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 with be a disaster for Edinburgh’s famed International Festival due to kick off as usual this August.

Before the pandemic, the festival sold a little more than 3 million tickets in 2019 and pulled in an estimated 450,000 visitors to Scotland’s capital city.

The pandemic meant there was no festival in 2020 and in 2019, when it resumed, ticket sales sank by almost 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 in passed in 2o22..

Restrictive Regulations on AirBnB-like Rentals

Now anyone in Scotland, including the approximately half million Edinburgh residents, will now need to get a license to rent out their homes to tourists even on a temporary basis. 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 is that most of central Edinburgh housing is primarily made up of tenements, meaning that what was once a mainstay for the August tourist trade will now not be available.

$42,000 a Month: A Rent For Billionaires

The result is a shortage of festival accommodation, something which is already becoming a nightmare as the supply of places to stay has shrunk and rental rates have skyrocketed. Rents for a month are reaching as much as £34,000 ($42,000) a month for August.

Policy Backfire

It gets worse. The rules were allegedly designed to help Scotland’s chronic housing shortage. But what it has done in reality is to favor the well heeled home owner over those less blessed.

For instance, it seems highly likely that people who own town houses — largely the well-heeled — will be able to rent out their flats. They will also get the benefits of 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 AirBnB Festival income to cover their annual mortgage.

The only possible good news coming out 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.