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Many cities around the world have grown frustrated and intolerant to hosts putting up their homes on Airbnb. The short-term rentals platform has been blamed for unruly tourists, rising house and rent prices, as well as a weakening of the local community fabric. As a result, many cities have turned to Airbnb regulation, imposing laws that are tough on both hosts and the platform.


Cyprus Airbnb Regulation


Each city has taken its own approach towards Airbnb regulation. Some have decided to fine hosts, others have placed caps on how many days hosts can rent out their homes. A bill designed to regulate and tax the rental income on an estimated 40,000 short term Airbnb-style properties in Cyprus, is currently under discussion in the parliament. The stated objective of the legislative proposal is to regulate the ‘unchecked’ rental of villas and residences as well as apartments for tourism purposes.  The new bill aims to change that by creating a dedicated registry for short-term self-catering accommodation and then taxing their income, bringing cash into state coffers.


In addition, the law on hotel and tourism accommodation is to be revised by adding clauses setting out technical, operational and health standards for self-catering accommodation such as those leased via Airbnb. Under the legislative proposal, where a household’s income from rentals is over €15,600, these rentals will need to register a VAT number.


Concerning the rental of apartments on platforms such as Airbnb, the potential law may require owners to get consent of the other owners and/or tenants in the same building beforehand. A dedicated registry with the Cyprus Tourism Organisation is to be created for these residences, villas and apartments. This will be a different registry to that already in existence for hotels and tourist lodgings. Each property registered would be assigned a number, which will be used in online advertising platforms such as Airbnb so that the authorities may know whether the property is registered or not.


It is unclear what the penalties for breaching these requirements will be. While the bill remains to be finalized, let’s take a look at how regulation has affected Airbnb rentals in other cities around the world.


Airbnb Regulation Around the World


The data seem to show that the impact on Airbnb is highest when hosts are targeted as the principal offenders. In the case of Berlin and Santa Monica where both cities fined short-term vacation rental hosts for listing entire homes, listings dropped by 49% and 37% respectively. Over in Berlin, the phenomenal impact of the ban on entire home listings may be tied to the punitive $100,000 fine. But, even with a $500 fine, Santa Monica also brought about a significant drop in the number of entire homes being listed Airbnb. For both cities, the drop in the percentage of listings was also reflected in a significant drop in revenue.


Interestingly, in Barcelona, limiting the licensing of tourist accommodations presents somewhat of a puzzle. The freezing of tourist accommodation licenses for vacation rentals — including hotels, bed and breakfasts, hostels, and the like — actually increased the number of Airbnb listings in the city. One explanation is that Airbnb and hotels are alternates for each other. If the threat for a hotel violating the freeze is more than the threat for an Airbnb host violating the freeze, there might be an increase in listing on Airbnb. However, it does not explain why monthly revenues slightly fall.


For San Francisco, the 90-day cap on renting entire homes led to a 5% decrease in listings on Airbnb. Compared with fining Airbnb hosts in Berlin and Santa Monica, this is a small reduction. Also, there was no significant decrease in revenue in San Francisco because prices increased and compensated for the drop in listings and reservation days.


Airbnb regulation in Berlin and San Francisco had the biggest impact on Airbnb professional management companies. In Berlin, the fine led to a 60% decrease while the overall group posted a 49% decrease. Unsurprisingly, professional hosts were able to adjust their price to compensate for the decrease in Airbnb listings and their monthly revenue fell by 55%, which is the same amount as the overall group. In comparison, in Santa Monica, where hosts are also subject to a fine, the regulations had almost the same effect on professionals and the overall group. The one factor that sets Berlin apart from Santa Monica is the sheer magnitude of the fine, which could certainly be a differentiating factor.


San Francisco’s 90-day cap on entire home listings also served to deter many professional hosts. They faced a 16% decrease in monthly listings compared with a 5% decrease in the overall group. The number of reservation days fell by 35%, which is double the overall group. This contributed to a 30% decline in monthly revenue.


It seems that cities that enforce regulation targeting individual hosts with fines, like Berlin and Santa Monica, have the biggest impact on the number of Airbnb listings in those cities. Airbnb management companies, on the other hand, are most affected by steep fines and caps. Some cities have attempted to target Airbnb itself. It seems inconclusive, however, whether this approach has a real impact on the number of Airbnb listings.


If you want advise on how to navigate these new regulations of Airbnb in Cyprus, get in touch with our team for a free consultation.

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