RENT PAYMENTS IN CYPRUS TO GO FULLY CASHLESS
A new law aimed at combating tax evasion is soon to come into force across the Republic of Cyprus. These new rules will see that only cashless rent payments, made through bank accounts or recognised electronic payment methods, are accepted.
In light of this, Cypriot authorities are in the process of preparing the final instructions and clarifications of the new rules. A separate information notice from the Tax Department is also expected. All of this information will include details on how the law will be applied, along with any possible exceptions.
The new law is to come into effect as Article 48A of the Assessment and Collection of Taxes Law. This specific provision is being introduced as an amendment to target tax evasion, improve transaction transparency, and eliminate undeclared rental income. It stipulates that rent must be paid exclusively via bank transfers, credit or debit cards, or other recognised digital platforms like QuickPay and Revolut.
The new regulations, which will completely ban cash or cheques from these transactions, are intended to apply strictly and only to rent payments. Although the initial tax reform announcements focused heavily on rents exceeding €500, updated Tax Department directives have now confirmed that the new law will cover all rental agreements across the Republic. This includes residential homes, offices, shops, and commercial spaces.
The new law also stipulates that cash payments for rent will no longer be recognised as deductible expenses. This will also be applied to corporate, as well as residential tenants, who may forfeit their eligibility for specific government tax reliefs or deductions. These include primary-residence loan interest deductions, along with other benefits. In addition to this, cash payments backed only by handwritten paper receipts will no longer hold valid legal weight in a court or tribunal if a dispute arises over unpaid rent.
SHORT-TERM STAYS ON THE RISE!
Demand for short-term rental accommodation across Cyprus is now soaring, creating one of the fastest-growing recent economic sectors on the island. This comes after analysts recently recorded one of the strongest recent surges of overnight stays at the island’s most popular resorts.
The rapid acceleration in demand for short-term rental accommodation is also highlighted by the fact that Cyprus has risen in recent rankings. These statistics, compiled by the most prominent online platforms, reveal that Cyprus ranks third with regard to the overall volume of short-stay accommodation across the European Union.
Cyprus now follows closely behind Malta and Slovenia, which remain the most popular European destinations for short-stay accommodation. Major tourist destinations such as Spain, Germany, France, and Greece have also posted strong double-digit growth in this sector. Overall, this reflects a broader recovery in European tourism.
A POPULAR NEW ARRANGEMENT
Although arguments now exist both for and against this mode of accommodation, some of the benefits are increasingly becoming more evident. More travellers are now looking for a more flexible, value-for-money experience, making short-term rental accommodation ever more popular. Studies show that this mode of accommodation is also attracting visitors to the island who would otherwise not visit, expanding the island’s tourism market share. The economic benefits that come with this type of accommodation are also more readily apparent. Cheaper accommodation is thought to help increase visitor numbers and their individual spending power, ultimately helping to boost local economies. Several analysts, because of this, are now advising that this model should be fully embraced.
ARGUEMENTS FOR
The primary argument for short-term rentals is that they provide significant economic benefits and flexibility for both property owners and the local community. This relatively new phenomenon, which is rapidly rising across the island, often fits in with a desire for a more individualised and free travel experience. Short-term rentals also directly support local service jobs. These include independent cleaning companies, property managers, interior designers, and local maintenance contractors. In addition to this, travellers who choose short-term rentals have been found to typically spread their spending over a wide variety of local services, boosting the local economy. Visitors staying in residential areas tend to spend more money at several small local businesses that include grocery stores, neighbourhood cafes, and restaurants, which do not typically benefit from traditional tourism.
ADVANTAGES FOR HOSTS
Hosts can adjust pricing dynamically based on peak seasons, events, and demand. This means that they can often yield higher monthly returns than fixed long-term leases. As well as this, property owners are also able to block out dates to use the property for themselves or to perform immediate maintenance and repairs without dealing with any tenant eviction laws. The highly flexible model offers advantages to hosts that want to rent out a spare bedroom, a guest suite, or a primary home while travelling to help offset their own mortgage and utility costs.
ADVANTAGES FOR TRAVELLERS
This new trend is representative of a broader movement that is now occurring throughout Europe. It seems that younger, lower-budget travellers now prefer short-term rentals because of their flexibility and value for money. Large families or groups can book a single multi-bedroom home, which is often much cheaper than booking multiple hotel rooms. Travellers are also given access to functional amenities like private kitchens, washing machines, and dedicated workspaces that are rarely standard in traditional hotel rooms. Short-term rentals are also frequently located in residential neighbourhoods outside of central tourist hotel zones, allowing visitors to experience a city like a local.
