Edinburgh to get nearly 500 affordable homes from new 'tourist tax'
The so-called tourist tax will help those on lower incomes in the city get a decent home.
Money raised by Edinburgh by the new Visitor Levy - which will add a small charge to overnight stays in the capital - will be used to fund almost 500 new affordable homes.
Edinburgh is the first city in Scotland to introduce the fee, which will introduce a five per cent levy on stays in hotels, guest houses, B&Bs and short-term lets for a maximum of five nights, from July next year.
The scheme is forecast to raise £100m in the first three years, with councillors agreeing to channel the first of the revenue into a new £5m Housing and Tourism Mitigation Fund.
The fund will be used to help deliver 472 affordable homes by early 2029, including three new build developments at Fountainbridge, Meadowbank and Coatfield Lane in Leith.
Around 361 of these would be social rented homes, with a further 111 mid-market rent homes planned.
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.”
The move would also allow households currently using unsuitable temporary accommodation, such as bed and breakfasts, to access more appropriate settled accommodation.
This is the first fully agreed use of the Edinburgh Visitor Levy’s funds, however the investment is subject to approval from the City of Edinburgh Council at the budget meeting on February 26.
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If it proceeds, the performance of the delivery programme will be reported to the housing, homelessness and fair work committee on an annual basis.
The money generated by the Visitor Levy scheme will be reinvested directly into initiatives that benefit residents and enhance visitor experiences in the capital, the second most visited city in the UK after London.
Investment is also planned in destination and visitor management, culture, heritage and events. A budgeting programme will allow residents and communities to have a say in how investment can be made to enhance the visitor experience in their area.
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.
This week, it was announced that councils are to be given greater flexibility over how they design and implement a visitor levy under a new bill being put forward in Holyrood.
While The Visitor Levy (Scotland) Act 2024 grants councils the power to raise funds through adding a percentage of the total cost of an overnight stay, the new approach will allow a fixed amount to be set instead.
Councils will also be given the option of setting different fixed amounts for different geographical locations, times of year or types of accommodation.
While Edinburgh is the first city to introduce the new levy, Glasgow is due to operate a similar scheme from January 2027 to raise around £16m a year.
Aberdeen is to introduce a 7% visitor levy on overnight accommodation from April 2027, with the fee expected to raise around £6.8m a year.
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