Members of the Housing, Homelessness and Fair Work Committee approved plans for the £5 million Housing and Tourism Mitigation Fund, which could help deliver 472 affordable homes between 2026/27 and 2028/29, with more than 75% potentially available for social rent.

Making more social rent homes available would allow households currently using unsuitable temporary accommodation, such as bed and breakfasts, to access more appropriate settled accommodation. This would return B&Bs to their intended uses of shorter-term guests.

It is expected that the Fund would support three new build developments – at Fountainbridge, Meadowbank and Coatfield Lane in Leith - with around 361 social rented homes and around 111 mid-market rent homes.

The investment is subject to approval from the council at the budget meeting on 26 February 2026. If it proceeds, the performance of the delivery programme will be reported to the Housing, Homelessness and Fair Work Committee on an annual basis.

Edinburgh’s Visitor Levy scheme was formally agreed in January 2025.

The levy applies to paid overnight accommodation booked after 1 October 2025, if the stay takes place from 24 July 2026 onwards. It is a 5% payment on the accommodation-only cost and applies to the first five nights’ stay. The scheme is projected to raise up to £50m a year to invest in developing, supporting and sustaining services for visitors to the city, and enhancing Edinburgh’s worldwide appeal as a place to visit and live.

Council leader Jane Meagher said: “Many of those working in our city’s thriving visitor economy and cultural sectors are often unable to find affordable housing in the city, making it difficult for them to live close to where they work.

“In addition, the council has declared a housing emergency, with more and more people presenting as homeless and not enough social homes available to meet this demand, and so too many residents have to use temporary accommodation, often in bed and breakfasts or hotels, taking vital capacity away from what should be tourist accommodation.

“That’s why it’s so important that this new funding is being committed towards a Housing and Tourism Mitigation Fund, which will be used alongside our existing investment programme for house building. This will ensure affordable homes are available for visitor economy workers in the city and means that bed and breakfast and hotel rooms can be used for their intended purpose - to welcome visitors to Edinburgh.

“This is the first fully agreed use of the Edinburgh Visitor Levy’s funds and will help deliver our objectives of developing, supporting and sustaining the quality public services and infrastructure that Scotland’s capital city must deliver for all visitors, residents and businesses.”

The money generated by the Visitor Levy scheme will be reinvested directly into initiatives that benefit residents and enhance visitor experiences. In addition to housing, the investment streams include: city operations; destination and visitor management; culture, heritage and events; and a participatory budgeting programme, which will further allow residents and communities to have a say in how investment can be made to enhance the visitor experience in their area.

These investment streams are being developed by officers, and the Visitor Levy Advisory Forum will be consulted on all proposals. The proposals will be presented for final approval from relevant Council committees in January and February 2026.