Short-term rentals

Online platforms such as Airbnb have entered the daily lives of Cypriots for good, albeit a bit late. It is a fact that these platforms are rushing to fill a gap that existed in the growing real estate sector, namely daily rental. Furthermore, the possibility of renting a property (a detached house or apartment) but also a part of a property (a room in the property) on a daily basis is provided, which of course benefits the consumer, since his choices are not limited to hotels.

Although the positive aspects of the above development are immediately noticeable, there are still many issues that arise when renting such properties. As will be explained below, various issues arising from these specific platforms create the need for state legislative intervention.

Airbnb services themselves are not illegal, but in some cases they violate national laws. An example is New York, which prohibits rentals for a period of less than 30 days. In Berlin, renting premises for less than 1 year is prohibited unless prior permission is obtained.

In Cyprus, in the absence of a legal prohibition, we primarily consider that it is perfectly legal for an owner to make his premises available on Airbnb. The owner’s right to use, enjoy and dispose of his property stems from the fundamental right to property, which is protected in Article 23 of the Constitution. Furthermore, the tenant’s right to rent premises and the owner’s right to accept such a lease also stems from the fundamental right to contract freely, under Article 26 of the Constitution.

In addition to the legality of the sale of properties located in Cyprus through digital platforms such as Airbnb, tax issues also arise. Not unfairly, hotels are reacting and essentially demanding to “play” on equal terms. The tax issues that arise are mainly due to the objective difficulty of control.

These and other issues were regulated by the Hellenic Republic, through Law 4446/2016 “Regulations for the short-term rental of real estate in the context of the sharing economy”, which would be a good example for similar legislation. This law initially limits its application to leases of less than one year. It then stipulates that such properties will be promoted by natural and legal persons who are the legal owners of the properties as well as by their representatives, which also involves property management companies.

The basic provision of the legislation is that no property can be listed on the Digital Platforms unless it is registered in the real estate register, which the Independent Public Revenue Authority (A.A.D.E.) maintains for this purpose. For transparency purposes, the registration number must accompany the property in each rental advertisement. In addition, the owner of the property must submit a declaration of real estate rental information. Finally, Greek legislation criminalizes the non-application of its provisions, providing for significant financial penalties. It is worth mentioning that in order to investigate any offenses, the A.A.D.E. has the right to request from the digital platform any information about the property managers.

The condition of the property and its area are not part of the aforementioned legislation since these issues can be well regulated by already existing legislation but also by the Airbnb Digital Platform itself, which has a two-way secret comment on the tenant and the rent, so that a negative comment will marginalize its recipient.

Efforts are currently being made in the House of Representatives to pass corresponding legislation to regulate this new need that arose from the development of technology.

This article is for informational purposes only and should not be considered legal advice.

Panagiotis G. Kyprianou