The Legal Service has rejected a proposal by the Deputy Ministry of Tourism to impose a cap of two registrations per person or company in the Self-Catering Accommodation Register, but the issue remains open.
Efforts to establish restrictions on the availability of short-term rental accommodations, such as Airbnb, in the Cypriot market are proving difficult, as demonstrated by the first attempt made by the Deputy Ministry of Tourism in this direction.
This initiative had not been made public until recently and came to light during a discussion in Parliament about ten days ago, specifically on 18 February. At that time, the Deputy Minister of Tourism, Kostas Koumis, stated that an amendment to the existing legislation, requiring mandatory registration in the Self-Catering Accommodation Register for properties to be advertised or rented, was under review by the Legal Service.
Specifically, as Mr Koumis publicly stated on state radio just a few days after the parliamentary discussion, the Deputy Ministry of Tourism had submitted a proposal several months ago to impose a cap on the number of self-catering accommodations that could be registered. More precisely, the proposal suggested that each legal or natural person should be allowed to register a maximum of two properties. The reasoning behind this proposal was based on the phenomenon of “para-hotel industry,” where short-term rentals, mainly by foreign investors, are turning into an unregulated hotel business. He explained that, under the current system, an investor could buy 10-12 apartments in Cyprus, convert them into self-catering accommodations, and rent them out without any restrictions, effectively competing with hotels without having the same obligations.
However, the Deputy Minister revealed that just a few days ago, the Legal Service expressed the view that such a restriction could not be implemented. Nevertheless, he stated that further discussions with the Legal Service would take place, as similar measures had been implemented in other countries. He also acknowledged that the issue required a holistic approach, a position he had also presented in Parliament due to the continuous growth of the phenomenon and its impact on the hotel industry and beyond. In this context, efforts would be intensified in the coming period to ensure compliance among those offering self-catering accommodations for short-term rental through online platforms, requiring them to register with the Deputy Ministry of Tourism to provide a clearer picture of the current situation in the country.
As the Deputy Minister of Tourism mentioned in his statements to RIK and Parliament, there are currently 8,248 accommodations registered in the Self-Catering Accommodation Register, with another 1,275 applications pending review. However, this number falls short of the estimates from the hotel sector, which suggest that at least 15,000 self-catering accommodations are available for short-term rental, with a total capacity of 80,000 beds—approximately the same capacity as the entire hotel industry in Cyprus.
Back in Parliament due to EU regulations
The issue of short-term rentals and their impact on society, tourism, and public finances is expected to be revisited in Parliament, specifically by the Energy Committee, which opened discussions on the matter last month.
This is also happening as part of Cyprus’s compliance with a relevant EU regulation on the subject. A draft bill to adopt the regulation was officially submitted to Parliament last Thursday, 27 February, and is expected to be discussed in one of the upcoming sessions of the Parliamentary Committee on Trade, as it amends the legislation regulating the operation of hotels and tourist accommodations.
As previously reported, the EU regulation does not aim to restrict the phenomenon of short-term rentals but rather to enhance transparency and data collection surrounding them. This is evident from the explanatory report accompanying the bill submitted to Parliament, which seeks to amend the Law on the Regulation of the Establishment and Operation of Hotels and Tourist Accommodations. The report states that the purpose of the bill is to amend the primary law to ensure the implementation of Regulation (EU) No. 2024/1028 of the European Parliament and Council, dated 11 April 2024, which sets out a comprehensive framework for regulating short-term rental accommodations within the European Union.
The report further explains that the regulation aims, among other things, to harmonise registration requirements for landlords and properties offered for short-term rental, clarify rules ensuring the display and monitoring of registration numbers, and streamline data sharing between online platforms and public authorities. Additionally, it allows further use of statistical data in aggregate form by competent authorities and researchers and establishes an effective enforcement framework. Member States, according to the report, will monitor the implementation of this transparency framework and establish relevant penalties in case of non-compliance with the obligations outlined in the regulation.
The report essentially states that the regulation addresses the fragmented way in which different platforms exchange information, helps prevent illegal listings, sets rules for landlords, short-term rental platforms, and national authorities, and improves transparency in the sector. The bill, after receiving guidance from the Legal Service of the Republic, was not put to consultation by the Deputy Ministry of Tourism, as it concerns the implementation of an EU regulation, which has direct applicability in Member States and has already been consulted at the European level.
Additionally, the bill concerns the imposition of penalties, which falls under the jurisdiction and discretion of the executive authority. As a result, it was not subject to consultation with those who might be affected by the penalties.
It is expected that, as the discussion on adopting the EU regulation progresses, the Trade Committee will also address broader issues related to short-term rentals.
Also read: Airbnb urges Barcelona to reconsider imposed measures
Source: Economy Today
