Short-term rentals drive prices higher for locals while undercutting hotels
In the heart of Mexico City, North America's largest city, a transcendental change is brewing. The imposing presence of Airbnb, a tourist accommodation giant, has unleashed a series of urban challenges that the local government is now seeking to address with determination.
Headed by Martí Batres, the local government has presented a pioneering initiative to regulate short-stay platforms, following the path of other global metropolises. The purpose is to mitigate social impacts, from rising housing prices to the gentrification of entire neighborhoods.
An expanding business model
The unbridled boom in daily, monthly and annual rentals, typified by Airbnb in luxurious properties, reflects a model of unrestricted growth that has flourished in the face of the passivity of the authorities. Currently, Inside Airbnb reveals that 26,300 spaces in the city are offered for temporary rental, with 65% being apartments or entire houses.
The majority is concentrated in gentrified neighborhoods such as Roma, Condesa, Juárez, Polanco and Centro Historico, joining forces with other platforms such as Booking.
Rental platforms need to be regulated
The vision of the capital government is clear: establish a regulatory framework that provides certainty to owners and clients. Eduardo Clark, head of the General Directorate of Digital Government, highlights the need to prevent entire buildings from operating as Airbnb, harming the hotel sector that complies with regulations. Additionally, it seeks to address concerns about unfair competition and rising rental costs for local residents.
Experts see this first step towards regulation with hope, recognizing that the authorities have been slow to act. The proposal, which comes almost a year after the initial announcement, seeks for all renters to register on a government platform, obtaining an official certificate necessary to promote housing on platforms such as Airbnb. It is proposed to limit to three properties per user, discouraging massive purchases and real estate speculation.
Demystifying a business model
The business model based on property rentals, lucrative for both platforms and owners, has transformed the traditional way of renting homes long-term. However, a network of intermediaries has emerged, such as the Mr. W company, managing hundreds of homes.
The government initiative seeks to force platforms and owners to provide statistical data, limit annual occupancy to 70%, and encourage the inclusion of homes in the rental market for local residents.
In fact, the regulation proposal is similar to that implemented in New York, considered the most advanced in the temporary rental business. María Silvia Emanuelli, coordinator of the International Habitat Coalition, highlights the possible positive impact of discouraging the concentration of housing in intermediaries.
A change that poses serious challenges
However, the current proposal still needs to clarify mechanisms to verify information, avoid duplication on platforms, and address homelessness comprehensively. Emanuelli suggests that the Government should consider expanding the housing supply, granting greater rights to tenants and proposing social income alternatives.
Mexico City is attempting a bold step towards regulating lodging platforms, transforming the tourism landscape with innovative measures. This change, although necessary, poses challenges that require comprehensive solutions to ensure a balance between the tourism industry and the needs of local residents.