Mexico City faces one of its monsters. The tourist accommodation giant, Airbnb, has unleashed a series of urban problems in the Mexican capital, and now the local government seeks to regulate it. The Executive, headed by Martí Batres, has presented this week an initiative to control short-stay platforms, just as other cities in the world have done. The project aims to mitigate the social effects that have occurred, such as the increase in housing prices and the gentrification of neighborhoods. The Batres Administration wants to force all tenants to register and limit the number of homes they rent out, to prevent these platforms from operating as irregular hotels and taking space from long-term rentals. Mexico City thus joins the list of destinations that have raised a cry against this boom and it does so in the midst of the enormous wave of foreigners who have not stopped arriving in Mexico to settle temporarily since the pandemic began.
“Brand new apartments for daily, monthly and annual rental,” Airbnb announced these days in several properties in the wealthy neighborhood of Polanco. It is the perfect summary of an income model that has grown uncontrollably under the gaze of authorities who stood idly by for a long time. On Airbnb, 26,300 spaces are currently offered in the city for temporary rental. 65% are apartments or complete houses. There are 17,200 homes that are empty as long as they are not occupied by visitors. The remaining ads are for rooms within a home inhabited by the advertiser. The data belongs to Inside Airbnb, an initiative that collects and publishes data from the platform. Most of the ads are located in highly gentrified neighborhoods, such as Roma, Condesa, Juárez, Polanco and Centro Historico. Ads from other temporary rental platforms, such as Booking, are added to this offer.
The capital’s Government wants to create, with this initiative, “a regulatory framework that gives certainty to users”, whether they are owners or clients, explains Eduardo Clark, the head of the General Directorate of Digital Government of the capital, in a telephone interview. One of the objectives that have been set in their sights is to prevent there from being entire buildings that operate as hotels but pretend to be an Airbnb, a phenomenon that has been registered in these gentrified areas and that “unfairly harms the hotel sector that complies with the regulations.” In addition, they seek to address concerns that the supply of these platforms has displaced that of medium and long-term housing. “This has not only limited the rental possibilities for the premises, but has also increased the cost of rentals,” adds Clark, who details that the estimate indicates that the impact of these stays on the increase in rents is “relatively little”.
Specialists see this first step towards regulation with hope, but recognize that the authorities looked the other way for a long time. Claudia Sheinbaum, former head of Government of Mexico City, announced in December 2022 that her Administration was working on a proposal to regulate temporary rental platforms. Agencies of the capital’s Executive stated months later that they were still in talks with other cities around the world to learn about their experiences. Sheinbaum left office to run for Morena in next year’s presidential elections and her place was taken by Batres. Almost a year after that announcement there has been more concrete progress, but it is only a project that has yet to materialize in a reform to the Tourism Law that must be approved by the local Congress.
The Batres Administration’s proposal establishes that all tenants register on a Government digital platform and write down their properties. Once this procedure is completed, they will be given an official certificate that will be required by platforms such as Airbnb to promote the home. Platforms that do not ensure that each offer has the Government’s approval may be fined, says Clark. Users will only be able to offer up to three properties, the first two for free, and if they have a third, they will have to pay a tax. “What we are looking for is to reduce the opportunity or perverse incentive that someone wants to buy 30 or 40 units, take them out of the long-term housing market and put them on Airbnb,” says the official. The intention is that these tools are used only by those who have an apartment but spend a lot of time outside the country, or people who live in a large place and decide to rent a part of their house. “But we don’t want people to see this as a business, buy and speculate on housing,” he adds.
The business model has been very lucrative for both the platforms and the owners, called hosts. This boom caused more and more owners to choose to no longer rent their homes in the traditional long-term rental model, for months or years. They found it more profitable to rent through Airbnb, even when they had unoccupied days, than to have a stable tenant. The deregulated business also led to the emergence of intermediaries who charge a cut to manage the homes, prepare them and serve as a liaison with guests. In Mexico, the main intermediary is the company Mr. W, which is currently advertising more than 400 homes, according to Inside Airbnb. EL PAÍS documented that the rent for an apartment becomes six times higher once Mr. W advertises it on the platform. Inside Airbnb reports on other intermediaries that manage dozens of apartments, Blueground, Homi, Capitalia and Host Me Tender.
If the initiative is approved, both the owners and the platforms will be obliged to provide statistical data to the Government, including how many nights have been rented in total. Registration will be for one year and when that period ends, the owner will have to renew it. “We are going to see that they do not exceed 70% occupancy on nights of the year, if they exceed it, we will deny them registration the following year,” says Clark. This will be done with the objective of “encouraging that property to be included in the rental market for city residents.” At the moment this is a first step, which will undergo modifications along the way, as explained by the Executive.
María Silvia Emanuelli, coordinator of the Latin American Office of the Habitat International Coalition (HIC-AL), points out that this first step seeks to mainly regulate the model of temporary rental of apartments or complete houses, which is the type of rental that most contributes to the rise of housing prices in an area. The specialist remembers that, in its beginnings, Airbnb used to offer bedrooms in houses where the host lives, in a solidarity economy model that did not significantly impact prices. Now it is clear that the model has been inverted and is causing the expulsion of regular or permanent tenants and, in general, the displacement of local communities due to the increase in the cost of housing and services.
Emanuelli considers that the regulation proposed by Mexico City is similar to that implemented by New York, which she describes as the most advanced regulations on the business of temporary rental platforms. The expert highlights that another beneficial aspect of the project is that it could discourage the concentration of homes in intermediaries like Mr. W. “It is being established that the same host cannot register more than three homes. It is already evident that the tourist economy is an economy that is hardly redistributive, it is normally highly concentrated in a few hands, and this regulation could discourage concentration,” she explains in an interview.
Lawyer and teacher in Latin American Studies, Emanuelli warns that in the capital’s Government proposal it still remains to be clarified what mechanisms will be implemented to, for example, verify that the information provided by a host is true, that the same home is not being offered for more of a platform, or that the percentage of occupied nights per year is what the host reports. Also, she adds, the initiative does not go to the bottom of the problem of lack of housing for residents of the capital and workers who work their days in the city, since it is a reform only to the Tourism Law. “This reform does not answer the question of what to do with the right to adequate housing. I believe that the head of Government should, along with this proposal, touch on other legislation to advance a comprehensive housing policy that allows expanding the housing supply, or giving greater rights to tenants, expanding options for people with limited resources, making a social income proposal,” he details.
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