Edinburgh’s Visitor Levy housing plans ‘could face legal challenge’, self-caterers warn

On Thursday, members of the Council’s Housing, Homelessness and Fair Work Committee approved plans for a £5 million Housing and Tourism Mitigation Fund, financed through the city’s newly introduced visitor levy. The fund is intended to support the construction of 472 affordable homes between 2026 and 2029, with more than three-quarters earmarked for social rent.

The Visitor Levy (Scotland) Act 2024 stipulates that revenues must be used for “local facilities and services substantially used by business and leisure visitors.” The ASSC argues that long-term social housing does not fall within this remit and warned councillors in a written deputation that the proposals could contravene statutory limitations.

Edinburgh’s Visitor Levy Advisory Forum, which advises on how levy revenues are invested, had also sought clarity on whether housing investment was a legitimate use of the funds.

Fiona Campbell MBE, CEO of the ASSC, said: “The ASSC fully supports the delivery of more affordable housing but this is not the right way to go about it. The levy was meant to support visitor infrastructure and services, not fund housing projects.

“Tourism businesses are once again being scapegoated for issues far beyond their making. It is deeply regrettable that Edinburgh Council now lays itself open to further avoidable legal and reputational damage.”

Ms Campbell urged the council to halt the plans until the legal risks had been properly assessed.

Council leader Jane Meagher defended the initiative, highlighting Edinburgh’s housing emergency and the strain on temporary accommodation.

She said many workers in the city’s visitor economy struggle to find affordable housing, while the use of bed and breakfasts as emergency accommodation reduces capacity for tourists.

“That’s why it’s so important that this new funding is being committed towards a Housing and Tourism Mitigation Fund,” Meagher said. “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.”

Edinburgh’s Visitor Levy scheme, formally agreed in January 2025, applies to paid overnight accommodation booked after 1 October 2025 for stays from 24 July 2026 onwards. The levy is set at 5% of the accommodation-only cost for the first five nights of a stay and is projected to raise up to £50m annually.

Funds are intended to be reinvested in initiatives that benefit residents and enhance visitor experiences, including city operations, destination management, culture and events, and participatory budgeting programmes.

The housing investment remains subject to approval at the council’s budget meeting in February 2026, with annual reporting to the Housing, Homelessness and Fair Work Committee.