Cyprus May Restrict Airbnb in Areas Facing Housing Shortages

Cyprus could gain clearer legal grounds to restrict short-term rentals through Airbnb and other platforms in areas facing shortages of affordable housing. Before introducing such measures, the authorities would have to demonstrate that problems exist in a specific location and determine the extent to which tourist rentals contribute to them, Cyprus Mail reports.

EU Sets Conditions for Restrictions

The European Commission is preparing the Affordable Housing Act, which is expected to be presented later in 2026. The legislation does not envisage an EU-wide ban on short-term rentals, a common cap on the number of rental nights, or mandatory licensing quotas.

Instead of uniform rules, EU countries will be encouraged to identify areas of housing stress — locations facing particularly acute shortages of affordable housing. Where sufficient evidence is available, national, regional or municipal authorities will be able to introduce targeted regulation, including measures affecting properties rented to tourists for short stays.

The European Commission stresses that restrictions should be combined with efforts to expand housing supply. In areas experiencing shortages, authorities are expected to encourage new construction, bring vacant properties back onto the market, increase the supply of social housing, and simplify planning and permitting procedures.

A legal basis for such decisions already exists. In 2020, the Court of Justice of the European Union ruled that a shortage of housing available for long-term rental could justify an authorisation system for short-term accommodation. Any measures adopted must be necessary, non-discriminatory and proportionate to the scale of the problem.

EU Regulation 2024/1028 has also applied since May 20, 2026, establishing common requirements for collecting information from property owners and digital platforms. Services may be required to display property registration numbers, conduct random checks and provide authorities with monthly data on stays, booked nights and individual units. Listings that fail to comply with registration requirements may be removed.

The regulation does not itself introduce caps or bans but creates a data framework for assessing the market. Airbnb supports greater data sharing but opposes broad restrictions in areas where short-term accommodation accounts for only a small share of the market. The company argues that regulation should be targeted and applied only where problems with housing affordability have been substantiated.

Cyprus Short-Term Rental Market Continues to Grow

In 2025, the number of nights booked in Cyprus through Airbnb, Booking and Expedia rose by 24.7%, from 6.12 million to 7.64 million, according to Eurostat. Growth continued in early 2026. Between January and March, more than 1 million guest nights were recorded, up 22.3% from the first quarter of the previous year. By growth rate, Cyprus ranked fourth in the EU after Malta, Slovenia and Slovakia.

The figures reflect demand but do not show how much housing stock has shifted into short-term rentals. The indicator measures guest nights: for example, a four-person stay lasting three nights counts as 12 guest nights.

A clearer indication of the size of the legal market comes from a report by the Audit Office of Cyprus. As of May 6, 2026, the Deputy Ministry of Tourism’s register contained 8,464 licensed self-service accommodation units.

That is equivalent to around 1.7% of the 492,931 housing units recorded in the 2021 census. The comparison is only indicative, however, as the housing stock has changed since then, while some tourist properties are second homes or were originally developed specifically for holiday accommodation.

Audit Finds Registration Problems

The official register probably does not cover the entire Cyprus short-term rental market. An Audit Office review found discrepancies between listings on online platforms and government records. Of 20 listings where the properties could be identified precisely, only six corresponded to licensed addresses and matched information in the register. Ten displayed no registration number, while four used either an invalid number or one belonging to another address.

Auditors also examined 150 Airbnb and Booking listings in the Famagusta district. They identified 23 villas and apartments that appeared in neither the tourist accommodation register nor the self-service accommodation database.

The sample is too small to apply the same proportions to Cyprus as a whole. Nevertheless, the findings confirm shortcomings in registration and enforcement. The Audit Office also pointed to weak interoperability between government information systems.

The tourism authorities intend to pursue legislative changes that would require additional documentation during registration and allow on-site property inspections. No caps on rental nights, local quotas or restrictions directly linked to housing affordability are currently being proposed.

Cyprus Housing Prices Continue to Rise

In the first quarter of 2026, housing prices in Cyprus rose by 7.5% compared with the same period of 2025, according to the Central Bank. Apartment prices increased by 10.8%, while house prices rose by 3%. The strongest growth was recorded in Limassol at 9.1%, followed by Larnaca at 8.9% and Paphos at 6.4%. Prices increased by 2.8% in Nicosia and remained unchanged year on year in Famagusta.

The Central Bank attributes the increase primarily to demand from foreign buyers, followed by domestic demand and higher construction costs. The regulator also notes a gradual increase in housing supply and does not identify short-term rentals as the main driver of price growth.

The European Commission has reached a similar conclusion. According to its assessment, short-term rental activity across the EU increased by 93% between 2018 and 2024. On average, such listings are equivalent to around 1.2% of the EU housing stock, although the share reaches as much as 20% in some tourist centres and neighbourhoods.

A high concentration of tourist rentals does not in itself prove that they are causing housing shortages or higher prices. The European Commission notes that short-term accommodation can intensify pressure in markets where supply is already constrained. At the same time, platforms also tend to expand rapidly in locations where property is already expensive because of tourism, employment and investment demand.

What It Means for the Market and Investors

International Investment analysts note that the scope for new short-term rental regulation will depend on the quality of local data. Nationwide figures on prices, tourism and registered properties will not be sufficient, and authorities will need to assess conditions in individual cities and neighbourhoods.

The analysis could include the concentration of Airbnb and other platform listings, the share of professional operators, the availability of long-term rentals and changes in housing costs. This level of detail would help determine whether the tourist accommodation segment is actually contributing to shortages of affordable housing. For now, nationwide indicators do not point to particularly severe housing pressure. In 2024, 2.4% of Cyprus residents faced housing-cost overburden, compared with an EU average of 8.2%.

For investors, this means higher regulatory risks primarily in tourist locations with a high concentration of properties used for short-term stays. New requirements could affect returns on real estate purchased specifically for rental through Airbnb and other platforms.