Material provisions of the short-term licensing policy (the “STL Policy”) issued by the City of Edinburgh Council (the “Council”) have been found to be unlawful at common law and in breach of the Provision of Services Regulations 2009. The Court’s decision can be found in Lord Braid’s opinion of 8 June 2023.
The Council adopted the STL Policy on 29 September 2022. The STL Policy imposed a licensing requirement for all existing and new short-term lets (“STLs”). It further severely restricted the ability of existing and new providers of STLs to seek and obtain a licence. The STL Policy was challenged by various STL providers, who raised judicial review proceedings in the Court of Session.
The key provisions of the STL Policy were found to be irrational in respect of the rebuttable presumption imposed on the providers applying for an STL licence in respect of tenements or shared main door accommodations. The provisions amounted to an effective ban of STLs in tenements where it would have been for STLs providers to persuade the Council that a licence should have been granted.
The Court found that the provisions were irrational and the following are some of the key reasons:
- The evidence the Council submitted at the judicial review proceedings suggested that the provisions would not actually result in a significant decrease in licences. Rather, by the Council’s own admission: “any well-run businesses who can show good management arrangements and no history of a problem [will] have reasonable prospects of obtaining a STL licence.” In the Court’s opinion, this would have led to innumerable exceptions to the Council’s policy which would have been fatal to its lawfulness. A valid policy can have defined exceptions but where these are too numerous, the policy is unlikely to achieve the necessary consistency, which would make it unlawful.
- More importantly, the Court found that the refusal of a STL licence where a planning permission for a STL had been granted (a prerequisite step before applying for a licence with the Council) was irrational. The Council could not on the one hand demand that planning permission be obtained, and on the other ignore that such permission was granted when it came to issuing a STL licence.
- The Court also found that the blanket requirement to the Council's policy on requiring carpeting in all secondary lets was irrational as insufficient attention had been paid to whether this was indeed necessary and proportionate to the aim sought (i.e. noise reduction) in all cases.
It is also interesting to note that the Court was presented with a claim under Article 1 of the First Protocol to the European Convention on Human Rights, which affords protection from interference with property rights. While it was not disputed that the Council's policy was an interference with STL providers' business, the Court found that the claim was premature and speculative. The effect of the policy on the businesses of providers was yet to manifest.
Furthermore, the refusal of a licence could be the result of a refusal to grant planning permission. As the planning regime on the matter was not subjected to a challenge at the judicial review, it could not be said that any interference with property rights would be solely caused by the STL Policy.
The Court is yet to issue interlocutory (formal) orders in relation to the STL Policy so the same remains in effect until the Court pronounces the necessary orders. It remains to be seen if the decision would be appealed by the Council.
The decision will, however, be of significant impact and importance to the STL sector and the wider hospitality sector. It also signals that the discretion granted by the Scottish Government to local authorities through the introduction of STL control areas is not as unfettered as it had been previously suggested.
Local authorities across Scotland should pay close attention to the Court's opinion and seek legal advice if they have any doubts about the lawfulness of their policies on regulating STLs.