Edinburgh holiday flat landlords in £10m tax dodge

As visitors descend on Edinburgh for festival season which starts today, £10.6 million of taxes are being avoided this year due to the boom in private homes being let out as holiday accommodation, according to new research.

An investigation carried out by Lothian MSP Andy Wightman has revealed that if a property is let for more than 140 days it becomes liable for non-domestic rates rather than council tax but only half of all such properties are declared.

And if a property has a rateable value of less than £15,000, the Scottish Government provides 100 per cent relief under the Small Business Bonus Scheme.

The MSP’s findings also show that 83 per cent of short-term lets in Edinburgh that are declared for non-domestic rates have a rateable value below £15,000 and therefore don’t pay non-domestic rates.

If all short-term lets over 140 days per year paid non-domestic rates, this would generate £10.6million in additional tax revenue.

Mr Wightman, who says he has been inundated with correspondence from constituents concerned about the loss of housing supply and an increase in anti-social behaviour, explained: “It is disappointing that the Scottish Government has not conducted an economic impact assessment of the Small Business Bonus Scheme in the ten years of its existence. There is no justification for short term lets being exempted from paying £10.6 million in taxes to help meet the considerable costs of public services in Edinburgh. Thanks to this scheme and the failure to declare properties as short-term lets, landlords, many of whom are overseas investors, profit from these services without contributing a penny.

“I have been inundated by constituents concerned that the growth of holiday lets is causing more anti-social behaviour and denies people access to good quality housing for long term rent. It is time to bring short-term lets under fully into the planning system and give the Council the powers to protect the availability of residential accommodation for the citizens of the City.”

Edinburgh Green Councillor, Claire Miller said: “As Edinburgh’s population trebles for our world-famous festivals and as visitors enjoy our historic built environment, it’s worth considering the impact that tourism is having on the City. Short term lets are a long-standing feature in Edinburgh to accommodate visitors during the festival but their rapid growth year-round is no threatening the residential character of the city centre in particular.”

Responding to the research findings, the Scottish Government said: “We are aware of the position regarding holiday lets and have published research on the supply and demand for short-term lets.

“The research was commissioned to inform the work of our expert advisory panel on the collaborative economy who are due to report to ministers by the end of the year.”