In early 2020, Cyprus introduced important regulations affecting property owners who offer short-term rentals. A new law now requires property owners to obtain a special license to rent out their properties, marking a significant change aimed at better regulating the burgeoning short-term rental market.
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Why Was the New Law Introduced?
The regulation was implemented in response to the increasing number of properties being rented out to tourists through platforms like Airbnb and Booking.com. A significant portion of these rental transactions were not declared for tax purposes, leading to a loss of tax revenue for the Cypriot government.
To address this issue, amendments were made to the Law on the Regulation of the Establishment and Operation of Hotels and Tourist Accommodation. Now, all properties intended for short-term rental must be registered in a centralized database.
Registration Requirements
Property owners must complete the registration process online through the Ministry of Tourism’s website. The following are the key requirements for registration:
- Building Permit: The property must have a valid building permit.
- Insurance: The property must be covered by valid fire and natural disaster insurance, as well as civil liability insurance.
- Bathroom Requirements: The number of bathrooms must be proportional to the number of bedrooms. For example, a three-bedroom apartment should have at least two bathrooms.
- Registration Process: After submitting the required information and documents through the online form, owners typically receive their license within about a month. The license is valid for three years and costs €222.
Impact on Listing Platforms
Major platforms like Airbnb and Booking.com now require property owners to provide this license number when registering their properties on their platforms. These platforms also transmit transaction details to the Cypriot authorities for tax purposes, ensuring compliance with local tax laws.
Importance of Compliance
It is crucial for property owners to comply with these regulations to avoid legal issues and potential fines. The process, while straightforward, is similar to regulations in many other European countries and is mandatory for all property owners who wish to engage in short-term rentals.
Market Impact
The introduction of these regulations has also influenced rental prices. Long-term rental prices have reportedly increased by about 50%, while short-term rental prices have risen by approximately 30%. Property owners should consider these changes when setting their rental rates and planning their income expectations.
Steps to Obtain a Short-Term Rental License
To legally rent out a property in Cyprus for short-term stays, property owners must follow several steps:
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Register with the National Housing Registry: Obtain a registration serial number. It’s advisable to complete this process well before the tourist season begins.
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Submit Required Documents: The registration process requires submission of several documents, including:
- Applicant’s identity card.
- A valid building permit.
- A recent electricity bill from the EAC.
- A valid tax number.
- Proof of property insurance covering fire and civil liability.
- Compliance with layout requirements, such as having the appropriate number of bathrooms for the number of bedrooms.
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Complete the Online Application: Fill out and submit the registration form on the Ministry of Tourism’s website (www.tourism.gov.cy). This can be done by the property owner or a legal representative with power of attorney.
While the new short-term rental licensing law in Cyprus introduces additional requirements and costs, it is a positive step toward transparency and regulation of the rental market. This legislation not only ensures compliance with tax laws but also protects the interests of property owners and tourists alike. Property owners should familiarize themselves with the requirements and complete the registration process to legally rent out their properties and continue earning rental income.
