Cyprus considers tighter rules for short-term rentals

The Association of Cyprus Tourist Enterprises (Stek) has called on authorities to tighten regulation of the short-term rental market. The move follows an Audit Office report that identified shortcomings in the existing control and supervision system, Cyprus Mail reports.

Challenges in Cyprus’ housing rental market

The Association of Cyprus Tourist Enterprises (Stek) said the Audit Office report confirmed its long-standing concerns over the regulation of the short-term housing rental market. Insufficient oversight of online booking platforms creates risks for guest safety and could negatively affect the reputation of Cyprus’ tourism industry.

According to Stek, the current legislation has serious shortcomings not only in its provisions but also in its implementation. Some property owners continue to accommodate guests and advertise their properties without the required licences. At the same time, the number of inspections remains limited, while cooperation between government authorities is not sufficiently effective.

The growing number of properties offered to tourists reduces supply in the long-term rental segment and makes it more difficult for local residents to find affordable housing options. In addition, the concentration of such properties in certain areas puts additional pressure on infrastructure, causes dissatisfaction among residents and affects the quality of the urban environment. Guest safety remains another concern due to the absence of unified requirements for owners operating this type of accommodation.

Online bookings are changing the tourism market

Cyprus’ short-term accommodation market continues to expand, while online platforms are becoming increasingly important in the tourism industry. According to Eurostat, in the fourth quarter of 2025, guests booked 1.71 million nights in short-term rental accommodation on the island through digital platforms.

The statistics include bookings made through major platforms such as Airbnb, Booking and Expedia. The growing popularity of this format reflects changes in the tourism market structure, with travellers increasingly choosing alternatives to traditional hotels.

The trend is not limited to Cyprus. In the first quarter of 2026, tourists spent 144.3 million nights in short-term rental accommodation booked through online platforms across the European Union. This was 9.7% higher than a year earlier and 16.6% above the level recorded in the first quarter of 2024.

This trend is increasing discussions about the need to balance tourism development, the interests of local residents and maintaining common safety standards.

Cyprus housing rentals: trends and rates

The popularity of short-term rentals is also affecting accommodation prices. During the summer season, the average rental price in Cyprus rises by 31.8% to €135.11 per night, compared with €93.95 during the rest of the year. In terms of seasonal growth rates, Cyprus ranks eighth among European markets.

The average nightly rate since May 2025 is estimated at €113.80. This is below the European average of €131.59 but slightly above the regional median of €112.16.

At the same time, demand growth remains moderate. According to the national short-term rental registry, the number of bookings in June decreased by 4.6% compared with the previous year. Growth of 4.1% is expected in July and 2.6% in August. Overall, the summer season shows only a 0.4% increase compared with the same period in 2025.

Paphos remains the largest market by the number of properties, with 4,231 listings. It also records the highest average daily rates on Airbnb at €263.81. It is followed by Famagusta (1,791), Larnaca (1,407), Limassol (1,267) and Nicosia (457).

How Cyprus plans to strengthen rental market controls

The Ministry of Tourism had previously proposed revising the legislation governing short-term rentals. Stek supported this initiative and prepared a set of measures aimed at addressing existing weaknesses in the system. These include regular inspections to identify illegal operators, stricter administrative and financial penalties, and mandatory display of registration numbers in all listings published on online booking platforms.

The association also believes that cooperation between booking platforms and government authorities should be strengthened to ensure that illegal listings are removed more quickly. In addition, Stek proposes introducing a maximum annual rental period for properties used for short-term tourist accommodation. A similar approach has already been adopted in several European countries.

Another proposed measure is to expand the powers of local authorities. Municipalities should be allowed to restrict or prohibit short-term rentals in areas where they contribute to a shortage of affordable housing, excessive noise or a decline in residents’ quality of life.

The association also supports the introduction of a mandatory overnight stay levy and common requirements for safety, health standards and insurance coverage for all accommodation providers.

Market outlook and implications for investors

International Investment analysts note that Cyprus authorities have already taken steps to strengthen oversight of the short-term rental market, but the issue of illegal properties remains relevant. The future development of the segment will depend on the effectiveness of new regulatory mechanisms and the ability of government bodies to ensure compliance with common requirements across the market.

More transparent rules could improve sector stability and reduce risks for investors purchasing properties with official status and the ability to operate legally as rental accommodation. Stronger oversight may also improve the quality of supply and increase confidence among property owners and buyers.

At the same time, new restrictions, possible limits on short-term rental periods or additional compliance costs could affect the profitability of individual projects. These changes may have the greatest impact on areas with a high concentration of tourist accommodation, where competition among short-term rental properties is particularly strong.

In the future, investors choosing property in Cyprus will need to consider not only current rental returns but also regulatory risks. The long-term attractiveness of an investment will increasingly depend on the property’s location, legal status, market demand and ability to adapt to changing rules.