Further to the Petition of Averbuch and others for judicial review of the City of Edinburgh Council in respect of the short-term let licensing policy under Civic Government (Scotland) Act 1982 (Licensing of Short Term Lets) Order 2022 (SSI 2022/32) (“the 2022 Order”) and related legislation, Lord Braid found the City of Edinburgh Council’s policy to be unlawful in a number of material respects.
The decision in the judicial review has identified material deficiencies in the current short-term let licensing regime, which are common to the policies of many other local authorities across Scotland – not just the City of Edinburgh Council. Having sought legal advice, we have identified that many local authorities in Scotland are operating live short-term let policies which have similar deficiencies and are therefore likely to be unlawful.
It is clearly a matter of concern that these policies, and many others across Scotland, are susceptible to challenge in the same way as the City of Edinburgh Council. It is incumbent upon the Scottish Government as the architect of the short-term let legislative framework to support local authorities in a review of their policies to ensure that these are lawful in light of the recent outcome of the judicial review.
A By Order Hearing took place in the Court of Session with Lord Braid on Thursday 22nd June. The decision on the orders was that specific clauses should be struck out from the City of Edinburgh Council’s (CEC) Short Term Let policy. The removed parts are paragraphs 2.9, 4.13-4.16 and 4.18-4.20 and Standard Condition 9 in Appendix 2.
City of Edinburgh Council (CEC) have until 13th July ‘23 to indicate whether they will appeal.
CEC’s Counsel undertook that the FAQs setting out details on its Short Term let Licensing scheme, would be updated to reflect Lord Braid’s judgement regarding renewals. They also undertook that, subject to an appeal, they would revisit the policy but gave no commitment on timescales. In the meantime, they should now publish the redacted version of the policy on their website.
We continue to press The City of Edinburgh Council and Scottish Government regarding the impact on business, tourism and livelihoods of their planning and licensing legislation and the significant harm we are convinced the two areas of legislation will cause if left unchanged.
STL Judicial Review Frequently Asked Questions
1. The Judicial Review found the ‘presumption of rebuttal’ policy in the City of Edinburgh Council’s short-term let licensing policy to be unlawful. This means there shouldn’t be an automatic presumption that someone in a tenement building should not get a licence. The planning permission process should consider the property’s suitability instead.
2. Certain aspects regarding temporary licences and requirements for carpets were also found to be unlawful. Some specific clauses in the policy were struck out as a result, mainly those related to the presumption of rebuttal.
3. The chances of obtaining a licence for those who have planning permission have likely increased following the judicial review. However, the team is waiting to see how the City of Edinburgh Council will react to the requirement to remove the presumption of rebuttal.
4. The case might have nationwide implications beyond the actual findings of Lord Braid.
5. The JR team is considering challenging the application of the planning control area policy, but it is not possible to challenge the legislation itself.
6. Despite pressure from the Crowd Justice team and the Association of Scotland’s Self-Caterers, there is no immediate suggestion from the Scottish Government of further delays or pauses in the Short-Term Let licensing process.
7. Legal costs were awarded to the Petitioners but the exact amounts involved and when they may be received is yet to be determined.
8. The Judicial Review has no direct impact on historic planning applications. However, the application of National Planning Framework 4 is a significant hurdle for any short-term let operator in applying for planning permission. Options for a further legal challenge in light of this are being considered.
9. It remains legal to apply for a Short-Term Let Licence. The City of Edinburgh Council is updating its policy to reflect Lord Braid’s judgement.
10. Even if further legal challenges are successful, pursuing a Certificate of Lawfulness at this stage would be beneficial.
11. In the affidavits supplied to Lord Braid by the City of Edinburgh Council, senior officials stated “Well-run businesses with properly maintained and managed properties are likely to satisfy the requirements of the Respondent’s STL Licensing Scheme and to have a reasonable prospect of obtaining a licence for STL secondary letting in a tenement or with shared main door accommodation. The affidavit of the First Petitioner raises matters which, if made in the context of an application, would require careful consideration as part of the application’s overall merits.”
Q. Could you please provide, as simply and clearly as possible, what the judicial review deemed as unlawful?
The best summary of the judgement can be found here.
Rosie Walker, Partner and Head of Litigation at Gilson Gray said:
“The court found that the City of Edinburgh Council’s short-term let licensing policy was unlawful at common law and in breach of The Provision of Services Regulations 2009 for a number of different reasons. Most strikingly they found that it was not for the Council, as Licensing Authority, to decide that a licence should not be granted just because a property is in a tenement.”
“The Court of Session today issued Lord Braid’s decision in a Judicial Review of the City of Edinburgh Council’s Short Term Lets Licensing Policy. The challenge was successful with the Court finding that the Council’s policy is unlawful at common law, in respect of the rebuttable presumption, the lack of provision for temporary licences and the requirement to supply floor coverings. The court also found that the policy breaches The Provision of Services Regulations 2009 regulations.”
In practical terms, the main ruling was that the ‘presumption of rebuttal’ was deemed unlawful. Therefore, there should not be an automatic presumption that if you are in a tenement, you should not get a licence. Lord Braid ruled that the intent of the overall legislation is that the planning permission process would consider the suitability of a property.
There were also aspects of temporary licences and the need for carpets that were deemed unlawful.
An order hearing was subsequently held by Lord Braid. The decision on the orders was broadly to accept CEC’s argument that specific clauses of the policy should be struck out and the rest left. The removed parts are paragraphs 2.9, 4.13-4.16, and 4.18-4.20 and Standard Condition 9 in Appendix 2.
