Impact of restrictions on temporary stays (Airbnb type) in Mexico City

Greenberg Traurig - In April and October 2024, Mexico City implemented significant reforms to its Tourism Law, Housing Law for Mexico City and Law for the Integral Reconstruction of CDMX, as well as to the Regulations of the Tourism Law of the Law of Mercantile Establishments ("normativity"), directly affecting owners or holders and technological platforms that facilitate Eventual Tourist Stays and, indirectly, property managers. These reforms have generated considerable debate on their legal and economic implications.

Key Aspects of the Reforms

The reforms introduce strict regulations for Estancias Turísticas Eventuales, defining them as temporary accommodations in residential real estate for a fee.

The amendments to the Tourism Law establish the following:

- Eventual Tourist Stays are regulated, defined as temporary accommodations in residential real estate for a fee.

- Hosts and platforms must register in a registry of the Ministry of Tourism, which will be created in 180 days.

- Hosts have 90 days to register, while platforms have 30 days.

- From the fourth property registered, a commercial land use and operating license are required.

- Tourist information obligations, semi-annual reports, civil protection, security and shared responsibility of the operators are established.

- The registration of Estancias Turísticas Eventuales with an occupancy of more than 50% of the year will not be renewed; they must operate as a hotel.

- Properties in popular, social and rental housing programs may not be used as Estancias Turísticas Eventuales.

- Housing rebuilt under the Law for the Integral Reconstruction of the CDMX may not be used as Estancias Turísticas Eventuales.

The regulation of the Tourism Law establishes the following:

- It is essential to have the CDMX Key to carry out registration, renewal or deregistration procedures in the Registry of Hosts, as well as to submit reports. Operating without registration is prohibited.

- Supplies and hygiene and safety conditions must be guaranteed, including emergency numbers, fire extinguisher, first aid kit, smoke detector and liability insurance per property.

- Misuse of the Technological Platform, such as not including the registration folio or providing false information, may result in sanctions such as warnings, fines of 25 to 100 UMAs, suspension of activities or cancellation of registration.

- It would be applicable to the Host that has more than three Estancias Turísticas Eventuales, who would be required, among others: notice of operation of neighborhood impact compatible with the use of land, rates in visible places, hours of operation, control of arrivals and departures, internal regulations, medical services, cleaning equipment, condoms, insurance to guarantee the values given in custody, etc.

The regulations of the Law of Mercantile Establishments indicate:

- Hosts and platforms must register in a registry of the Ministry of Tourism, with specific deadlines to comply with this obligation. In addition, from the fourth registered property onwards, a mercantile land use and an operating license are required.

- The regulation also establishes safety and civil protection obligations, and penalizes the misuse of technological platforms with fines and possible cancellation of registration.

Economic and Competitive Impact

The reforms have been criticized for restricting property rights, legal certainty and freedom of contracting, as well as restricting the freedom of contracting and association of owners and holders of real estate and Digital Platforms, as well as the freedom of trade and industry of individuals.

It has also been said that such regulation violates the principles of equality and proportionality and creates barriers to competition by limiting the occupancy of Temporary Tourist Stays to 50% of the year and prohibiting its use in social housing properties or properties rebuilt under certain laws. This regulation seems to be aimed at protecting competing agents of the Estancias Turísticas Eventuales, generating an artificial increase in prices and limiting options for consumers.

Studies conducted in other countries where similar limitations have been adopted reveal that they have no impact on the reduction of long-term rents or housing prices. In fact, in Mexico City, there are 2.7 million homes and only 25,000 are listed on platforms such as Airbnb.

Conclusion

The reforms to the CDMX Tourism Law represent a significant change in the regulation of temporary accommodations, with important legal and economic implications. The response from those affected has been active, seeking to protect their rights and promote a fairer competitive environment. The situation continues to evolve and it will be crucial to watch how legal and non-litigation strategies develop in the coming months.

gtlaw.com