Short-term let operators 'could bankrupt Edinburgh council' with compensation claims

Short-term let operators in Edinburgh say they could claim compensation from the council that has the potential to bankrupt the local authority.

A council scheme, which aims to regulate the industry, has now been subject to two judicial reviews.

Both times it was ruled that aspects of the implementation of the policy by the City of Edinburgh Council had been unlawful.

Now operators say they have received legal advice suggesting they could win tens of millions of pounds in compensation – although the local authority says it’s had guidance suggesting the opposite.

It comes after the council’s planning committee agreed to consider a report from officers into proposals made by the association of Scotland’s self-caterers – the industry’s biggest trade body.

Part of those suggestions would see businesses that were operating in the city before the scheme was brought in given approval to operate.

Operators say such changes would prevent legal action over potential compensation.

Marc Hughes, who runs Quarter Mile Serviced Apartments in the city, told STV News that delays in hearing back about licence applications had caused problems for his business.

He said: “We all forward plan our holidays, if you look from the other side of the spectrum, the owner of the place you’re going to go to needs to plan as well.

“We are now taking bookings that – potentially, can we honour them? I’m going to regardless, and I think a lot of owners are going to do the same thing.

“You could potentially, if you didn’t get your license, then get fined and just have to pay the fine, but you know, it’s a mess.”

Lord Braid ruled in December that aspects of City of Edinburgh Council’s regulation of short-term lets was “unfair and illogical”.

Operators took legal action over the retrospective nature of permission being required for accommodation.

Marc has led the charge over a possible compensation claim, he says legal advice has suggested there could be a very costly bill awaiting the council if claims are made.

“The advice that has been given by two separate legal firms, is that the council is due compensation”, he said.

“It should be obvious on the face of things, if you’ve refused somebody for a license which the courts have then said the application for that license is unlawful, then how on earth can you keep that person’s money?

“In terms of the effect that it could have on the council, there is the potential of bankruptcy.”

The Association of Scotland’s Self-Caterers (ASSC) are not involved with discussions around compensation, but are continuing to campaign for changes to the scheme.

Fiona Campbell, the chief executive ASSC said: “What we have proposed is that those businesses operating before the planning control area came into implementation should be granted the ability to continue trading in planning terms.

“If they behave badly or there’s any issue with anti-social behaviour or bad management, that would be captured by licensing.”

But supporters of the short term let scheme say the Council should only be looking to make the policy stronger, not making these changes that they believe will only weaken the system.

Matt McDonald, who represents the tenants union Living Rent, added: “I think it’s another example of these landlords that are making the city a more difficult place to live for tenants, throwing their money around to create more loopholes for themselves.

“In housing legislation we’ve seen time and again massive loopholes opened up by landlords that have got the money to spend.

“I think the bill is a good start, but it doesn’t go far enough.”

While operators claim they could seek this compensation from the council, the local authority say their legal advice does not support this.

Councillor James Dalgleish, planning convener at the City of Edinburgh Council, said: “We have considered the issue of compensation and having taken legal advice do not believe there is any requirement to set up a compensation scheme.

“We remain committed to carrying on our engagement with all parties that have an interest in short term lets in how we can continue to develop our policy and guidance.

“In line with this commitment we are currently considering the proposals from the Association of Scotland’s Self-Caterers and a report on this will be discussed by the next planning committee.”

The planning committee will meet again in Edinburgh’s City Chambers in June. It’s expected officers will bring a report, to be considered by councillors, which reviews the feasibility of introducing proposals by the ASSC and what impact doing so would have on the scheme.