s dwellings, secondary lets—properties rented out entirely to guests—have been under scrutiny, especially in the context of a growing number of long-term empty properties in the city. This issue has come to the forefront as The City of Edinburgh Council considers revisions to its licensing scheme, and the Scottish Parliament’s Local Government, Housing, and Planning Committee prepares to gather oral evidence from stakeholders on the Scottish Government’s short-term let implementation update report.
The key takeaways from the study include:
- The self-catering sector contributes £154 million in GVA and sustains 5,580 jobs in Edinburgh.
- A mere 0.5% decrease in the number of secondary let properties could result in a £57 million loss in economic activity.
- While secondary lets represent 0.8% of dwellings, the number of empty homes in the city is significantly higher, at 4%.
Although the report centers on Edinburgh, its findings are likely to be relevant to other local authorities grappling with the consequences of short-term let regulations. The research outcomes have been shared with the council and the Scottish Government, emphasising the self-catering industry’s commitment to evidence-based policymaking and data-driven decision-making.
The industry has expressed reservations about the unintended consequences of the Scottish Government’s regulations on short-term lets, suggesting that these measures have failed to achieve their intended policy objectives. Legal challenges have further complicated Edinburgh’s approach to regulating short-term lets, with recent setbacks prompting the council to re-evaluate its licensing application procedures.
Graeme Blackett, director of BiGGAR Economics, highlighted the economic significance of short-term lets in Edinburgh, pointing out that guest spending in the local economy has a more substantial impact than residential use. The sector contributes £154 million annually to Edinburgh, with short-term let properties representing only 1.5% of the city’s housing stock—a proportion deemed too insignificant to significantly influence the local housing market.
Fiona Campbell, CEO of the ASSC, underscored the economic importance of secondary lets in supporting over 5,500 jobs and boosting local tourism and hospitality businesses. Campbell stressed the need for a holistic evaluation of Edinburgh’s housing market, focusing on addressing the prevalent issue of empty homes rather than jeopardising the tourism sector.
Iain Muirhead, co-founder of STL Solutions, emphasized the vital role of short-term lets in supporting Edinburgh’s tourism industry and accommodating visitors for various purposes, including work, festivals, and education. Muirhead urged local policymakers to consider the report’s findings when formulating regulations to prevent the emergence of an unregulated black market.
Ralph Averbuch, spokesperson for JfSCC, challenged the misconception that full-time Scottish self-catering operators are the root of the issue, highlighting the real problems of population growth and inadequate affordable housing construction. Averbuch called for bold government action in addressing the housing crisis, instead of targeting a small fraction of Edinburgh’s housing stock.