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Cyprus Faces A New Reckoning Over Airbnb-Style Rentals As Regulatory Pressure Mounts

Cyprus is preparing tighter rules for self-service accommodation after an Audit Office report exposed widespread licensing failures across the short-term rental sector, prompting renewed calls for stricter enforcement from the hotel industry.

The report examined licensing practices across self-service accommodation and the wider tourism sector, highlighting compliance gaps and raising fresh questions over the effectiveness of the current regulatory framework.

Licensing Under Scrutiny

The findings gained additional attention following the collapse of a building in Germasogeia on April 11, 2026, where three self-catering apartments were operating, intensifying concerns over oversight and safety.

In a statement issued yesterday, the Cyprus Association of Tourist Enterprises (STEK) said the report confirmed long-standing concerns that accommodation continues to operate without the required licences, effective inspections or sufficient coordination between public authorities. According to the association, these shortcomings have weakened the state’s ability to properly supervise the sector.

STEK argued that inadequate regulation extends beyond unfair competition for licensed hotels. It said weak enforcement also adds pressure to the housing market, makes it more difficult for permanent residents to find affordable homes, affects neighbourhood quality of life and may pose risks to visitor safety.

Seven Proposals

As the Deputy Ministry of Tourism prepares new legislation, STEK has proposed seven measures for inclusion in the draft bill:

  • Effective and systematic inspections to detect illegal accommodation.
  • Stronger enforcement, including administrative and financial penalties.
  • Mandatory display of registration numbers on digital platforms and cooperation with authorities to remove illegal listings.
  • Limits on the number of days properties can be rented on a short-term basis, in line with practices adopted in several European countries.
  • Powers for local authorities to restrict or prohibit short-term rentals in areas facing housing pressure or significant disruption.
  • A mandatory overnight stay levy.
  • Common safety, health and insurance standards across all hospitality providers.

Audit Finds Widespread Non-Compliance

As of May 6, 2026, Cyprus had 8,464 licensed self-service accommodations registered in the Self-Catering Accommodation Register. However, the Audit Office found that many properties advertised on online booking platforms were either missing from the register or displayed incorrect registration details, making effective supervision difficult.

Of the 20 properties that could be identified, only six (30%) were properly registered and held valid licences. Ten (50%) displayed no registration number and did not appear in the official register, while four (20%) used registration numbers that were either no longer valid or belonged to different properties.

Deputy Ministry Points To EU Rules

Responding to the findings, the Deputy Ministry of Tourism acknowledged that some properties advertised on digital platforms are either unregistered or fail to display a registration number. It said the issue will be addressed through the implementation of Regulation (EU) 2024/1028, whose provisions became applicable on May 20, 2026, strengthening the registration and verification framework for short-term rental platforms.

Hotel Sector Also Faces Licensing Problems

The Audit Office found that compliance issues extend beyond self-service accommodation. As of April 27, 2026, only 168 of Cyprus’ 728 hotels and tourist accommodations (23%) held a full operating licence, while another 158 establishments (22%) were operating under temporary permits.

The remaining 402 establishments, representing 55% of the total, were operating without either an operating licence or a temporary arrangement. The report concluded that the facilitation measures and transitional arrangements introduced in recent years have not achieved the intended level of compliance across the sector.

Cyprus Employment Rises 1.7% To 525,167 In Q2 2026

Cyprus employment increased 1.7% year over year to an estimated 525,167 people in the second quarter of 2026, according to the state statistical service, Cystat. Employees accounted for 472,254 of the total, while 52,913 were self-employed. The increase points to continued labor market growth across both wage employment and independent work.

Trade, Construction And Leisure Lead Employment Growth

Wholesale and retail trade, including motor vehicle and motorcycle repair, recorded some of the strongest employment gains, alongside construction and arts, entertainment and recreation.

Those sectors are closely linked to domestic economic activity, with trade reflecting consumer demand and construction reflecting investment. Employment growth in leisure-related industries also points to continued activity in consumer-facing services.

Hours Worked Rise Faster Than Employment

Labor input increased faster than headcount. Cystat estimated that employees and other workers put in 246.57 million hours during the second quarter, up 2.2% from a year earlier.

The increase suggests that businesses were not only employing more people but also recording higher total hours worked. Wholesale and retail trade, construction, and arts, entertainment and recreation again recorded the strongest gains.

Labor Market Expansion Remains Broad-Based

The combination of higher employment and hours worked points to continued expansion in Cyprus’ labor market during the second quarter. The pace remains moderate, but gains across several major sectors indicate that labor demand continued to support economic activity.

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