Edinburgh’s Airbnb Dichotomy
by Sandy Anderson
For many years, Edinburgh has been a ‘go-to’ destination for the discerning international tourist. A relatively compact City Centre steeped in architectural heritage and iconic landmarks, a vast expanse of beautiful countryside for outdoor and extreme activities on our doorstep, an internationally renowned annual arts and comedy festival, and a plethora of restaurants, bars and clubs attract cultural tourists and revellers from around the world, ranking us number 1 in Forbes’ and Time Out’s ‘Best Cities in the World for 2022’ guide.
Our city has always reacted well to welcome our annual influx of 4 million guests and their ever increasing demands and expectations of a modern city. Largely attracted by our UNESCO World Heritage Sites in the Old and New Towns, this project has attracted over £34M in National Lottery Heritage Fund Grants for the 5-year period between 2014 and 2018.
So why has the paradox of residents and tourists living side by side, never been more discernible? Living and working in a city we share with interlopers, Edinburgh has always tread a tightrope between keeping our tourist population happy and entertained, without compromising the requirements and living standards of local residents. Yet for a number of years, tension has become more palpable between heritage & community groups, and the tourism industry. Can the dichotomy of living and visiting Edinburgh be down to one simple issue?
With an average daily rate of £181 and occupancy of 51%, a 2-bed apartment in Edinburgh could make over £33,000 per year
Since the dawn of the internet, there is no denying the positive impact and benefit that Hotel Booking sites have had on the tourism industry. In particular, since the inception of Airbnb (the company that reinvented and rebranded the generic name for short-term letting and holds a net worth reported at £64 Billion), the financial benefit for both private landlords and tourists around the globe has been immeasurable. It is worth £70M per year to Edinburgh’s economy, much of which goes directly into the pockets of residents as opposed to the international hotel chains and large estate agencies. Airbnb listings in Edinburgh have doubled since 2016 to approximately 12,000. With an average daily rate of £181, and occupancy of 51%, a 2-bed apartment in Edinburgh could make over £33,000 per year. It also brings free-spending tourist traffic into neighbourhoods lacking hotels and supports the local infrastructure in parts of the city which visitors might otherwise miss.
Stag and Hen Parties are big business in Edinburgh
Whilst it’s been refreshing to see individuals and small-time operators benefit directly from tourism, the inevitability of issues beginning to surface with little or no regulation was obvious. The less attractive side of tourism has always been evident but kept at arm’s length and considered to be a price worth paying for those who call Edinburgh home. From large groups of drunken revellers stumbling through our streets until dawn, to the less salubrious ‘gentlemen’s bars’ cropping up in close proximity to one another. From dodging the ubiquitous ‘pavement pizza’ on the walk into work on a Monday morning, to some noisy neighbours here to make the most of their weekend.
The latter has become an increasingly large headache for locals, the tourism industry and the property market alike. For some time now, the local authority has been under pressure to take action to prevent the problematic social issues caused by tourism and its negative impact on local residents. Further to a Scottish Government consultation in 2019 which saw over 1,000 people and businesses contribute, the ‘Short Term Lets Licensing Scheme’ legislation was approved in January 2022, which has made it a requirement for over 16,000 existing hosts and operators to license their premises by 01st October 2023 (recently extended from March ‘23), and the Planning Committee are taking an obstinate hard line, with apparent blanket refusal on most applications where there is any potential for conflict of use.
In addition to the social issues and decline in demand for hotel rooms, central Edinburgh’s property prices have also become out of reach for many of our residents. We have been faced with a housing shortage in the City Centre with soaring prices for properties and long-term rentals alike. Despite the ‘Association of Scotland’s Self Caterers’ blaming a lack of housebuilding for the shortage, it has been evident that many Landlords remove their properties from the long-term market so they can profit from short term Airbnb rental income or take advantage of the more attractive rental yields of their property. This reduced supply coupled with constant demand results in higher prices in both the long-term rental and sales markets. With a further knock-on effect of neighbourhood businesses that relied on creating ties with residents being replaced by businesses that focus solely on tourists. Bars, restaurants and gift shops replace grocery shops, local amenities and civic infrastructure.
The dreaded key boxes adorn many Ediburgh doorways
… with ever increasing build costs, labour shortages, and house & land prices that have yet to catch up, development and the construction industry in the city is now facing a cliff edge.
It was evident that measures had to be taken, however we are now experiencing a catastrophic backlash on landlords who have bought and rented properties based on the income of short-term rental use, many of whom have invested life savings or see such assets as their sole pension fund. Property developers are being driven to shelve projects which are no longer viable when re-appraised against a residential sale value, or a long-term rental use class. Combined with ever increasing build costs, labour shortages, and house and land prices that have yet to catch up, development and the construction industry in the city is now facing a cliff edge of either building cheap high density housing, with little architectural merit, or don’t build at all.
