Introduction

The Petition of Peter Ralph Averbuch, Dickins Edinburgh Ltd, Reserve Travel Ltd, and Edinburgh SC (Self Catering) Ltd sought judicial review of the City of Edinburgh Council's Short-Term Lets (STL) Licensing Policy, adopted on September 29, 2022. The petitioners, comprising property owners and managers involved in the STL market—such as Airbnb rentals—challenged the policy’s legality, particularly its aspects concerning the licensing presumption against secondary lettings in tenements, the duration of licenses, the absence of temporary licensing provisions, and specific conditions imposed on licensed properties. The respondent, the City of Edinburgh Council, defended the policy as a rational and proportionate response to the challenges posed by the burgeoning STL market. This commentary delves into the comprehensive analysis provided by the Court of Session, highlighting key legal principles, precedents, and the broader implications of the judgment.

Summary of the Judgment

The Court of Session, presided over by Lord Braid, examined the legal challenges posed by the petitioners against the Council's STL Licensing Policy. The court found that certain provisions of the policy were unlawful under common law and in breach of the Provision of Services Regulations 2009, specifically:

• The establishment of a rebuttable presumption against granting licenses for secondary lettings in tenements.
• The restriction of license duration for secondary lettings to one year, in contrast to the three-year period for other STLs.
• The absence of provisions for temporary licenses for secondary lettings.
• The imposition of specific conditions, such as requiring suitable floor coverings in all secondary lets.

Additionally, while the temporal restriction on license duration was upheld as lawful, the policy's overall structure, particularly the rebuttable presumption and temporary licensing provisions, was deemed irrational and oppressive. The court also addressed the petitioners' claims under Article 1 of Protocol 1 of the European Convention on Human Rights (ECHR), finding them premature and speculative at the time of judgment.

Analysis

Precedents Cited

The judgment extensively referenced several key legal precedents that shaped the court’s reasoning:

• Sagnata Investments Limited v Norwich Corporation [1971] 2 QB 614: Affirmed that licensing authorities are entitled to establish general policies to guide decision-making.
• Calderwood v Renfrewshire Council [2004] SC 691: Reinforced the legitimacy of licensing policies.
• Cinderella's Rockafella's Limited v Glasgow District Licensing Board [1994] SCLR 591: Highlighted that excessive exceptions could undermine the very essence of a policy.
• Sneddon v Renfrewshire Council [2009] SC 539: Emphasized that policies can allow for exceptions in exceptional circumstances without pre-determining outcomes.
• Di Ciacca v Scottish Ministers 2003 SLT 1031: Explored the relationship between different statutory regimes, underscoring that one regime's decisions should not unduly fetter another's discretion.
• Leisure Inns (UK) Limited v Perth and Kinross District Licensing Board 1991 SC 224: Asserted that licensing authorities can consider amenity issues if not already addressed by planning authorities.
• R (Poole) v Birmingham City Council [2021] PTSR 1705: Addressed the proportionality of licensing schemes and policies.

These precedents collectively informed the court’s stance on the necessity for clarity, proportionality, and the non-arbitrariness of licensing policies.

Legal Reasoning

The court’s legal reasoning centered around several core principles:

• Legislative Framework: The STL Licensing Policy operates under two legislative regimes—the Civic Government (Scotland) Act 1982 and the Town and Country Planning (Scotland) Act 1997. The court emphasized the distinct yet complementary functions of licensing and planning authorities.
• Rebuttable Presumption: The policy's provision of a rebuttable presumption against granting licenses for secondary lettings in tenements was scrutinized. The court found that this presumption lacked clarity, was not proportionate, and effectively rendered the policy too rigid, undermining its purpose.
• Policy Clarity and Consistency: The court assessed whether the policy was clear and unambiguous, as required by the Provision of Services Regulations 2009. It determined that the policy's language regarding rebuttable presumptions and temporary licenses was convoluted and failed to provide applicants with clear guidance.
• Proportionality and Public Interest: The policy was evaluated for its proportionality in serving public interest objectives, such as safety and community amenity. The court found that certain provisions, like the one-year licensing duration for secondary lets, were not inherently disproportionate, but others, particularly the rebuttable presumption, were.
• Distinction Between Licensing and Planning Authorities: The court highlighted the importance of maintaining distinct roles between licensing and planning authorities. The policy's attempt to let the licensing authority make determinations based on property types (like tenements) encroached upon the planning authority’s jurisdiction, leading to an unlawful overlap.

Overall, the court concluded that while licensing policies are permissible, they must adhere to legal standards of clarity, non-arbitrariness, and proportionality. The Edinburgh Council’s policy failed to meet these standards in several key areas.

Impact

This judgment has significant implications for future cases and the regulatory landscape governing short-term lettings:

• Licensing Policy Development: Local authorities must ensure that their licensing policies are clear, proportionate, and within the scope of their legislative authority. Blanket presumptions or rigid distinctions based on property types without adequate justification may be deemed unlawful.
• Separation of Regulatory Functions: The decision underscores the necessity of maintaining clear boundaries between different regulatory authorities. Licensing authorities should not overstep into areas designated for planning authorities, such as determining the suitability of a property type for short-term lettings.
• Provisions for Exceptions: Policies must explicitly outline the criteria and processes for exceptions, ensuring that applicants have a clear understanding of how to challenge presumptions or refusals.
• Compliance with EU Regulations: Although the UK has exited the EU, retained regulations like the Provision of Services Regulations 2009 continue to impact policymaking. Authorities must ensure that their policies comply with these regulations to avoid legal challenges.
• Economic and Community Balance: The judgment highlights the delicate balance authorities must maintain between fostering economic opportunities through short-term lettings and protecting community interests and amenities.

Future licensing policies for short-term lets will need to carefully navigate these considerations to withstand legal scrutiny.

Complex Concepts Simplified

Conclusion

The Court of Session's judgment serves as a pivotal reminder of the limitations and responsibilities vested in local authorities when formulating licensing policies. By declaring certain aspects of the City of Edinburgh Council's STL Licensing Policy unlawful, the court reinforced the necessity for policies to be clear, proportionate, and within the legal framework established by relevant statutes and regulations.

Key takeaways from the judgment include:

• Clarity and Guidance: Licensing policies must be articulated in clear and unambiguous terms, providing applicants with a transparent understanding of criteria and processes.
• Respecting Regulatory Boundaries: Authorities must honor the distinct roles of licensing and planning bodies, avoiding overreach into domains reserved for others.
• Proportionality and Fairness: Policies must balance public interest objectives with the rights and economic interests of affected parties, ensuring measures are neither oppressive nor arbitrary.
• Compliance with Higher Standards: Even post-Brexit, adherence to retained EU regulations remains crucial in shaping fair and lawful licensing practices.

As the STL market continues to evolve, this judgment underscores the importance for local councils to meticulously craft their licensing regimes, ensuring they uphold legal standards while addressing community and economic needs.