If you have been following this page for any length of time, you will know that Evergreen Property manages both short and long term properties on behalf of its landlords. We have been doing this successfully for many years and have been managing short term lets for over three years. In that time, we have seen a surge in popularity within Edinburgh and beyond of the short let model. Landlords have moved to short lets due to numerous reasons (discussed in a previous Vlog post) so I shall not discuss those reasons here.
Has this rise in short term lets had a demonstrable negative impact within Edinburgh?
The charges brought against the Short let industry within Edinburgh that were cited in the city-wide review corporate strategy meeting on 7th August 2018, include:
- Impact on available housing supply within the city
- Erosion of sense of community in areas with dense concentrations of short term lets
- Short term letting is generally not suitable for tenement properties
- Properties which are used as short term lets may not reach the same safety standards as other types of visitor accommodation
- Noise and antisocial behaviour created by guests using short term lets
- Short term lets which operate on a commercial basis may not be paying rates or other council charges required
The ASSC has recently released its own proposal to deal with the perceived problem and it suggests using legislation that is already in place; I shared it recently but you can read it here.
So, we need to look at addressing (or refuting) the perceived issues brought about by Short Lets. If implemented, could or would the ASSC proposal work?
In brief, the ASSC proposal suggests a registration for all Short-Term Let properties operating within local authorities that consider that there is a housing shortage. This would be in line with Edinburgh’s Council’s desire to introduce a Tourist Tax or Transient Visitor Levy (TVL) and would therefore not cost the council any additional administrative costs (as long as the design was correct from the outset). In areas where the local authority can prove an evidence based and demonstrable housing shortage (and that short-term rental is exacerbating this shortage), anyone operating for more than 140 days a year (the threshold for a property to move from council tax to business rates) should require a licence, in line with proportionate EU directives.
The ASSC has highlighted that there is an existing framework (that of Rent Pressure Zones) which the councils could use to determine and ultimately use to enforce the licensing and or decline of a property’s license to operate. Bizarrely, despite the rhetoric from the Edinburgh Council, Andy Wightman, and media, no council in Scotland has set up a Rent Pressure Zone (RPZ) yet.
In order for a RPZ to be set up the following 3 requirements need to be met:
- Rents in the area are rising too much
- The rent rises are causing problems for the tenants
- The local council is coming under pressure to provide housing or subsidise the cost of housing as a result
It is argued that there is an existing legal framework in place and this proposal, as laid out by the ASSC, could start with minimal costs and time. Any new legal framework requires huge legal due process, consultations, and fundamentally a lot of time and money.
So, I wish to address the points raised in the corporate strategy meeting and assess whether the ASSC’s proposal will address the worries.
Impact on available housing supply within the city
As no single council (including Edinburgh) has introduced a Rent Pressure Zone, one could, perhaps, disingenuously, argue that the problem of available housing does not exist in Edinburgh. It is not my place to reason why no RPZs have been set-up, but until they are, any other group can logically argue that there is no demonstrable proof there is no housing shortage and even further, any perceived shortage is caused by short term lets.
Opponents of STRs say that there are 10,000 Airbnb listings within Edinburgh. This is a lot and we have noticed a lowering of our nightly rate, most markedly over the winter; however, three things, in my mind, show that Airbnb is not the real problem.
- There are 79,000 empty homes in Scotland, and only 17,000 STRs.
- On all Council building plans and projections, there are shortfalls. The Local Development Plan estimates that we need to build an extra 5000 homes by end of 2019. Clearly there is a responsibility for the council to build more housing, rather than blame its residents.
- Lastly, since the turn of the year, I have noticed more ex-Airbnb properties coming back on to the Long Term Rental Market. This, at the moment, is anecdotal but the signs that landlords are returning to the PRS after trialling STRs is building as the amount of photos of staged rental properties (towels on beds etc) is increasing. Many STRs have struggled with rates and occupancy over the winter and we believe the there is a natural supply and demand effect happening as landlords realise the feast and famine of short term rentals of Edinburgh and are beginning to opt out in favour of the steady income stream of BTLs (with the increasing rents and buoyant market).
