Housing

Edinburgh Fringe: Festival landlords 'dodge paying millions in tax'

As Edinburgh gears up for the busiest month of the year, research suggests the city could be missing out on up to £10 million in lost tax revenue from short-term lets

Edinburgh

Today marks the start of Edinburgh’s Festival Fringe, with visitors flocking to the Scottish capital and filling up in-demand rental accommodation.

However, findings released on the eve of the world’s biggest arts festival show that private landlords in the city will dodge having to pay over £10 million in tax as they flog their properties to punters.

The loophole is simple: with landlords renting out homes, many will not have to pay business rates under the Scottish Government’s Small Business Bonus Scheme. The scheme denotes that if a property’s rateable value as a business is less than £15,000, the Government offers full relief from any tax payment.

The research, published by Andy Wightman, a Scottish Green Party MSP, found that 83 per cent of short-term lets in Edinburgh fall within this bracket and are therefore not liable for non-domestic rates. The research reports that around £6m is not collected in tax – money that could provide a vital boost to the cost of the city’s under pressure public services.

Meanwhile, it’s estimated that £4m in public money is lost, with only half of the holiday-rental landlords declaring that their properties operate commercially.

It’s time to give the council the powers to protect the availability of residential accommodation for the citizens of the city

Mr Wightman is demanding a review of the system after having been “inundated” with the concerns of his constituents regarding the matter.

“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,” said Mr Wightman. “It is time to bring short-term lets fully into the planning system and give the council the powers to protect the availability of residential accommodation for the citizens of the city.”

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.”

Words: Sophie Monaghan-Coombs

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