A plan to regulate short lets such as Airbnbs has been ruled unlawful by a judge before it even comes into effect.
Landlords in Edinburgh took the city council to court and following a two-day hearing at the Court of Session, Lord Braid agreed that part of the proposal was unlawful.
The council wants to introduce the licensing scheme following complaints about the high number of short-term lets in the Scottish capital.
Opponents of Airbnb have claimed that short lets fuel housing shortages and lead to increased anti-social behaviour
Short let landlords had until October 1 to apply for a licence, with people who list whole properties on sites such as Airbnb also needing planning permission.
Renting out a room in your own home, or letting your home while on holiday, would still be allowed.
Activist groups from across the UK claim the Edinburgh model could have been used as a template for short let regulation nationwide – but that now lies in tatters.
Opponents of the scheme raised £300,000 through crowdfunding for a judicial review at the Court of Session.
Lord Braid ruled that the lack of provision for temporary licences and requirement for some hosts to supply floor coverings went beyond the council’s powers.
He said the policy was unlawful because it breached existing laws on what licensing authorities could do under the law.
He wrote in his judgment: “It is not the function of the respondent’s licensing authority to decide that a licence should not be granted because a property is of a particular type or is in a particular area.
“For the respondent to adopt a normal practice of not granting an short term licence for premises in a tenement, even where planning permission had been granted, is irrational and contrary to the purposes of the overall statutory scheme.
“It would be perverse and oppressive for the respondent, upon receipt of a licensing application, to require an applicant to obtain planning permission for a tenement property; and thereafter, planning permission having been obtained, to refuse the licence for no other reason than that the property was in a tenement.”
The Scottish Government had backed the Edinburgh scheme, claiming that a proliferation of short lets reduced the stock available for mainstream letting.
Rosie Walker, head of litigation at Gilson Gray representing the short let operators who brought the action, says: “The court found that the City of Edinburgh Council’s short-term let licensing policy was unlawful at common law and in breach of The Provision of Services Regulations 2009 for a number of different reasons.
“Most strikingly they 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.
“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.
“Short-term accommodation providers create a significant number of jobs in the city and deliver flexible accommodation that hotels and other operators simply cannot – particularly during important events like the Edinburgh Festival.
“The campaign was the largest crowdfunded legal case in Scottish history, underlining the strength of support for our clients. It comes on the back of years of engagement by the Industry with the Scottish Government and the local authority to try to put in place a workable regulatory framework.”
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