Summary of Recent Developments

We are now less than 90 days away from the 1st of October deadline, and the past month has seen a flurry of activity in the world of Short-Term Lets (STLs), both positive and negative. As this pivotal date approaches, it is crucial for STL owners and operators to be aware of recent developments and consider their next steps carefully.

Judicial Review and Planning Status

One significant event in the recent landscape of STL regulations was the Judicial Review on 8th June, which declared parts of the Council's Licensing policy as unlawful. Despite this setback, a follow-up meeting on 23rd June suggested that the necessary revisions to the policy could be implemented relatively easily. However, it is essential to note that Lord Braid’s ruling will not alter the fundamental architecture of the new regulations in Edinburgh, and all operators must continue addressing planning and licensing matters.

Presently, there are no indications of further delays to the 1st October 2023 licensing deadline. The Scottish Government wrote to the ASCC responding to a recent ‘red flags’ document, that highlighted the key issues and unintended consequences that this legislation will bring to the sector. Disappointingly, the Scottish Government declining to take any action on any of the ASSC’s points.

Another concerning development arose last month when the City of Edinburgh Council published a document revealing that residential uses are deemed more valuable than STLs when considering NPF 4 Policy 30(e). Despite a cautionary note from the Chief Planning Officer about the limited weight of this document as a material consideration, it has already begun to influence decision-making processes, with most planning applications being declined on the basis that any short term let accommodation is better suited as long-term residential accommodation. STL Solutions are currently in the process of commissioning an economic report to challenge this view.

Statistics presented at the 1st June Council meeting show a stark contrast in STL planning applications. Out of 74 applications made in Q1 2023, only 2 were approved, while 72 were refused. This data underscores the almost impossible challenge STL operators are facing in obtaining planning permissions from the City of Edinburgh Council.

Positive Developments

Amid the challenges, there have been some positive developments in May, June and July:

Firstly, there was much-needed clarification on the mechanics of STL licence applications. The question of whether licensing Officers would provide applicants with time to appeal in cases where an STL planning application or certificate of lawfulness (COL) application was refused was resolved. An emailed response from one of the Licensing Officers in late May confirmed that applicants would be given time to go through the entire planning process before a licensing application is rejected. This clarification provides operators with a more transparent process and an opportunity to explore further avenues before facing licensing refusals.

Secondly, on 7th June, the Scottish Government released an amended version of Planning Circular. This amendment aimed to provide clarity on the planning status of STLs that were already operational before the STL control area came into force in September 2022. Prior to this clarification, there had been debates among planning lawyers, consultants, Local Authority planners, and Scottish Government Planners.

The Circular now confirms that the designation of a control area does not automatically deem previous change of use of a dwellinghouse to be a material change of use. However, it’s essential to remember that Section 26B applies to changes of use that occur after the control area’s designation. Additionally, the Circular emphasises that Section 26B does not replace the existing requirements of the 1997 Act for planning permission for material changes of use. Therefore, material changes of use for short-term letting, whether before or after the designation of a control area, would still necessitate planning permission.

This has been further clarified and confirmed in a Scottish Government Guidance on Planning for Short Term Lets published on 21 July 2021.

In simple terms, this means if you started operating as a short term let before 5 September 2022, per the Scottish Government, you may not need planning permission, but you currently will require a COL to prove this as part of licence application process. Whilst we still consider that the number of successful COL applications will be low, this seems to be the more prudent approach to take currently in light of planning decisions taken by CEC and will allow you to continue trading until all appeal processes have been exhausted, which has previously taken anywhere between 4 to 9 months to determine.

STL Solutions are also actively involved assisting with further legal challenges, including a potential further judicial review in Edinburgh in relation to planning. Whilst this challenge may assist the position at a future stage, it is highly unlikely this challenge would be complete prior to the 1st October 2023.

Suggested Next Steps

Considering the recent developments, STL owners and operators are advised to take the following steps:

1. Certificate of Lawfulness (COL) Application: If operators do not have a good chance of securing a COL for established use based on ten years of continuous operation, it may be prudent to consider applying for a COL to confirm that there has been no material change of use. This COL application can serve to satisfy licensing requirements without the need for planning permission, although to be very clear this is still unlikely in many cases, but will allow you to continue trading.

As materiality can only be assessed on a case-by-case basis, operators should consider testing the limits of materiality by making individual COL applications. STL Solutions have undertaken extensive research on successful appeals and will consider each application against these appeals to strengthen each application.

STL Solutions can assist prepare a certificate of lawfulness application on your behalf, assessing your property against historical cases.

2. Licensing Applications: To further simplify the process for our clients, STL Solutions can submit the STL licence application on their behalf for an additional fee. Additionally, we can undertake all the necessary certifications required for the licence.

How STL Solutions Can Help

STL Solutions has combined resources from many of the leading experts involved in short-term letting advice, including planning and licencing experts and members of the team actively involved in the Judicial Review and further pending legal challenges. Our team can guide you through the process and assist with compiling necessary documents and references.

Next Steps

If you require our services, the first step is to complete a form using the link provided. We will then assess your property and come back to you by email with an initial view of the next steps for you.

Navigating the evolving landscape of STL regulations requires careful consideration and proactive steps. We are here to support you through the process and help you make informed decisions to protect your STL operations and investments. Don’t hesitate to reach out to STL Solutions for expert guidance and assistance.