By Helen Daniilidou
29/09/2025
The European short-term rental (STR) market is facing its most significant shake-up yet. Driven by the twin pressures of housing crises and the implementation of new EU data and transparency regulations (expected to be fully in force by mid-2026), popular destinations are introducing stricter, costlier, and more complex rules.
For property investors, this turbulent environment makes regulatory stability a premium asset. At Plus Wise Estates in Cyprus, we believe the increasing regulatory complexity across the continent strongly positions the Cypriot market as the top choice for secure, high-yield STR investment.
Cyprus: Stability, Clarity, and Compliance
The Cypriot government continues its path of clear registration and standardized quality, avoiding the punitive restrictions seen elsewhere. This stability provides a solid, long-term foundation for your Cyprus short-term rental investment.
| Policy Area | Cyprus’s Clear Mandate (2025/2026 Outlook) | Investor Takeaway |
| Licensing | Mandatory Registration: All STR properties must register with the Deputy Ministry of Tourism for a license, ensuring a professional, accountable market. | Low Regulatory Risk: The focus is on formal compliance, with no national restrictions on property numbers or rental days. |
| EU Data Compliance (Upcoming) | Cyprus is actively preparing to comply with the EU’s regulation on STR data collection (expected 2026), which mandates that platforms (Airbnb, etc.) report host and property data to authorities. | Ahead of the Curve: Cyprus already requires registration numbers to be displayed, aligning its existing framework with the new EU standards. |
| Day Limits | No Fixed National Limit. Property can be rented year-round. | Maximum Earning Potential: Allows you to fully capitalize on Cyprus’s long tourist season without a restrictive day cap. |
| Tax & VAT | Subject to Income Tax. If operated as a business (high turnover/services), 9% VAT applies above the annual threshold (€15,600). | Clear Structure: Well-defined tax obligations support reliable financial planning and lower operational risk. |
The Shifting Sands: Greece, Spain, Portugal & France (2025/2026 Changes)
The complexity in these markets is increasing operational costs, reducing earning days, and demanding expert-level compliance—raising the barrier to entry significantly.
🇬🇷 Greece: Bans, Safety Standards, and Tax Hikes
Greece is tightening control with a focus on property quality, higher taxes for professional operators, and outright bans in key urban areas.
| Policy Area | New 2025/2026 Reality | Impact on Investors |
| NEW Registration Freeze | Ban on New Licenses (Extended to 2026): No new STR registration numbers (AMA) are being issued in the 1st, 2nd, and 3rd Municipal Districts of Central Athens. | Market Closure: Effectively blocks new investment in prime areas like Plaka, Kolonaki, Koukaki, Syntagma, and Exarchia. Existing, licensed properties are exempt, but new properties cannot enter the market. |
| Minimum Standards | Effective Oct 1, 2025: All STRs must meet hotel-like standards: liability insurance, fire safety equipment, and sufficient natural light/ventilation. | Increased Cost & Risk: Requires mandatory, costly upgrades. Properties not meeting these standards (e.g., poorly lit basements) will be removed from platforms. |
| “Professional” Rules | Hosts with three or more properties are classified as a business and face higher corporate taxes (starting from 13% VAT). | Limits Portfolio Growth: Discourages scaling beyond 2 units due to the abrupt tax penalty. |
🇪🇸 Spain: Local Fragmentation and Community Power
Spain’s market is a patchwork of local restrictions, with power shifting back to property owner communities (Condominiums).
| Policy Area | New 2025/2026 Reality | Impact on Investors |
| Andalucía (Costa del Sol) | New Law (Effective 2025): Requires property owners to obtain written community consent before applying for a short-term rental license. | Risk of Ban: Your right to rent can now be revoked or prevented by a simple majority vote (e.g., 60%) of your building’s owners, creating significant uncertainty. |
| Madrid/Barcelona | Severe zoning restrictions and de facto bans remain, requiring a separate street entrance—effectively ruling out most apartments. | Market Closure: Virtually impossible for a new investor to legally enter the apartment market in key cities. |
| National Registry | A new Código Registral Único (CRU) is being enforced for all rentals, centralizing oversight and making illegal operation easier to track and fine. | Enforcement Risk: Fines for non-compliance remain high (up to €500,000). |
🇵🇹 Portugal: Municipal Control and Long-Term Incentives
Portugal has solidified its framework to give local municipalities (Câmaras Municipais) maximum control over the Alojamento Local (AL) market.
| Policy Area | New 2025/2026 Reality | Impact on Investors |
| License Stability | AL Licenses are now nationwide transferable and no longer require a 5-year renewal (a positive change). | Slight Improvement: Reduces long-term licensing risk, but other factors remain. |
| Contention Zones | Municipalities are compelled to create and enforce regulations by October 31, 2025, including “contention zones” where new licenses are prohibited. | Localized Bans: New investment is blocked in high-demand tourist and housing-scarce areas (Lisbon/Porto). |
| Tax/Sale Penalties | Capital Gains Tax (CGT): If you sell a property that has been an AL within the last three years, the CGT calculation is less favourable, incentivizing owners to exit the STR market. | Higher Exit Costs: Penalizes quick selling and asset movement. |
🇫🇷 France: Environmental and Day Restrictions
The Loi Le Meur (The Anti-Airbnb Law) significantly tightens control, focusing on energy efficiency and rental day limits.
| Policy Area | New 2025/2026 Reality | Impact on Investors |
| Rental Day Cap | Municipalities can reduce the rental limit on a primary residence from 120 days down to 90 days per year. | Severely Reduced Revenue: A direct 25% cut in potential rental days for primary residence operators. |
| Energy Efficiency | Mandatory DPE (Energy Performance Diagnosis): Gradually bans properties with poor ratings (F and G) from the rental market starting 2025/2026. | Forced Renovation: Forces costly, mandatory, and often immediate renovations just to remain legal. |
| Tax Reduction | The tax deduction for unclassified furnished rentals is sharply cut from 50% to 30% (for income up to €15,000) starting Jan 1, 2025. | Lower Profitability: Reduces the tax efficiency and increases the taxable income for small-scale operators. |
The Plus Wise Estates Verdict: Why Cyprus Wins in 2025/2026
The new reality across Europe is less flexibility, higher cost, and localized prohibition. In stark contrast, Cyprus maintains an open, clear, and compliant framework.
For the serious investor prioritizing predictability and maximum yield, the choice is unequivocally Cyprus:
- Full-Year Revenue: Zero national day caps mean you earn 365 days a year.
- Clear Compliance: A single, transparent registration process eliminates the risk of being banned by a neighbourhood or a city hall.
- Low Regulatory Surprise: Cyprus’s current rules are already structured to easily comply with the upcoming 2026 EU data mandates, minimizing future upheaval.
Invest with stability. Partner with Plus Wise Estates to secure your successful, compliant, and high-yield Cyprus property investment amidst the EU’s growing turbulence.