Short-term let owners in city ‘subsidised by £2.6 million’
Airbnb and short-term let property owners are being publicly subsidised by at least £2.6 million in Edinburgh, according to research.
Figures published by Airbnb suggest that hosts in the city made £78m from letting out their properties last year, but many are paying nothing for basic services such as bin collections and pavement repairs from which they and their tenants benefit.
More than 1,000 property owners – the majority of those who declare their shortterm lets to tax officials as a business – are paying nothing for local services, with the bill being picked up by taxpayers.
That is a result of small business rates relief – a concession designed to support small, independent traders – being applied under current regulations to short-term let properties.
Tax being lost to the public purse may be higher due to the sector being left to largely regulate itself.
If every Airbnb host renting out their entire property in Edinburgh qualified through the loophole, to take an extreme example, the potential liability to taxpayers for reimbursed business rates would be more than £14 milion.
One landlord branded the loophole “a bad joke” and called on the Scottish Government to take action.
The proliferation of shortterm lets in the city means some residents say they feel like they are “sponsoring” businesses run by people who do not contribute to the local authority’s coffers.
Under current Scottish Government rules, any short-term let which operates for more than 140 days a year does not have to pay council tax and instead becomes liable for business rates.
However, because small businesses with a rateable value of £15,000 or under are given total relief from business rates, most short-term lets in the city that declare themselves as businesses pay no tax to the council.
The money lost by the council from the business rates exemption is repaid to the council by the Scottish Government.
Airbnb claimed hosts in Edinburgh made £78 million in 2018 from letting out their properties.
One landlord, who manages a portfolio of 100 properties, mostly in Edinburgh, called the loophole a “bad joke”.
The businessman, who wished to remain anonymous, said: “I know someone who just got £2,500 in backdated council tax refunds for their Airbnb property.”
An Airbnb spokesman said: “This data is pure speculation and doesn’t reflect the reality of hosting in Edinburgh.
“The truth is that local hosts share their homes for an average of less than four nights a month – well below 140 nights a year – and guests on Airbnb account for less that 3 per cent of visitors to Scotland.”