Short-term lets in North Berwick: MKA Economics Report

North Berwick Environment and Heritage Trust (NBEHT) is pleased to publish a report prepared by Mark Kummerer of MKA Economics and titled  Economic Impact of Residential and Short-Term Let Properties in North Berwick. See link below.

NBEHT commissioned the report following serious concern about the significant and growing loss of housing stock to short term lets (a commercial business use) in the town. NBEHT was concerned also that the figures relied upon by East Lothian Council on the economic impact of short term lets on the local economy were not locally derived and were unreliable. The loss of housing stock can have an adverse effect upon the local economy and the health and well-being of the community. NBEHT is not anti-tourism but wishes decisions about North Berwick to be made on the basis of accurate statistics derived from this specific place.

The report is based upon locally sourced and derived data. NBEHT had asked East Lothian Council to undertake this research, but they were not interested.  NBEHT is very thankful to the North Berwick Trust and to the North Berwick Community Council for funding the research. Our concern was that within East Lothian Council there was over-reliance on Scotland-based data and there was no local data based on what was happening on the ground in North Berwick. East Lothian Council accepts that the majority of short term lets are concentrated in North Berwick.   

MKA Economics had undertaken similar research in Edinburgh, work which compared short term lets and residential letting.  

The results show that the numbers are growing. In May 2024 when the data was derived there were 445 short term lets.  These are significantly higher numbers than a NBEHT research report identified two years ago.   

Briefly what the figures show is that the economic benefit to the local economy is far less than the figures East Lothian Council relies upon.  In addition, it is important to note that the benefit to the local economy is greater for residential lettings.   So residential letting is economically better for the town, and keeps housing stock for housing purposes, when compared to short term lets. 

On the job creation front it appears that more jobs are created by short term lets, than residential letting, but it must be remembered that jobs created in tourism in North Berwick as elsewhere are seasonal and low grade. For a vibrant  economy the town needs permanent jobs all year round.   The report author was asked about the job creation ratios and explains that less expenditure is required to generate a tourism job than a typical job, so more jobs are created from less spend.  However, they are valued less in Gross Value Added (GVA) terms so GVA is higher for non-tourism jobs. Ultimately, tourism jobs can be created from lower levels of spend, but they are seasonal and lower value so ultimately the GVA (which is the most important metric) is lower.

There is something that does not appear in this report because it is not directly relevant, but it is important.  Short term lets are businesses and as such owners typically do not pay Council tax. Most owners appear to register for business rates, and they are zero rated for business taxes.  That means East Lothian Council gains little if anything in the way of income (local taxation) and could be regarded as making in effect a loss as owners often (we are told anecdotally) ask their rental clients to put waste and rubbish in street bins, as they are not entitled to domestic waste uplift.  Of course, East Lothian Council does gain income from residential letting and ownership derived from Council tax income. 

The Scottish Government has a planning policy which requires that the economic benefit is looked at carefully. This new document allows judgements to be made using locally derived and accurate data in May 2024, something that has not been available up until now. Balanced and informed decisions can now be made.

Read the 2024 MKA Economics Report Economic Impact of Residential and Short-Term Let Properties in North Berwick.