Cyprus continues to be an attractive destination for real estate investors due to its stable tourist flow, favorable climate and opportunities for short term rentals. However, this market has undergone a number of changes in recent years, mainly due to the introduction of new legislative changes. Let's take a look at the opportunities, risks and characteristics of renting out property in Cyprus through short-term rental platforms such as Airbnb.
Short term rental opportunities
Renting out property in Cyprus through Airbnb is rapidly growing in popularity. To date, more than 8,000 properties have been rented out through Airbnb, indicating a growing interest from both homeowners and renters. Short-term rental platforms allow tourists to find more affordable and convenient accommodation options and owners to generate income from their properties, especially in popular tourist areas such as Larnaca, Paphos and Limassol.
Previously, Cyprus required the consent of the house committee or all apartment owners to rent out a property through such services, but this requirement has been removed with the introduction of the new rules. Another important change was the removal of the restriction to renting properties only in residential areas. Now, any property can be registered for short-term rentals, which has greatly expanded the opportunities for property owners.
Legislative changes and requirements
An important part of investing in short-term rental properties is complying with legal requirements. In January 2020, a law came into force in Cyprus regulating owners who rent out accommodation for short-term rental through online platforms. According to this law, all properties rented out through services such as Airbnb, HomeAway or Booking.com must be registered with the National Housing Registry.
To register with the registry, you must:
- Have a tax identification number.
- Carry insurance that covers fire and disaster risks.
- Apply for a serial number, which is required to list the property on rental platforms.
Once a serial number is obtained, owners must pay a registration fee of 222 euros every three years. The law also provides for fines for non-compliance: owners who rent properties without registration can be fined up to €2,000, and up to €4,000 for repeated violations. Additional control measures include the possibility of inspections by the Sub-Ministry of Tourism.
Return and Financial Attractiveness
Investing in short term rental property in Cyprus can generate substantial returns. In popular tourist destinations such as Paphos, Ayia Napa and Protaras, owners can earn between €13,000 and €63,000 per year, depending on the location and type of property. These incomes are steadily increasing: in Ayia Napa and Protaras, for example, short-term rental incomes have increased by 27% and 43% respectively over the last year.
The elimination of seasonality is another important factor contributing to the growth in yields. Historically, the peak demand for rentals has been in the summer, but in recent years more and more tourists have been coming to Cyprus out of season, as well as a growing number of expatriates who prefer to spend the winter in warmer countries. This makes short-term rentals in Cyprus a more stable and profitable business throughout the year.
Additional Costs
While short-term rentals can be profitable, it is important to consider the additional costs that can affect your net profit. One of the most significant expenses is paying for utilities, especially electricity. Cyprus has some of the highest electricity rates in Europe, which adds to the cost of maintaining a property. If a property owner offers amenities such as air conditioning or a swimming pool, electricity costs can significantly reduce income.
In addition, many owners hire management companies to provide a high level of maintenance, which also adds costs. Property management, especially when renting through Airbnb, requires active involvement: responding to tenant requests, organizing cleaning, and making repairs all take time and resources.
Risks and challenges
Despite the attractive prospects, investing in short-term rentals in Cyprus comes with certain risks. Firstly, competition in the rental market is increasing, especially in popular tourist areas. Property owners must maintain the high quality of their properties and services to remain competitive.
In addition, it is important to consider legal risks. Compliance with all legal requirements and registration of properties in the land registry are prerequisites for legally renting out real estate. Owners who ignore these rules risk serious fines and other penalties. It is also necessary to take into account changes in tax laws and insurance requirements for properties.
Investing in property in Cyprus for rental through Airbnb remains an attractive option for generating income, particularly in popular tourist areas. Recent legislative changes have simplified the registration process, but also increased enforcement. It is important to consider both the legal requirements and the additional costs of maintaining a property, including high electricity rates and management costs. Renting out multiple properties can increase profits, especially as short-term rentals in Cyprus become less seasonal and more stable throughout the year.
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