The leader of the council at the centre of a short-term lets red-tape storm has backed an extension of the deadline for business operators to apply for licences.

Cammy Day, leader of City of Edinburgh Council and a proponent of the controversial policy, said he supported the lobby pushing to extend the live date.

The Scottish Government legislated for the licensing scheme to come under local authority control with a new fees and regulation system starting on October 1 after pushing it back from March.

The move, aimed at tackling housing shortages and anti-social behaviour, has been criticised as unworkable by industry insiders.

It is feared onerous costs and planning permission concerns are to blame for hardly any self-catering businesses ranging from guest houses to yurts registering.

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Council papers showed this week that it expects an 80% reduction in available self-catering tourism accommodation as a result of short-term let and tourist tax legislation.

Louise Dickins, who owns lettings company Dickins Edinburgh and is director of the Association of Scotland’s Self-Caterers, told BBC Radio Scotland: “Currently, existing hosts need to have been applied in Edinburgh for planning and licensing by the 1st of October.

"For a one-bed flat it costs £3,000 or more. The Scottish Government are absolutely saying to everyone ‘get applying, you need to apply now’, but does that mean that four in five applicants in Edinburgh are going to be rejected?

“The application fees are non-refundable.”

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She added: “It’s not just about losing £3,000 but if you are rejected then potentially you have lost your livelihood, you’ve lost the value of your business as a going concern, lots of people have been working in these businesses, it is their pride and joy, for years.

“The implications go far beyond Edinburgh. This a problem that was made in Edinburgh, but let’s say we have got 80% of the self-catering accommodation removed from Edinburgh, the impact on the festival next year is going to be enormous.”

Mr Day said the 80% was a “worst-ever case scenario”.

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He said: “It is us projecting the worst situation that could happen in Edinburgh. What we are trying to do is rebalance the need for people who live in the city and people that want to visit the city as well.

“We have had this discussion publicly, we have argued for legislation, legislation has come in.

“Only the Government can change that. The lobby to change that date is live and we would be open to having that discussion with the Government as well. The 1st of October is looming but only the Government can change that.”

The council leader said that of the 12,000 short-term lets in Edinburgh, only 240 had registered, and with 111 being approved “and the remainder is being processed just now”.

He said: “You’re right it’s a low turnout but I understand the sector will put applications in towards the end of September for that date in October, but if they want to join us in a lobby to ask for an extension to that we would be more than happy to have that discussion.”

A recent survey of around 1,270 short-let businesses by the ASSC found around 60% of operators had yet to act on applying for a licence.