Edinburgh Unveils Groundbreaking Visitor Levy Transforming Tourism Revenue Into Nearly 500 New Affordable Homes

Published on December 4, 2025

Edinburgh is preparing to reshape the ways tourism supports daily life in the city, with a new Visitor Levy poised to channel millions of pounds into affordable housing and community improvements. The initiative, set to launch next July, marks the first time a Scottish city will introduce such a charge — a significant milestone for a destination that welcomes millions of visitors every year.

The scheme applies a five per cent charge on the cost of overnight accommodation for up to five nights. Hotels, guest houses, B&Bs, and short-term lets will all be included. Because Edinburgh consistently ranks as one of the busiest tourism hubs in the UK, forecasts predict the levy could raise around £100 million within its first three years. Instead of being directed into general funds, that revenue will be invested straight back into programmes that address the pressures created by tourism while improving the city for residents.

A flagship component of this reinvestment strategy is the creation of a dedicated £5 million Housing and Tourism Mitigation Fund. This fund is expected to help deliver 472 affordable homes by early 2029 — a major expansion of the city’s housing stock at a time when demand continues to outpace supply. These new homes are planned across three major development areas: Fountainbridge, Meadowbank, and Coatfield Lane in Leith. Each of these sites has been identified as a priority location for expanding access to stable and affordable housing.

Of the new homes planned, about 361 will be allocated for social rent, offering long-term security to individuals and families who need it most. The remaining 111 properties are earmarked for mid-market rent, opening opportunities for residents who do not qualify for social housing but still face difficulty securing affordable accommodation in the competitive private rental market. This balanced approach aims to ensure a more inclusive housing landscape across the city.

One of the key outcomes of this large-scale housing expansion will be a reduction in the number of households placed in temporary or unsuitable accommodation. For many, that currently includes stays in bed and breakfast properties — a short-term fix that falls far short of meeting long-term needs. By accelerating the development of new, permanent homes, the city aims to provide more stable pathways for residents transitioning out of temporary housing.

While the housing fund represents the first confirmed use of the Visitor Levy’s revenue, final approval still rests with the City of Edinburgh Council during its upcoming budget meeting in February. Once implemented, progress on the homebuilding programme will be monitored closely, with annual reports presented to the committee overseeing housing, homelessness, and fair work.

The levy’s impact, however, extends far beyond housing. Edinburgh also intends to invest in its cultural, heritage, and event sectors — key pillars of its global identity. Funds will support improvements to visitor management, strengthen the upkeep of key attractions, and enhance the experiences of the many travellers who contribute to the city’s economy.

A central element of the plan is ensuring that local residents have a meaningful say in how the new revenue is spent. A participatory budgeting programme will allow communities to propose and vote on initiatives that enhance their area. This approach ensures investment aligns with the ambitions and priorities of the people who live in Edinburgh every day, not just the millions who visit.

To support this comprehensive investment strategy, officers are developing several streams of funding that will guide how tourism income is redistributed in the years ahead. These proposals will be reviewed by the Visitor Levy Advisory Forum before being submitted to the relevant Council committees for final decisions in early 2026. This phased process ensures transparency, accountability, and thoughtful distribution of funds.

The rollout of Edinburgh’s levy comes at a time when Scotland is expanding the flexibility it affords to local authorities regarding visitor charges. A new bill will allow councils to choose between percentage-based or fixed-fee models and even set different amounts depending on location, season, or type of accommodation. This shift aims to give cities the tools needed to manage tourism in ways that best suit local conditions.

The capital’s pioneering move has also prompted other Scottish cities to advance their own plans. Glasgow intends to implement a Visitor Levy in January 2027, generating an estimated £16 million annually. Aberdeen has announced its own version — a seven per cent charge beginning in April 2027, expected to raise about £6.8 million each year.

Edinburgh’s approach signals a fundamental shift in how tourism contributes to civic wellbeing. Instead of viewing visitors purely as economic drivers, the city is reframing tourism as a partnership that fuels community growth. By investing levy revenue into housing, culture, and neighbourhood development, Edinburgh is positioning itself as a leader in sustainable urban tourism — one where residents and visitors thrive together.