This means that specific provisions within the policy, mainly in relation to the presumption of rebuttal were deemed unlawful.
Q. We were previously concerned that even with planning we might not get a licence. Will this change?
Yes, the chances of obtaining a licence should have improved now as a result of the Judicial Review. A caveat is we await how CEC will respond to the requirement to remove the presumption of rebuttal.
Q. Are there any nationwide implications from the court case beyond the actual findings of the judge regarding Edinburgh Council’s overreach?
Yes – please refer to this letter written by the ASSC
Q. What are the team’s thoughts about planning control areas, e.g. Edinburgh? Is there any discussion of challenging these, and/or how planning/change of use decisions are being taken (beyond the ASSC’s challenge regarding Cllr Chas Booth)?
The team believes planning control areas were intended to control the increase of short-term lets in key pockets of Edinburgh. However, in practice, this is being used as a mechanism to almost eliminate short-term lets, with a preference for awarding planning permission to aparthotels. This will significantly reduce the choice and availability of self-catering accommodation, make it very difficult for mid-term rentals (such as corporate rentals), and have a severe impact on events like the Edinburgh Festivals.
For these reasons, consideration is being made to challenge the aspect of how the control area is being applied. However, it is no longer possible to challenge the control area legislation.
Q. What is the Petitioner team’s thinking regarding another (welcome) delay? Likely, possible, or unlikely?
Despite pressure from the Petitioner team and the ASSC, currently, there is no indication of a further delay or pause of licensing at this stage.
The ASSC has requested a further delay many times and the latest letter from the Industry Advisory Group also requests this.
Q. Did the Petitioner team win legal costs and for those of us who invested £1000+ in bringing this action, will this be shared?
Yes, legal costs were awarded. The amount of legal costs awarded rarely exceeds 60% of the total costs spent, which was approximately £200,000. CEC managed to obtain a 15% reduction in one part of the legal cost award. However, our legal Counsel secured a 50% uplift in another part. It’s a complex process and we await exactly how much the campaign will eventually receive. We would like to use part of the remaining funds for Phase 2 of this challenge, specifically focusing on Planning, but we will consult with backers on the practicalities of this.
To be clear, the JR team has no access to funds. These are currently held by our legal team in client accounts. Any funds remaining will be passed back to Crowd Justice to be reallocated to another case, refunded if donated £1,000 or over, with anything remaining going to charity.
Q. What impact will the JR have on the 165 Edinburgh planning applications submitted in good faith before the original April deadline and which were rejected?
The City of Edinburgh Council seems to be using the newly adopted National Planning Framework 4 policy to refuse all applications for planning permission before even getting to the licensing stage.
Q. I’m just lost regarding timelines around Edinburgh properties. Do we still need to apply for planning permission and if so when is the deadline?
There is no direct impact to historical planning applications as a result of the Judicial Review. A further legal challenge is being considered. Again, if successful, this would not directly impact on historical applications. However, options are being considered to professionally challenge applications, in particular the application of NPF4.
To be clear, NPF4 is by far the biggest hurdle now facing any short-term let operator who is considering applying for planning permission. This policy requires an applicant to demonstrate that “the loss of residential accommodation isn’t outweighed by demonstrable, local economic benefits.” Despite this being a national policy, the Scottish Government has stated it is for local authorities to decide how they apply this locally. The City of Edinburgh Council (CEC) has no guidance on what this means, and the Scottish Government has stated it is for local authorities. We think there may be scope to challenge this policy. The first step would be for anyone refused a Certificate of Lawfulness to appeal to the DPEA. There may then be scope to challenge this at the Court of Session.
A study by MKA Economics, commissioned by CEC, is now being cited by some to show that the economic benefit of a permanent resident outweighs the economic benefit of short-term lets. We believe this study falls well short of being comprehensive or thorough and requires further analysis. As such the ASSC and STL Solutions are currently evaluating proposals to co-commission a further economic study.
Q. My question is around clarifying what we need to apply for when applying for planning.
There is no silver bullet to this question. Legal challenges to planning are being considered. Our advice right now is to start preparing and submit closer to the due date. There are potentially some strategies to use to extend the period of trading if you believe you may be unsuccessful.
Q. Is it illegal or legal to not apply for a licence where the policy to evaluate the application is illegal?
It is still legal to apply for a licence. CEC are updating their policy in the meantime.
If you were operating prior to 5th Sep 2022, when the short-term let planning control area was introduced
AND
Your operation had no material change of use – a Certificate of Lawfulness can be applied for, rather than a planning application.
Q. Is there any value or a legal need to apply for a Certificate of Lawfulness at the moment?
It’s a good question. We do not believe there is a legal ‘need’ per the wording of the licensing order. This is something we are seeking legal advice on.
However, on balance, despite potential legal challenges, attempting to obtain a Certificate of Lawfulness would be a good position to be in. Even if legal challenges were successful, a Certificate of Lawfulness would take away any doubt in future.
BACKGROUND
The Judicial Review team is made up of four petitioners with the close support of Iain Muirhead and Anna Morris. The petitioners are Ralph Averbuch, Glenn Ford, Louise Brook & Craig Douglas. This team came together in the closing stages of 2022 when, faced with uncertainty over the future of full and part-time operators of Short Term Lets in Edinburgh and Scotland, it was decided that legal action to challenge the interpretation and application of the new STL Licensing Law was unavoidable.