Scotland’s Latest Attempt To Kill Its Own Economy

Scotland’s latest bizarre economic policy is about to run headlong into common sense. The result will be a disaster for Edinburgh’s famed International Festival, which is due to kick off, as usual, this August.

The Festival sold a little more than 3 million tickets in 2019, pulling in an estimated 450,000 visitors to Scotland’s capital city.

The 2020 pandemic meant there was no festival that year. But when it resumed in 2022, ticket sales sank by almost a third to 2.2 million.

But so much for the rebound. This year is likely to see another drop because of a strange and self-defeating housing regulation that got passed by the Scottish parliament in 2022.

Restrictive Regulations on Airbnb-like Rentals

Now anyone in Scotland, including the approximately half million Edinburgh residents, will need to get a license to rent out their homes to tourists. Website Hostaway explains as follows:

• “All short-term rentals in Scotland will be required to have a license, unless specifically excluded. It is a legal requirement to obtain a new license, regardless of whether hosts occasionally sublet or let out a spare room for instance.”

Getting a license per se isn’t the problem. The reality is that apartments in tenement buildings with shared stairs ways are unlikely to get approval, experts say.

That’s a major issue for would-be tourists given that most of central Edinburgh housing is primarily made up of tenements. In simple terms, the temporary rentals in the center of Edinburgh that were was once a mainstay for the August tourist trade will now not be available.

$42,000 a Month: A Rent For Billionaires

For the forthcoming festival this August, there is now a shortage of accommodation. Its so bad that rental rates have skyrocketed as high as £34,000 ($42,000) for the month of August.

Policy Backfire

It gets worse. Allegedly the rules got designed to help Scotland’s chronic housing shortage. But what happened, in reality, is different. Instead of helping reduce rents, the new rules favor the well-heeled home owner over those less blessed.

For instance, it seems highly likely that people who own townhouses — largely the well-heeled — will be able to rent out their homes. They will also benefit from extra income at the new higher rental rates.

Meanwhile, people in tenements — who don’t tend to be as financially flush as townhome owners — may see a shortfall in their income. That’s particularly sad because many such tenement dwellers regularly relied on a few thousand pounds of AirBnB festival income to cover their annual mortgage.

The only possible good news of this economically insane rule is that the economic hardship will be widespread and likely lead to the ouster of the Scottish National Party along with its self-defeating policies.