Retrospective Application of Section 26B in Edinburgh's Short-Term Let Regulation

Introduction

The case of Ian Muirhead and Dickins Edinburgh Ltd v City of Edinburgh Council ([2023] CSOH 86) addresses the interpretation and application of Section 26B of the Town and Country Planning (Scotland) Act 1997. This landmark decision by the Scottish Court of Session in December 2023 scrutinizes whether the designation of Edinburgh as a short-term let (STL) control area has retrospective effect, thereby imposing planning permission requirements on existing short-term let operations that commenced before the designation date of 5 September 2022.

The petitioners, including property owners and a management company, challenged the City of Edinburgh Council's (the respondent) guidance and enforcement actions, arguing that Section 26B should apply only prospectively. They contended that applying the section retrospectively unfairly impacted their established operations.

Summary of the Judgment

Lord Braid, delivering the opinion of the court, held in favor of the petitioners. The court concluded that Section 26B was not intended to have retrospective effect and should only apply to changes of use occurring on or after the designation date. Consequently, the respondent's interpretation, which treated existing short-term let operations as subject to planning permission under Section 26B, was incorrect. The court granted the petitioners' orders, declaring that the use of dwellinghouses for short-term lets predating the control area designation does not constitute a material change of use under Section 26B.

Analysis

Precedents Cited

The judgment references several key precedents that influenced the court's decision:

Sunshine Porcelain Potteries Pty Ltd v Nash (1961) AC 927: Established the presumption against retrospective legislation unless explicitly stated.
Secretary of State for Social Security v Tunnicliffe (1991) 2 All ER 712: Clarified that legislative changes affecting past rights must be explicit, especially when fairness is at stake.
Wilson v First County Trust Ltd (2004) 1 AC 816: Highlighted that while legislation can alter existing rights, significant unfairness requires clear legislative intent.
Moore v Secretary of State for Communities and Local Government [2013] JPL 192; Cameron v Scottish Ministers [2020] CSIH 6: Addressed whether short-term letting constitutes a material change of use.
Cymon Valley BC v Secretary of State for Wales and another (1987) 53 P & CR 68: Discussed the exhaustion of planning permission once a change of use is implemented.
Averbuch v City of Edinburgh Council 2023 SLT 665: Provided background on challenges to licensing policies.
Axa General Insurance Company Ltd v Lord Advocate [2011] UKSC 46: Related to the right to peaceful enjoyment of possessions under Article 1 of Protocol 1 of the European Convention on Human Rights.
Pepper v Hart [1993] AC 593: Pertained to the use of ministerial statements in statutory interpretation.

Legal Reasoning

Lord Braid's legal reasoning was methodical and grounded in statutory interpretation principles. Key points include:

Presumption Against Retrospectivity: The court reaffirmed the general legal principle that legislation is not retrospective unless explicitly stated, emphasizing fairness and vested rights.
Interpretation of Section 26B: Analyzing the language and purpose of Section 26B within the broader Town and Country Planning Act 1997, the court determined that it logically pertains to future changes of use rather than existing ones.
Impact of Legislative Intent: Considering the legislative framework and debates, the court concluded that applying Section 26B retrospectively would impose unfair burdens on existing operators, something Parliament likely did not intend.
Consistency and Fairness: The respondent's interpretation led to inconsistent applications across different scenarios, undermining legal fairness and predictability.
Protection of Economic Interests: The judgment recognized the economic implications for small business operators reliant on short-term lets, balancing them against public planning interests.

Impact

This judgment sets a significant precedent in Scottish planning law by clarifying the non-retrospective application of Section 26B. Its implications include:

Legal Clarity: Provides clear guidance that regulations under Section 26B apply only to future changes of use, offering certainty to existing STL operators.
Enforcement Practices: The City of Edinburgh Council must adjust its enforcement strategies to comply with the non-retrospective interpretation, avoiding undue burdens on existing operators.
Policy Formulation: Legislators may need to revisit Section 26B if retrospective application becomes a policy goal, ensuring explicit language to override the presumption against retrospectivity.
Economic Stabilization: Protects property owners and management companies from unforeseen compliance costs related to retrospective planning permission requirements.
Future Judicial Reviews: Establishes a benchmark for assessing the retrospective effects of planning regulations, influencing how courts interpret similar provisions in the future.

Complex Concepts Simplified

Short-Term Let (STL)

An STL refers to renting out residential accommodation for brief periods (days to weeks) not intended as the tenant's main residence. A 'secondary STL' specifically involves properties that are not the operator's principal home.

Material Change of Use

This legal term refers to a significant alteration in how a property is utilized, necessitating planning permission. For instance, converting a residential dwelling into a commercial establishment like a fish and chip shop would typically be considered a material change of use.

Retrospective Effect

Legislation with retrospective effect applies to events or actions that occurred before the enactment of the law. Such application is generally disfavored unless explicitly stated to ensure fairness and protect existing rights.

Certificate of Lawful Use (CLU)

A CLU is an official document obtained from the planning authority declaring that the current use of a property is lawful, meaning it does not require planning permission and is protected from enforcement actions.

Declarator

A declarator is a court order that declares the rights of the parties involved without ordering any specific action or awarding damages.

Conclusion

The judgment in Ian Muirhead and Dickins Edinburgh Ltd v City of Edinburgh Council fundamentally clarifies the application of Section 26B, affirming its prospective nature and shielding existing short-term let operations from unexpected regulatory burdens. By upholding the petitioners' interpretation, the court reinforced the principle that legislation should not retrospectively alter established rights unless explicitly intended, thereby promoting legal certainty and fairness. This decision not only impacts current STL operators in Edinburgh but also serves as a guiding precedent for future challenges involving the retrospective application of planning laws in Scotland.

Stakeholders, including property owners, legal practitioners, and policymakers, must take heed of this ruling to navigate the evolving landscape of short-term lettings and ensure compliance with planning regulations without infringing upon established rights.