Panayiotis Z. Toulouras LLC consults and assists some of the island’s biggest property management companies. Our team answers all the Frequently Asked Questions you may have on the new ”AirBnB” law. For more information visit www.toulouraslaw.com.
The House of Representatives passed a New Law, N. 9(I)/2020 (also “the Law”), regulating the registration and operation of self-catering accommodation, which was subsequently published in the Government’s official Gazette on the 7th of February 2020.
The New legislation regulates the licensing, advertising and operation of Self-catering Accomodation in Cyprus ‘SCA’.
Definition of Self-Catering Accommodation
“Either a single tourist furnished villa, or a single residence, or a single apartment, which constitutes “a unit” under the provisions of the Immovable Property (Tenure, Registration and Valuation) Act, which does not constitute a “hotel” or “tourist accommodation” as defined in Part II and Part III of the same law, which is rented as a villa or a residence or a unit and not as a part of it, and is registered in the Register of Self-Catering Accommodation under the provisions of Part IIIA.
Conditions for Renting
Renting your self-catering accommodation is from now on prohibited, unless certain conditions are met according to the Law:
- The SCA bears the features and specifications of a single residence and/or a single tourist furnished villa and/or single apartment, as these are defined by the Law
In simple terms, properties can be rented as a whole unit, not as rooms individually.
- The SCA is registered at the Deputy Ministry of Tourism (DMT) registry to obtain a license. All existing operators and properties have a 2-year grace period to comply but all new licensees must comply asap (at the moment the DMT has yet to launch a platform for registration).
- The SCA maintains throughout its operation a valid license and has renewed its license with the DMT when required. For each unit, there will be an annual fee based on the category of the unit, prepaid for 3 years.
SCA can only be advertised, according to the Law, provided the SCA is registered at the DMT registry and licensed, has received a registration number, and their registration number is indicated on all promotion/advertisements of the SCA.
- Any self-catering accommodation that operates prior to the Law being enforced, will have a two-year grace period to abide by these advertising requirements.
- At the end of the grace period, no self-catering accommodation can be advertised according to the Law unless they have received a registration number.
- Whoever advertises or operates a SCA without the appropriate number and license registration in place, can be guilty of an offense carrying a prison sentence of up to one (1) year and/or a fine not exceeding five thousand euros (€ 5,000).
- The publication/advertisement of misleading or false information and/or other information related to the SCA is prohibited
a) Each individual property will have it’s own registration number. This will be probably identified by the EAC meter’s unique identification number.
b) All contracts made with landlords by operators should include express permission for the commercial use/subletting/allowing for short term rental.
c) Where an operator applies for licensing a property, the landlord/owner’s authorization shall be required.
d) Fees will be prepaid for 3 years. Should a license be withdrawn, we envision that the DMT will refund back proportionally for the time remaining.
Revocation of License
The DMT is allowed/permitted to revoke automatically any property from the Self-Catering registry if:
- where license was granted under false or misleading information given
- where the SCA operations have ceased.
- where DMT deems necessary after an inspection, that all necessary certificates and documents required to obtain a license where not renewed
- where operator/manager/management of SCA has been convicted for a serious offence under the rules and regulations of Safety and Health at Work legislation, as well as offences related to health violations as regulated by the relevant rules and regulations set by the Ministry of Health
- where operator/manager/management of SCA has passed away or has been issued a bankruptcy order (if a natural person) or a liquidator has been appointed (if a legal person)
- where a provisional order has been issued or completion of a provisional order has been finalized for the pause of SCA operations.
- where provisions of the Law or regulations set by the New Law have constantly been infringed
- where operator/manager/management of SCA has been convicted, after license has been obtained, of serious criminal offences and/or drug related offences thus infringing owner/operator’s clean criminal record.
The DMT can carry out ex officio inspections of the SCA at all times.
Application Procedure & Renewal
- The Operator/Manager/Management of an SCA with prior approval and/or authorization of the owner of the property submits an application the DMT, together with the fixed fee set for their specific SCA as determined by the DMT (not yet defined) along with a declaration confirming that below conditions are met/included:
a) Registration with Tax Department for a tax identification number or a VAT number depending on which is required.
b) All the relevant details and characteristics of the unit, such as its technical specifications, and, evidence that it has been built as per the building permit and planning permission issued by the appropriate local authorities.
c) Insurance Cover for the SCA covering any dangers, which includes fire damage and public liability.
- The DMT within 2 months of receiving the declaration, must examine and inform the applicant where their application has been approved or rejected (with justification).
Note: The DMT is currently in the process of developing a platform so all such applications shall be submitted online. Until such a platform is live, no applications can be expected to be submitted.
- With the registering the SCA at the DMT, the DMT will simultaneously provide a registration number and license that should appear and be publicized in all transactions, and the first registration license which is valid for 3 years from the date of issue.
- The registration license is renewed every 3 years after an application is submitting at the DMT, along with the registration renewal fee, within 3 months prior to the existing license expiring.
Once registered with the Tax Department, the provisions of the Income Tax Law should apply, in that the unit owner will have to declare any income derived from the unit and pay any tax liability arising from the income.
- Furnished Villas and House/Apartments:
- Space with living room
- Single room that functions as the kitchen, living room and bedroom. (Studio)
- Kitchen area which can be incorporated as part of living room with a ventilator necessary
- Maximum capacity per house is 10 persons with a house containing 4-5 bedrooms – please note that more than 3 bedrooms will require a second bathroom
- For residential complexes, low dividers that separate the access and the garden of each house from the neighbour must be provided.
- The decoration of the garden with flowers, trees, lawn, also includes access to entrances and communal facilities.
- Provided that it is permitted, where SCA is found at a residential complex, each property should be allocated at least one parking space
- Air-conditioning systems – installation and operation
- Water supply – installation to provide hot-cold water to all spaces
- Drainage – connection to sewerage system and/or existence of installations/arrangements for sewerage according to all permits given
- Electronic lighting system – installed and provided in all the interior space, verandas and the garden where seating is provided.
- Construction – It is a permanent building with all building and/or planning permits required issued
- Disability Facilities – If SCA contains facilities for disabled people this should be stated.
Panayiotis Z. Toulouras LLC areas of work include, among others:
- Negotiation and drafting of contracts
- Sales and Purchase of property
- Long term and short-term leases
- Property management for residents and non-residents
- Licensing and Permits
- Property due diligence reports
- Property management employee agreements
- Real estate transaction and tax issues