So what could be done differently? In recent planning decisions and committee hearings, there has been all but universal refusal for short-term holiday let licenses. All landlords are being tarred with the same brush as the ‘shared door’ tenement flat owner who has packed their property full of stags rutting, or hens clucking until the small hours, imposing misery on the long-standing residents.
These decisions are understandable under current circumstances, however until recently, the licensing system does not appear to being judged specifically on each case’s own merit. How can landlords who guarantee the avoidance of social issues, be accommodated within the current legislation?
Given the apparent blanket refusal of all Short-Term Holiday Let license applications, how have Block Nine Architects recently secured planning consent for 20 new Short Term Let apartments in the centre of Edinburgh?
8 & 9 Albyn Place – Recently granted consent for a ‘whole house’ change of use to 20 Short-Term Let apartments.
The proposals for the conversion of 2 Listed Georgian Townhouses at the heart of the World Heritage Site had an arduous determination process through the Planning system. Driven by the high quality of architectural design proposals, comprehensive planning and design statements, drawings and 3D visualisations to support the application, the approval was a hard fought victory which bucked the trend of outright refusal for most comparable applications.
This ‘Planning Win’ was down to a number of factors that were successfully addressed within the application;
The clear demonstration that there would be no clash of uses (both buildings were to be entirely used as short-term let apartments so there were no permanent residents to disturb)
The proven reputation of the developer / landlord,
Our ability to prove that after conversion, there would be minimal impact on the historical architectural heritage of the property / site.
Despite vociferous objections from neighbouring townhouses regarding the Short-Term Let use class, these were discounted as it could be clearly demonstrated that this ‘whole house’ solution would not directly impact other residents, and that guests could be managed effectively by our client’s strict control systems.
We also overcame heritage groups’ objections claiming the proposals required a ‘lighter touch to have less impact on the fabric of the buildings’. Their objections were also discounted due to the thorough documentation, drawing and modelling within our Planning submission to demonstrate quite the opposite.
Historic conversions have formed the backbone of our practice over the last 10 years. We have an extensive portfolio of heritage and conservation projects under our belt. Together with our trusted consultancy team, we have a clear understanding of the Planning and Conservation department’s requirements, and what is possible to modify and adapt listed buildings of this nature in advance of a submission. Our expertise in this case resulted in the submission of a very robust, thorough application which addressed a number of critical issues head on, in particular with regards to preventing social issues, protecting neighbouring residents and the preservation of the listed buildings and the character of the conservation area.
Many of these properties which have been transformed over time to accommodate a myriad of different uses (individual houses, hotels, post war hospitals etc), have most recently been converted to provide City Centre commercial office accommodation. In the culture of post-Covid hybrid or home working patterns, offices no longer carry the market demand or rental values to sustain this use class, so these stunning properties were being marketed in abundance. Since 2020, we have converted a number of these properties back into whole residential townhouses, or smaller residential and rental apartments without any unfavourable impact on their neighbours.
At Albyn Place, the Planning Department recognised that we were working with an experienced and conscientious developer client with an excellent track record in the city, a genuine passion for Edinburgh’s built heritage, a demonstrable portfolio of high-end apartments, and also with high-tech management control measures in place to prevent social unrest or over occupancy.
3D modelling demonstrated that after the conversion, there would be minimal impact on the listed architectural heritage of the property.
However, we still hear of the Planning Department tying themselves in knots with unsubstantiated reasoning for the refusal of others’ applications. Properties which have operated for years without a single complaint, are continuing to be declassified as short-term let. High-end rental properties which are generally outwith the problematic party goer’s price bracket are also being refused a license. We’ve even heard of Planners citing concerns of guests arriving with ‘wheely’ suitcases causing too much noise on surrounding cobbled streets. The haphazard reasoning and lack of consistency behind a refusal can be very difficult to comprehend and the application of Planning policy appears to be a continually moving target and very difficult to try to predict. It often seems dependent on who may be applying most pressure and shouting the loudest at the latest Planning committee meetings – the neighbourhood residents groups or the tourism industry.
The Short-Term Lets Licensing Scheme policy has been rightly introduced to discourage the social issues which short-term lets can bring to mixed residential buildings and neighbourhoods, as well as preventing the current rising house prices in the city centre. However we are extremely pleased that despite the density and quantity of units, the council has considered this ‘whole house’ solution as a sensible compromise to ensure that there is no conflict of use class, tourists are not deprived of high quality heritage accommodation within City Centre properties, and responsible landlords with tight controls over the activities of their tenants are not disadvantaged.
Ensuring your application has pre-empted any potential social issues, and can demonstrate ways of mitigating the issues of problematic guests is a must.
Demonstrating that this risk can be managed effectively whilst respecting the existing building and neighbouring built environment will also be critical for maximising the chances of the application.
Taking advice from an experienced consultancy team with prior knowledge of the Planning system, and a portfolio of previous projects working with Edinburgh’s historic building stock and the short term let market is essential.
If you have a potential development property or site which you are considering for conversion, short term let or residential use class, contact us for more information on how we can help you navigate this increasingly complicated market.