STR industry 2024-2025: Challenges and opportunities

2024 was a year of significant growth for the STR industry and major changes in terms of legislation, both in Greece and in the rest of Europe.

2025 will find the sector in a legislative turmoil but demand is still moving at very high levels, something that no-one can ignore. Competition is intensifying and property managers have recognised the need to operate with more professional standards in place.

Since the end of a year is traditionally ideal for reflection, let’s take a look back at what happened in the short-term rental sector and what we expect to see next year.

Legislative changes and tax burdens

2024 was a year of intense legislative developments in the short-term rental sector in Greece, with the implementation of new fees and the introduction of additional charges. Significant changes are also planned for 2025.

Since the beginning of the year, individuals who own 3 or more properties and run them as short-term rentals, are required to start a business activity with corresponding social security contributions, business tax and VAT.

Traveller’s Fee

As of January 1, 2024, the imposition of the Traveller’s Fee on short-term rental came into effect. This fee amounts to 0.5% of the total rent and concerns all hosts who list their properties through online booking platforms such as Airbnb, Booking.com and similar OTA services.

The process of declaring and paying the fee is carried out through the AADE platform. Declarations must be submitted quarterly, with specific deadlines, while non-compliance will result in fines. The introduction of this fee is aimed to boost municipal revenues from tourism activity.

In 2025, Municipalities have the option to increase the Traveller’s Fee to 0.75%, at the discretion of each Municipal Council and many have already taken this decision.

Climate Resilience Fee (CRF)

What was in force in 2024

The CRF was implemented from 1 January 2024 and concerns all tourist accommodation, including those available for short-term rental. The fee is imposed per room or apartment and per day of use, with variations depending on the category of accommodation.

Initially, the CRF was set at €1.50/ day for apartments and €10 for single-family homes over 80 sq m. between March and October. For the remaining months of the year, this amount was reduced to €0.50c and €4 respectively.

It has been announced that the revenue from the CRF will be used to finance projects related to adaptation to the effects of climate change, such as the prevention of fires, floods and the restoration of natural disasters.

Increases from January 1, 2025

And before the year is even over, new charges have been announced in Greece, effective from January 1, 2025. The new year welcomes adjusted and increased TAKK rates.

Between April and October, the new charges are as follows:

• For short-term rental apartments: The fee will increase to €8 per day.
• For detached houses over 80sq m: The fee will be set at €15 per day.

Between November and March, the new charges will be:

• For short-term rental apartments: The fee will increase to €2 per day.
• For detached houses over 80sq m: The fee will be set at €4 per day.
  

Business Fee per accommodation for short-term rental companies

In April 2024, a circular sent by the AADE held an unpleasant surprise for PMCs (property management companies). It announced the imposition of a business fee per accommodation for companies operating in short-term rental. The announcement stated that legal entities operating in short-term rental are required to pay a business fee of €600 for each apartment or room they manage in different buildings, as they are considered branches. This decision caused reactions in the industry, as it was considered sudden and oppressive for companies operating in the sector, while Stama and POMIDA appealed to the Council of State.

Short-term rental restrictions

The wave of restrictions that central governments and local authorities around the world are attempting to implement increased significantly during 2024. The main arguments were:

• The housing crisis and mainly the lack of decent and affordable housing for permanent residents in large cities.
• The significant burden on local communities and natural resources that popular destinations face from the phenomena of overtourism.

Despite the continuous publication of data and figures proving that the restrictions implemented since 2023 in New York did not lead to a decline in real estate prices, on the contrary they led to an increase in hotel prices, many European destinations announced restrictions on short-term rental.

In Greece, from January 1, 2025, the issuance of AMAs will be prohibited in the three central districts of Athens.

At the same time, the Ministry of Tourism for Greece has put out for public consultation a draft law that sets out specifications for the operation of short-term rental accommodation. These include mandatory civil liability insurance, a declaration from an electrician, fire extinguishers and smoke detectors, a cut-off relay or anti-electrocution relay, escape signs, a certificate of pest control and disinfestation, a first aid box and a guide with emergency services telephone numbers readily available.

However, the most problematic point is the reference that the accommodation should “constitute areas of primary residential use as per paragraph 95 of article 2 of law 4067/2012 (A’ 79)”. This means that properties that changed use after 2011 are excluded from short-term rental, and even retroactively. It should be noted that many of these were empty and abandoned for years, professional office buildings and industrial spaces in the center of Athens and other large cities, which were never used for housing, and which were renovated in order to be available for short-term rental, contributing to the aesthetic upgrade of degraded, former industrial areas.

European legislation on short-term rentals

However, changes are also coming from the European Union. The European Parliament approved the arrangement of rules on the method of collecting and communicating data on short-term rental in the EU while establishing the European Real Estate Register.

It also paves the way for the imposition of VAT across the entire range of short-term rentals, with platforms responsible for collecting it. The new rules will become optional in July 2028 and mandatory from January 2030.

Increased demand also brings business growth

The pandemic radically changed the travel industry, with demand plummeting, and then soaring. At the same time, geopolitical crises and the economic problems they have created are putting pressure on travelers’ budgets, who, while showing no inclination to limit their travels, are turning to various cost-saving solutions. In this context, short-term rentals are seeing their demand constantly increase.

On the other hand, the upper economic classes have turned their interest towards the search for personalised experiences, in accommodations that offer more privacy. That is why luxury villas are experiencing great booking growth. It is no coincidence that major hotel brands are investing in villas and holiday homes, which they are already selling from the plans. And Greece is at the center of these investments.

Subsequently, business activity in the sector is experiencing intense mobility. The business ecosystem that has been created around short-term rental has grown significantly, creating new jobs and generating significant profits. In addition to the establishment of many innovative companies, which create tools and solutions for the sector, also incorporating AI (Artificial Intelligence) business acquisitions and mergers are now beginning to take place in Europe. Finally, start-up financing moves are returning to the fore, and some of them are particularly impressive, such as the $365 million that Hostaway raised just before the end of 2024.