The multi-millionaires who are profiting from Edinburgh's short-term lets bonanza

A Monaco-based millionaire, an English aristocrat and an Australian investment fund are among the major players making money from Edinburgh’s short-term lets bonanza.

Wednesday, 21st August 2019, 8:17 am
Stefan King (right) and the Airbnb key boxes on show in Edinburgh

The findings of an investigation by the Evening News into who is profiting from the explosion in short-term lets show how far the platform has grown from its original aim of helping people rent out a spare room.

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Scottish taxpayers footing £2.6m Airbnb tax bill in Edinburgh

Multi-million pound companies now account for a large number of short-term let (STL) properties in the city, the vast majority of which operate outside the licensing and safety regulations which cover most other holiday and rented accommodation.

Stefan King (right) and the Airbnb key boxes on show in Edinburgh

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There is no suggestion of wrongdoing by any of the individuals involved but our findings highlight the extent to which large corporations use STL platforms such as Airbnb and Booking.com to operate unchecked within the Capital.

Airbnb said nearly 60 per cent of its users in Scotland rent out their main home and keep 97 pence in every pound of income and said our findings do not reflect the reality of renting in the Capital.

The growth of STLs comes as the numbers of complaints from city residents increase due to the impact of so many neighbouring properties being snapped up by often unaccountable Airbnb landlords.

Our findings also raise questions about how much Edinburgh benefits from the growth of the short-term let industry - which Airbnb estimates at £320m per year - with so much of the profits apparently heading overseas.

Stefan King.

By examining properties listed on the Scottish Assessor’s website as self-catering units, we matched company names with individuals to trace income.

These properties were then cross-referenced with online adverts on STL platforms such as Airbnb and Booking.com.

Our investigation found: - Monaco-based Steven Ferguson, once named one of Scotland’s richest men after he sold his company Ferguson Group for £270m, owns nearly 30 properties on North Bridge and Blackfriars Street via his North Bridge Lofts and NBL Linton Ltd companies. - The mutli-millionaire owner of the Scotsman Hotel and The Three Sisters, Stefan King, owns eight flats on George IV Bridge through his company the G1 Group. - Sir Richard Rowley, the Baronet of Hill House in Berkshire, owns several short-term let properties through his C & J Limited company.- STLs are also owned by foreign and domestic investment firms including Ravenstone, an Edinburgh-based ‘wealth management’ company, and an Australian investment company.

Airbnb flats.

Due to the nature of Airbnb’s location data, which is anonymised for the safety of hosts, it is impossible to match listings to title deeds of properties.

However one property, no longer listed on Airbnb but still on Booking.com and other STL platforms, is owned by a British Virgin Islands-based investment subsidiary of the Panamanian law firm Morgan and Morgan, who were also named in the Panama Papers.

Identified through a complaint on Twitter, the property was found to be owned by the global law firm which specialises in off-shore investment with the firm listed as the owner on the title deeds through a subsidiary investment company based in the British Virgin Islands.

How widespread foreign investment in Edinburgh’s property market and how many similar properties are listed on Airbnb is difficult to quantify, leading to questions as to how much benefit those living in the Capital get from the industry.

Laura Kerr

This is exacerbated by the prevalence of multi-listers and management agencies on the platform who further obscure the link between listings and the owners of properties.

However, owner of Airbnb management company Airmanaged, Daniel Parker said that 99 per cent of his listings are owned by local people or those who have moved away.

Mr Parker, whose company manages around 300 STLs, said: “Most of them are have one property and are trying to make a little bit of extra money.

“Foreign investors is not something we are aware of in a big way.

“I understand there is an issue, and I think what needs to come in is clear safety regulations and a landlord registration system.

“It should be regulated and am all for regulation and making it safe and sensible.”

James Scullion, director of North Bridge Lofts, said: “We made the decision to buy into serviced apartments as we were keen to develop and grow a portfolio of prime location properties in Edinburgh.

“Of course the capital value growth in the city has been good over the past few years but we are looking to invest into the city and our properties for the long term to strengthen our brand of high quality serviced apartments.

“Ultimately the good profitability and continuing capital growth in properties of this type make these a logical and what we feel is a solid long term investment.”

Housing and economy convenor at Edinburgh council, Councillor Kate Campbell said the SNP aims to move away from the use of property as a way of storing wealth, something that has impacted the provision of housing in the city.

She said: “The Scottish Government has just launched an ambitious draft vision for housing in 2040, which includes the statement that a ‘well-functioning housing system’ should aim to ‘shift the balance away from the use of homes as a means to store wealth’. I couldn’t agree more.

“But alongside this homes being lost to commercial uses is a large part of the [homeless] problem. It’s the basic economics of supply and demand – there’s evidence that rents are increasing by up to 30 per cent in areas with a high concentration of STLs.”

Conservative councillor Jo Mowat said: “At the moment we don’t have enough housing stock available which is skewing the market, and it is more about the use and how you let rather than who owns it.

“I would like to see an increase in housing for people living here. STLs makes living in the city less attractive for people and all that does is add to our housing pressures.

“Having that back as housing stock would be really really good news for the city.”

The Scottish Government said their consultation sought views on a licensing regime and said they are committed to working with local authorities.

A spokesman for Airbnb said they have zero tolerance for bad actors, support a tourist tax and regulation of the sector.

She said: “This property is no longer listed on Airbnb and these misleading claims and conjecture do not reflect the reality of hosting in Edinburgh.

“Unlike other forms of tourism that take money out of the places they do business, Airbnb empowers regular people, boosts local communities and is subject to local tax.”

Edinburgh has changed to a 'holiday camp'

An Old Town resident whose front door was made famous as the ‘ultimate boss of Edinburgh Airbnb’ has said she feels like she lives in a ‘holiday camp’, surrounded by Airbnbs.

Laura Kerr, who bought her flat on Upper Bow in 2016, said she misses the community spirit she grew up with in Portobello.

She said: “I grew up in Portobello. It does feel like the centre is being hollowed out, especially speaking to people in the area, it does feel very much like a tourist ghetto.

“There is the lack of community. When there are 21 flats you expect to know a few people but almost every weekend you are passing different faces in the stair.”

“There’s nothing wrong with having tourists but it does feel like they are being given priority over residents.

“There is a feeling of living in a holiday camp. It’s difficult because I’ve always wanted a home in the Old Town, ever since I was a child and I do think why should I be pushed out by tourists.”

Ms Kerr added the constant stream of new neighbours also makes her worry about security and safety.

She said: “There is a definite feeling of a lack of security.

“We’ve found drug paraphernalia and scorch marks from those who have been using heroin as well as littering and tourists banging on the door asking where their holiday flat is.

“If we are going to make anything happen we have to make the effort to live there and reclaim it for the locals."