Boycott or Certificate of Lawfulness?
Boycotting the Licensing System
Choosing to boycott the licensing system for short-term let (STL) properties in Edinburgh carries potential consequences that operators need to consider. By not applying for a license, operators risk receiving an initial fine of £2,500 and even a criminal conviction. A criminal conviction would not only result in the immediate inability to apply for a license but could also have long-term repercussions on an operator's future ventures.
It's important to note that the current Edinburgh City Council (CEC) licensing scheme is legally valid, except for the pending planning Judicial Review (JR2), which is scheduled for October. The outcome of JR2, however, won't be known until possibly November, and it's this outcome that could potentially render the current licensing scheme unlawful. Therefore, if operators continue to trade without a license after October 1st, their actions would be considered unlawful until the JR2's results are determined.
The situation becomes more complex with potential legal challenges. Some operators are contemplating class-action lawsuits against the council, seeking compensation for damages due to previous closures. While the potential for compensation exists, the financial stability of Edinburgh City Council might be a concern, especially considering recent instances like Birmingham Council's bankruptcy. Operating without a license could result in criminal convictions, escalating fines up to £50,000, and even imprisonment, leading to significant stress and personal challenges.
Applying for an Under 10-Year Certificate of Lawfulness (COL)
Opting to apply for an under 10-year Certificate of Lawfulness (COL) is an alternative route that STL property operators can consider. The cost of obtaining a COL is £1,150 plus VAT, along with additional fees to the council based on property size. This cost might seem substantial, but it can potentially be offset by the increased revenue resulting from higher prices due to the change in supply and demand arising from a shortage of STL properties in Edinburgh.
The potential for a 30% increase in prices due to scarcity could indeed help operators recoup the investment in the COL. The current market dynamics, coupled with a favourable outcome from the Development of Planning and Environment Agency (DPEA) appeal process, offer operators an extended timeframe for trading without automatic shutdown. Even if the DPEA appeal is unsuccessful, operators are not immediately shut down; they can still continue operating and potentially seek planning permission through local council channels.
Another benefit of holding a COL is the protection it offers against potential changes resulting from the JR2 verdict. If the JR2 leads to changes in planning policies, operators with a lawful license would be in a better position to continue operating in the future. In contrast, those without a license could face challenges under new regulations. Eg NPF4 Furthermore, exceeding the tenure period required for an over 10-year certificate of lawfulness provides additional stability for operators, making them less vulnerable to future changes.
So - boycott or not?
In conclusion, the decision between boycotting the licensing system and applying for an under 10-year Certificate of Lawfulness for STL properties in Edinburgh presents operators with a complex choice. Boycotting the licensing system carries immediate risks of fines, criminal convictions, and potential legal challenges. On the other hand, obtaining a COL involves upfront costs but offers benefits in terms of increased revenue, extended trading timeframes, and protection against future changes in regulations. Operators need to weigh these factors carefully to make an informed decision that aligns with their financial and operational goals.