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By Vasia Kotlida
The trend of short-term lettings is gaining more ground in 2019 in Cyprus and in the wider region (e.g. Israel, Greece).
Last year there was a significant increase in the listing of accommodations on the Airbnb platform as well as on other rental platforms and the corresponding response from tourists is very encouraging and positive.
According to the Airbnb platform, visitors who used short-term lettings in Cyprus reached 120,000 from 125 different countries in 2017-2018, while this number is expected to rise significantly in the following year.
However, parts of the hotelier’s community talk about unfair competition and want the legislation changed on this issue.
Nevertheless, the sharing economy undoubtedly offers multiple benefits to both tourists and Cypriot residents. Since 2008, the real estate market has been affected dramatically by the financial crisis, resulting in a large number of unsold real estate assets for a long time, burdening financially owners and banks.
Through platforms such as Airbnb, Homeaway and Booking, owners are allowed to rent their properties for short periods of time, earning incomes that they would not get otherwise and at the same time have a positive effect to the economy and the society.
The large percentage of non-performing loans in Cyprus is a major problem in the real estate market and the owners can benefit from the short-term lettings, thus paying their obligations to the bank. Also, a large number of people, from cleaners to taxi drivers, are employed in the services that result from the short-term lettings, creating new jobs.
Airbnb in Cyprus
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· 120,000 Guest arrivals
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· 31 Typical nights hosted per listing |
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· 40,000 Outbound guests
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· 125 Total guest countries of origin |
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· $2,900 USD Typical income earned by host
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Source: Airbnb, 2018
At the same time, areas that are not very well developed, either in central locations or in remote areas, are being upgraded and the local economy strengthened as tenants spend money on local services.
It is also noteworthy, that in most cases tourists using short-term rental accommodation would not choose to stay in hotels or holiday packages that are "all inclusive", thus boosting the local economy by choosing local places for dining, visiting and shopping.
This new form of rental housing is an alternative way of living that helps in the increase of tourists. According to surveys, tourists who have a specific budget for their holidays, prefer short-term rental properties and visiting areas that without this possibility they would not choose to go to.
However, if heavy regulations comes into effect, such as rent restrictions, undoubtedly the real estate market will be disturbed, and real estate prices will be negatively affected.
As a result, demand for real estate will decline, apartments and dwellings will remain empty or will be rented for very low amounts.
In order for both tenants, tourists, hoteliers and the government to benefit, it is necessary to establish the appropriate legislative framework that will balance the opposing interests rather than satisfy unilateral situations.
It is undisputed, however, that tenants have to adhere to health and safety rules and pay tax liabilities to the state (e.g. 9% VAT per stay) – as hoteliers are doing.
In conclusion, tenants are required to act in accordance with the law and pay taxes but at the same time the government has to promote and encourage innovative property rental practices.
New ways of renting property are now part of the modern way of operating the market, offering impressive benefits to tourism. The establishment of an improved legal framework can benefit all market parties and boost the economy after all.
The writer is an analyst, Portfolio Underwriting, Delfi Partners & Company, Cyprus
