New regulation affecting temporary accommodation services offered via digital platforms like Airbnb and Booking.com came into effect as of Thursday in Mexico City.
The regulations were approved in March after the capital’s mayor, Martí Batres of the ruling Morena party, submitted them to the city congress late last year.
What does the new regulation require of hosts?
Under the new rules, which were published Thursday in the official gazette of the Mexico City government, national or foreign hosts must register in a new Registry of Technological Platforms and list the properties they make available to tourists for residential use. When registering, hosts must specify the technological platform or platforms through which each property is being offered. They must also provide proof of civil liability insurance.
Hosts must submit two reports annually to Mexico City’s Tourism Ministry (Sectur) in January and July, including details on property occupancy and nights stayed. Providing false information or failing to submit such reports will result in removal from the registry per the new regulations.
Additional responsibilities include informing neighbors about the property being rented on the platform, maintaining clean and safe facilities for tourists, observing tax regulations, visibly displaying proof of registration with Sectur and ensuring that homes are not used for activities that disrupt public order or are against the law.
Hosts who own more than three properties must apply for a special permit to register a fourth. If granted, they must observe specific tax regulations for commercialized housing.
What does the new regulation require of hosting platforms?
Hosting platforms must also register in the Registry of Technological Platforms and keep their registration current. Registrations are valid for two years and must be renewed at least thirty days before expiration. They must also provide proof of civil liability insurance.
Hosting platforms must require hosts to provide proof of registration with Sectur before listing a property on their website. This registration number must be included in each property advertisement.
They must also submit bi-annual reports to Sectur, including details on property occupancy and nights stayed.
Moreover, hosts must implement security measures to protect minors staying at their properties.
How is this regulation expected to mitigate rising housing costs in CDMX?
The increasing number of short-term rental accommodations has played a role in the displacement of residents and a rise in the cost of living in specific areas of Mexico City.
According to the Mexico City Congress, the new law seeks to “generate balance in real estate development without generating land speculation or gentrification scenarios.”
Frida Guillén, a National Action Party (PAN) deputy and head of the Tourism Commission in the city congress, told news outlet Pie de Página that the new regulations are just a “first step” in slowing gentrification. The next step would be the implementation of a “digital nomad” tax, where individuals staying for more than twenty nights would be charged an additional fee.
Lawyer and housing specialist Carla Escoffie, on the other hand, told Pie de Página that while requiring liability insurance was a positive step, the modifications to the Tourism Law are insufficient and primarily aimed at benefiting the hotel industry. “In terms of addressing the issues that have emerged around housing and the city in terms of the impact Airbnb can have on cities, this is not a reform that addresses that,” Escoffie said.
When do hosts and hosting platforms have to register?
Starting Thursday, Sectur has 180 days to create the Registry for Technological Platforms. Once the register is available, hosting platforms have 30 days to submit their registration process. In turn, hosts will have 90 days to register.
Upon registration, the hosting platforms may request an one-time extension of 90 calendar days to submit the first bi-annual report.
With reports from Animal Político, Pie de Página
Long overdue. No such system will be perfect, but this should help tame the metastatic growth of Airbnb etc.
Should be put into law in all of Mexico. These rentals bring down home values and turn your neighborhood into hell. I sold my house in one neighborhood and move to another place that the HOA does not allow short term rentals. The HOA owners voted on this and pass by a lot. I love it here now.
It would be more informative if the article included information on tax obligations for both owner and renter. As I understand it, owners must have a RFC (tax ID) and make regular tax deposits, and tenant rental fees are to include the VAT. I don’t know the tax details (I have no rental properties), but perhaps another article on this topic would help.
At least here in Sinaloa (Mazatlan), Airbnb submits IVA (VAT), ISR (Income tax) and Occupancy Tax directly to SAT. They charge the guest the VAT, the ISR is taken from your earnings and the Occupancy Tax they charge and directly pass through to SAT. You have no choice in any of that, which in my opinion is good because no matter what Airbnb hosts are paying all their taxes. The amount of ISR and VAT (%) you actually pay can depend on how it is set up (for ISR if no RFC they take the highest like 35%, with RFC can be as low as 4%). In addition, whether or not you have to file yearly taxes is based on how it is set up with SAT. The basic normal ISR tax rate for a rental not on a technology platform is 25%, plus the 16% IVA on rental price.
I don’t own any rental properties in Mexico, but if I did I would be concerned what may follow after these information regulations go into effect. Mexico City could eventually impose limitations on the number of units that could be available for short-term rentals by Colonia in the city. The city could also impose a sizable registration fee on owners to participate in short-term rentals. I also expect the city could turn over these records to SAT (Mexico tax authority) to pursue uncollected taxes. I assume the hotel industry would like this as it would make their properties more price competitive as short-term property owners pass on their added costs to tenants. I don’t have an opinion one way or the other, as I’m just speculating on where this might be headed.
As an example, in February 2022 Manhattan (NYC) implemented a very restrictive set of regulations on short-term rentals of 30 days or less. Now owners who rent their apartments short-term must be physically present in the unit and provide the renters complete access to the entire unit (no interior locked doors). In effect this becomes shared communal living space with the owner. Obviously owners then cannot rent out more than one apartment short-term.
Appears to be a good political move but obviously Mexico has much bigger things to worry about such as infrastructure, pollution, water.
Those things cost money; this (partial) solution generates revenue or at worst covers administrative costs.
I don’t get the fact that they want to impose this on long-term renters with the digital-nomad tax. And it doesn’t matter if you’re a foreigner or a mexican national, the rules apply to everyone. I would think that long term rentals wouldn’t have been included. Most cities that have these rules are against short term leases.