In Scotland, the Edinburgh city council has called for a license limiting Airbnb rentals to 45 nights per year, in addition to a levy on tourists of £1 per person per night.
The city has seen a rising number of tourists in recent years, with the number of foreign visitors to Scotland increasing 16.9 percent to 3.2 million last year, according to the Office for National Statistics.
According to a study produced by the council on the impact of the sharing economy, there are more than 9,000 properties in Edinburgh listed on Airbnb, with the platform reporting that 21 percent were operating for more than 90 days per year, the limit currently set in London.
“There is clearly a need for a solution to the scale of the problem in Edinburgh,” the council said. “At present local authorities have no powers to license or register short-term lets but they have some powers under planning, trading standards and environmental health, antisocial behavior and waste legislation.”
“We know that short-term lets are having a detrimental impact on residents and communities and I see regulation of this sector as the way forward,” said Kate Campbell, housing and economy convener. “Our new dedicated team, made up of experts from the Council, will make best use of the powers we have available to us to resolve any complaints.”
Still, Campbell said, in the long term, a licensing regime is needed to really get the industry under control. “This would give us the power to control the concentration and numbers of short-term lets in the city. It would also allow us to put in place health and safety requirements and a ‘fit and proper person’ test for landlords," she said. “Residents are suffering because of short-term lets. Finding solutions for our communities is a priority for this administration.”
Edinburgh’s Pressure
Edinburgh has one of the fastest-growing populations of any city in the UK, according to the council, increasing 12.2 percent between 2006 and 2016, with only Manchester expanding more quickly.
The city also relies heavily on the tourist sector. According to the council’s figures for 2015, 9.6 percent of the city’s working population was in the accommodation and food services industry.
The council has also called on the government to introduce a visitor levy of £1 per night, which it estimates could raise £11 million per year. “We have some of the highest occupancy and room rates anywhere in the UK,” said council leader Adam McVey. “The sector is doing very well out of the tourist economy.”
Airbnb has responded to the proposal: “Hosts using Airbnb want to pay their fair share of tax and we want to help. So far, we’ve collected and remitted over $700 million in cities around the world and should Edinburgh wish to introduce a tourist tax, we’ll gladly support that.”
Not everyone was as welcoming. The Scottish Tourism Alliance said: “While a tourism tax/visitor levy may work well for tourism businesses, destinations and local authorities in other global destinations where the level of [value-added tax] on tourism services is lower than that of the UK, the idea must be examined within the context of: the UK having the second highest VAT rate in Europe at 20 percent; the challenges which exist to the imposition of an additional tax; the impact on price-sensitive visitors and indeed the impact on businesses already coping with the ‘perfect storm’ of rising costs that tourism businesses in Scotland currently face.”
So far, the Scottish government has resisted entreaties to bring in a tax, but reports at the time of writing suggested that it might be changing its stance.
The Scottish government’s report from The Expert Panel on The Collaborative Economy stated that any solution to the issues around the collaborative economy “could be piloted in Edinburgh and may have relevance to other areas of the country.” With both London and Bath also pondering a tourist tax, it is not the only strategy observers will be keeping an eye on.
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.