Edinburgh Council’s licensing scheme for operators of short-term lets has been judged unlawful at the Court of Session.

Lord Braid’s decision in a Judicial Review of the City of Edinburgh Council’s Short Term Lets Licensing Policy follows a challenge by a group of four accommodation providers.

They raised more than £300,000 in a crowdfunding campaign to challenge the policy which was a response to the impact on neighbourhoods of a rise in properties being used as short-term lets (STLs), particularly in the city centre.

The scheme requires hosts to apply for a licence by October. Those who list entire properties on Airbnb and similar sites also need to seek planning permission from the council, or just a ‘certificate of lawfulness’ if used as an STL for more than ten years.

Petitioners’ opposed a presumption against allowing entire flats within the city’s tenements to be used as holiday lets.

The policy states that “secondary letting in tenement or shared main door accommodation is considered as unsuitable” and the burden would be on the applicant to demonstrate why they should be exempt from the rule.

Following a two-day hearing on 11 and 12 May Lord Braid today found that the council’s policy is unlawful at common law, in respect of the rebuttable presumption, the lack of provision for temporary licences and the requirement to supply floor coverings. The court also found that the policy breaches The Provision of Services Regulations 2009.

Rosie Walker, partner and head of litigation at Gilson Gray, who represented the short-term let operators, said the ruling showed that “it was not for the council, as licensing authority, to decide that a licence should not be granted just because a property is in a tenement.

“Our clients took the brave decision to bring this action against the local authority to protect their businesses and, more widely, to protect an industry that is very important to the Edinburgh economy.”

She added: “Short-term accommodation providers create a significant number of jobs in the city and deliver flexible accommodation that hotels and other operators simply cannot – particularly during important events like the Edinburgh Festival.

“The campaign the largest crowdfunded legal case in Scottish history, underlining the strength of support for our clients. It comes on the back of years of engagement by the Industry with the Scottish Government and the local authority to try to put in place a workable regulatory framework.”

The Association of Scotland’s Self-Caterers said: “We have yet to fully digest the detail of the decision but we hope that this will give common cause to both the Scottish Government and City of Edinburgh Council to seek a fresh approach that aims to collaborate and work with local operators of self-catering accommodation, recognising the many good things it brings to the economy and people of Scotland.”

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