The result of Edinburgh’s Airbnb crackdown? Spiralling prices and a burgeoning black market

At this summer's Edinburgh International Festival and Festival Fringe, the running joke among comedians wasn't about Britain's quadruplet of fresh-faced leaders, Sir Keir Starmer, John Swinney, Eluned Morgan, or Michelle O'Neill.

It was the one about the outrageous price of temporary accommodation during August, with the divisive topic sparking a social media backlash. A merry-go-round of popular comics and TV personalities, including Jason Manford and Gail Porter, weighed in. Boycotts were touted. Several acts cancelled due to spiralling costs. Talk about awkward for the world's largest arts festival.

Try finding cheap self-catering accommodation in the Scottish capital these days and you'll be in for a surprise. Thinking about coming for Oasis at Murrayfield next August? Stop crying your heart out. Prices near the stadium over the three nights currently peak at £1,485 for an apartment on Airbnb .

Compounded by a lack of residential housing, Edinburgh is now at odds with itself after last year's attempt to bring short-term lets on home-sharing platforms like Airbnb and Vrbo under control – and it has led to the sector being squeezed. The old Edinburgh saying is, "you'll have had your tea", meaning "you'll get nothing for free here, pal." Now, there's no getting away from how much of a joke that really is.

To recap: this story began to unfold in 2019, under the watch of then First Minister Nicola Sturgeon, when the Scottish government made a commitment to ensure local authorities had appropriate regulatory powers over short-term lets in the city.

Fast-forward to today and, a year after the legislation was introduced, the number of Airbnb-type properties has reportedly been slashed. Unlicensed lettings have flooded social media. And prices have soared. Edinburgh spoon-feeds you sights, that's true. But these days at what cost?

According to the City of Edinburgh Council, more than 4,700 licensing applications have been received for short-term lets and it has determined at least 3,500 to date. A drop in Airbnb properties across the city, it adds, suggests the stern new measures are working. By the end of last year, too, figures showed there were around 3,350 fewer whole properties being offered for short-term letting compared to 2019.

Leader of Edinburgh Council and Labour Group Leader Cammy Day said: "One year on and the early signs are promising that the regulations are helping to keep visitor accommodation safe and well managed in Edinburgh. We're committed to ensuring that everyone benefits from Edinburgh's thriving visitor economy, but it has to be managed, and it has to be sustainable – and I strongly believe that our short-term let controls have been an important step in the right direction."

But those representing the city's short-term accommodation providers say the black market has grown exponentially and the roll-out of regulations has been chaotic.

Fiona Campbell, CEO of the Association of Scotland's Self-Caterers (ASSC), said: "As professional self-catering businesses have been shut down or at threat of closure, there's a burgeoning black market of unlicensed accommodation in the capital, thereby undermining the entire purpose of the regulations."

Four types of licence for short-term lets are available in Edinburgh: secondary letting (renting a property where you do not normally live, such as a second home), home letting (using all or part of your own home, while you are absent), home sharing (as above, but while you are there), and home letting and home sharing (using a combination of the two).

However, ASSC claims that of 2,245 applications, only 1,672 secondary let licences have been granted by Edinburgh Council since the regulations came into force last year. And this from a sector which has provided a £90m per annum boost to the local economy and formed an integral part of the accommodation mix for decades, especially during the summer season.

"To cap it off, the Council's Short-Term Licensing regulations have seen a hat-trick of court losses, all of which could have been so easily avoided if it listened to industry on how to make its policies proportionate and legally sound," added Campbell.

"It is only through the latest legal challenge that we have seen more secondary let licensing applications granted. However, those very same operators remain in limbo as onerous planning permission requirements could still result in the closure of their business. Unless the harmful impact of the regulations is fully ameliorated, the situation is likely to be even worse next year, risking the viability of the Festival."

It's a similar story in New York, which outlawed short-term lets last year, one month before Edinburgh's crackdown . On the US east coast, the idea was meant to lower rents and open up whole apartments for full-time residents. However, critics including Airbnb itself claim the data shows it's done nothing to solve the housing crisis, while also driving up costs for travellers.

While the Edinburgh crackdown predominantly affects self-catering businesses, David Weston of the Scottish Bed & Breakfast Association (SBBA) also claims the policy implementation has affected his members directly.

"In 17 years dealing with governments in Edinburgh, Westminster and Brussels on a huge range of policies, in our experience the Scottish Government's implementation of 32 different local Short-Term Lets Licensing schemes is the worst example of policy execution we have ever seen in our sector," Weston said. "It is an unnecessarily onerous burden on very small businesses, and has led to a loss of some 5 per cent of our Scottish membership last year, as B&B owners chose to close or sell up rather than apply for a licence. We and many others urged the Scottish Government to go for a simple, low-cost, national registration scheme, but they ignored us."

What's more, according to a nationwide SBBA survey conducted in May, 79 per cent of its members say there are now fewer B&Bs in their area since the Short-Term Licensing Act was introduced. Conversely, zero per cent say the number has increased. "Scotland has started to accrue the perception as being an expensive destination – compared to other European countries and, crucially, compared even to England," Weston added.

On Edinburgh's cobblestoned streets, this is a view shared by several residents' associations. One house owner from Moray Feu in the New Town said: "I Airbnb a room in my home, as do quite a few people in this area, and I'd say that prices have gone up — and I have no idea how the council are policing it. I also know many people, especially during the festival, who let out properties and rooms through word of mouth."

All this begs the question of what it is that everyone wants out of Edinburgh these days. A fantasy-like castle? A royal palace? A festival brimful with drama and top comics?

All joking aside, maybe it's really just an affordable bed for the night.