Illegal Short-Term Rentals Continue to Challenge Cyprus’ Property Market

The short-term rental sector in Cyprus is experiencing rapid growth, but the persistent issue of illegal rentals remains a hurdle for authorities and the real estate market. Recent data from the Deputy Ministry of Tourism highlight an expanding legal rental landscape, yet unregistered properties continue to operate under the radar.

Currently, official records indicate there are 9,153 registered short-term rental properties island-wide, providing accommodation for 39,218 guests. Despite this notable increase in compliance, experts estimate the true market size is significantly larger, with illegal rentals distorting the picture.

Market Expansion: Registrations Nearly Double in Two Years

According to the Register of Self-Catering Accommodation, Cyprus saw a jump from 4,765 registered properties with 21,636 beds in April 2023 to almost double those numbers today. This surge reflects not only growing visitor demand but also a stronger push by owners to comply with regulations.

Paphos leads the market with 4,231 registered rental homes, trailed by Famagusta (1,791), Larnaca (1,407), Limassol (1,267), and Nicosia (457). This distribution reflects broader tourism trends but also highlights regional differences in enforcement and market dynamics.

Illegal Rentals: A Persistent Concern

Illegal short-term rentals remain an ongoing challenge despite growth in official registrations. Since early 2025, authorities have received 81 reports concerning unlicensed properties. The Deputy Ministry of Tourism has intensified site inspections and leveraged online monitoring to crackdown on illegal listings. Those cases with solid evidence are forwarded for legal prosecution, signaling a firmer stance on combating this grey market.

Beyond tax evasion, illegal rentals exacerbate Cyprus’ housing shortage and add pressure to an already strained property market — issues that impact both local residents and investors alike.

Upcoming Regulatory Changes to Enhance Market Oversight

In response to these challenges, Cyprus is set to implement the 2025 Amendment Law, harmonizing national standards with the EU Regulation 2024/1028. Effective from 20 May 2026, the new legislation will:

• Standardize registration criteria for hosts and properties
• Strengthen reporting and enforcement mechanisms
• Mandate data sharing from platforms such as Airbnb and Booking.com
• Create a unified platform to prevent illegal listings
• Enforce consistent penalties for non-compliance

This EU-aligned framework aims to improve transparency while enabling law-abiding operators to compete on a fair footing. Authorities are optimistic that these reforms will bring long-term stability to Cyprus’s rapidly evolving short-term rental market.

For those interested in exploring legal property opportunities, check out cheap apartments for sale in Cyprus or browse through auction properties in Cyprus to find potential investments aligned with new regulations.

As Cyprus navigates this period of regulatory overhaul and market expansion, both buyers and renters should stay informed about compliance requirements and market trends to make sound decisions in this dynamic environment.