ARGUEMENTS AGAINST
Short-term rentals are constantly facing growing global scrutiny due to the local housing market pressures that it is causing. The primary argument against this relatively new facet of the industry is that it negatively impacts local housing markets and community stability. While the model offers financial perks to owners, critics argue that its unchecked growth is creating significant social and economic friction. Landlords who are frequently converting long-term rentals to short-term rentals are severely shrinking the available housing supply for residents. This, in turn, is driving up rental prices as long-term housing availability drops, making cities less affordable for working-class families. The increased demand from speculative investors buying properties solely for short-term rental platforms has also inflated local real estate prices, pricing out first-time buyers.
DISADVANTAGES FOR HOSTS
Complaints to landlords have drastically increased. This is especially apparent in residential areas that experience a revolving door of transient tourists. The reduced sense of security and neighbourly connection in some of these local communities is further compounded by nuisance and noise often caused by unsupervised guests. The most common of these complaints have been disruptions through loud parties, poor parking behaviour, and the overfilling of residential waste bins. High turnover rates in apartment complexes also lead to heavier wear on shared facilities like elevators, lobbies, and security gates, increasing maintenance costs for everyone.
DISADVANTAGES FOR TRAVELLERS
Unlike hotels, which are regulated by law, private short-term rental properties remain largely unregulated. This means that they may lack certain industry-standard health and safety features. These include interconnected fire or smoke alarms, fire extinguishers, or clearly marked emergency exits. Some have also been found to be operating without any of the strict commercial zoning laws, licensing fees, and health inspections that all hospitality businesses must pay for and follow. This has led to accusations of an unfair playing field that has largely undermined the Hotel Industry.
REVAMPING THE TRADITIONAL ACCOMODATION MODEL
The short-term rental accommodation model in Cyprus is growing at a rapid rate across the country. This is leading to concerns for some analysts. Modern technology, and in particular the internet, has not only revolutionised its availability but has also helped to transform it. Short-stay accommodation, as a result, can be booked directly within minutes, and online sites, such as AIRBNB and BOOKING.COM, now offer a variety of rental options in all parts of the island.
A TOPIC OF MUCH DEBATE
A growing majority of travellers now use internet sites to find value-for-money accommodation. They claim that the main attraction is not only the price, but also their easy-to-let nature. This is helping to fuel the recent surge in short-term rental accommodation across the island. The growing popularity, however, is now prompting considerable debate, and fears are constantly being raised regarding its sustainability. Authorities, seeking to balance tourism growth with long-term housing affordability and legal compliance, have also raised concerns.
A YEAR ON YEAR RISE
Recent figures suggest that the short-term rental sector is experiencing significant year-over-year growth. Just over 9,000 licenses have been issued or renewed for 2025. This equates to a total of approximately 35,000 beds. The district of Paphos leads with the highest number of units. This is closely followed by the districts of Famagusta, Larnaca, Limassol, and then Nicosia in that order.
A BOOST TO LOCAL ECONOMIES
As the concept of short-term rentals becomes increasingly widespread, concerns are being raised about the broader implications for residents and future visitors to the island. Privately owned short-term rentals are believed to contribute to a rise in tourism. They have also proven to create additional employment opportunities. This has ultimately boosted local economies across the island. However, with the number of short-term rentals surging, there are warnings of a greater long-term negative economic impact. Some analysts are suggesting that this model has already created a shortage of long-term rental accommodation. This has helped limit availability and pushed up rental costs for residents. This has prompted some to call for a ban on short-term rentals altogether!
NEW LEGISLATION FOR SHORT TERM RENTALS IN CYPRUS
The hotel sector is currently reeling from what they claim is unfair competition from previously unlicensed rentals. As a result, they are pushing for more compliance concerning short-term rentals. They claim that their aim is to improve oversight of the rental market. This is a response to concerns from the hotel sector that is seeking to uphold quality.
This has directly led to legislation that now requires the registration of properties being used for short-term rentals. All property owners renting out villas, apartments, or houses now have to register as part of a new initiative to uphold quality. All owners must now hold a valid permit, and those who do not face serious penalties.
As a result, all short-term rental units should now have a unique registration number under the law. This number is given to a property after registration, and must be shown clearly in any advertisements for any such properties. This scheme currently has over 9,000 registered properties across the island.
Those who are currently operating without a permit face fines, a year in prison, or both. Repeat offenders may face an extra €200 fine for each day a violation continues.
