On Tuesday 4th March, the Cyprus Attorney General's Office rejected a proposal by the Ministry of Tourism to limit the number of short-term rental properties that can be registered to a single owner.
It should be recalled that this initiative was aimed at regulating the rapidly growing daily rental market, which is dominated by platforms such as Airbnb.
The innovation was initiated by Tourism Minister Kostas Koumis, who proposed to limit the number of rental properties to two units per individual or legal entity. According to him, the main problem in Cyprus today is the massive purchase of apartments by investors, mostly foreigners, who register them for short-term rentals but do not provide an adequate level of service. This in turn creates an uneven playing field for the traditional hotel industry, which incurs significant costs to comply with strict regulations.
In particular, the main concerns raised by Koumis related to:
- Lack of control - unlike hotels, short-term rental properties are not subject to strict licensing and hygiene regulations.
- Rising housing prices - buying up rental properties reduces housing affordability for local residents.
- Unfair competition - apartment owners avoid tax and regulatory obligations, while hoteliers are forced to comply with a multitude of standards.
Under current regulations, an investor can own a maximum of 12 apartments and rent them out without strict restrictions. This makes short-term rentals a more attractive business than the hotel sector, which has displeased the hospitality industry.
Despite the Public Prosecutor's Office's refusal to support the Minister's initiative, discussions on the issue continue. The Parliamentary Trade Committee plans to consider tighter regulation of the short-term rental market to bring national legislation into line with the new EU directive.
It is expected that other regulatory measures may be proposed in the future, including stricter requirements for the registration of properties, taxation and service levels.