Erosion of sense of community in areas with dense concentrations of short term lets
Campaigners against STRs argue that the constant change of ‘residents/guests’ is leaving residents and owner occupiers unsure who is “On the stair” and who their neighbours are. Having lived in Edinburgh for nearly 25 years, I am about to say something potentially controversial;
The erosion of the neighbourliness has been happening for many, many years. The idea of neighbours taking in others washing if it is raining, for example, is a rarity and people can live within a tenement for years without really having a conversation with their neighbours. I am not saying this is how it should be; I am simply saying how it is! In several of the properties we manage, we have introduced ourselves to the neighbours and universally, they seem to like meeting new people and are proud of Edinburgh and happy to give local recommendations. In several cases, we have been thanked for running short lets the flat had previously been occupied by noisy and inconsiderate tenants. The average guest stays 4 days and, if noisy the problem has gone within a week. A disruptive tenant – someone who listens to loud music late at night, has parties, has loud and irregular arguments with partner or flatmates – is very hard to manage and move on. Guests who break our rules are moved on quickly. They have very few rights compared to a disruptive tenant.
Short term letting is generally not suitable for tenement properties
I refer my reader to the points above. I understand that Wheelie Bags are the bain of tenement blocks and we specifically ask all guests to carry them upstairs. I believe the council is specifically looking at “Party Flats” in this instance. None of the flats we manage could be classes as party flat and they all have sensible occupancy. I know of several two bedroom flats, that take up to 20 people in single beds. However, this have full commercial planning. My landlords and I, still struggle with the council’s suggestion that the use is different when we rent the whole property to a single group (usually families) and do not break any PRS rules of over-crowding etc. For example, we have several two bed properties, and the maximum we have is (twin, double and two on a sofa bed) but many properties do not have a sofa bed, in these instances, the maximum occupancy is 3 or 4.
Properties which are used as short term lets may not reach the same safety standards as other types of visitor accommodation
This is very simple to remedy. Impose the same laws on STRs as the PRS. We regularly look at our properties’ safety features and advise landlords that they should be updating their safety features to be in line with the best practice as outlined by PRS and ASSC; this includes, GSC, EICR, PAT, Smoke and Heat Alarms etc. If you would like a full review of your STR safety I recommend my wife’s company Landlords’ Little Helper.
Noise and antisocial behaviour created by guests using short term lets
There are already ample ways to report and deal with Anti-social behaviour.
The perceived problem is a lot worse that the actual problem. Between 2015 and 2018, there were 39 complaints against Short term lets with regards anti-social behaviour. Figures and references can be found in the ASSC-commission Frontline Report. Out of 9,700 complaints, I suggest there are other issues rather than a few disruptive guests.
Short term lets which operate on a commercial basis may not be paying rates or other council charges required
This is being directly addressed by the ASSC proposal as all properties engaged in any commercial short letting, will need to register. The TVL will also help address this issue. With most operators owning just one property, they should be applying for business rates if available for over 140 days and let for more than 70. The fact most properties will gain exemption under small business relief, is not the operators’ fault. They should be paying for water and waste collection though and whether the council want more private bins clogging the back alley ways of the Old Town is another matter entirely!
If the ASSC proposal gets traction and made law, then it would be up to the individual councils to make registering easy and cheap. The Landlord Registration system would be used as a template and has been operating several years. It is not without fault and we all know that there are hundreds of landlords still operating without a registration and still issuing SATs. Like most legislation it will cost the good guys money and the rogue operators will continue to fly under the radar until caught. This maxim would be true for any new legislative changes!
In all, I believe the ASSC proposal to be ultimately sensible, pragmatic and proportionate. It would be easy to introduce and only requires minimal work within Holyrood or the council to start implementing it. From my discussions with landlords and other manager, most welcome further regulation, as long as it is proportionate and sensible and doesn’t seemly wipe out a thriving industry that provides a much-needed amount of guest accommodation.
I would love to hear your views on the ASSC proposal and would be happy to take sensible suggestions directly to Fiona Campbell; further, I will continue my dialogue with my MSP Alex Cole-Hamilton.
