Airbnb is worldwide on the rise. What started as a renting out of private apartments during holidays and sharing of holiday houses has become very commercial. Today most of the offered apartments and houses don't fall any more into this category. Whether this is a positive or a negative development is not the concern of this article. What we wanted to explore is the situation of Airbnb in Mauritius. What is the status? What are the problems? What is the legal situation?
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Today most Airbnb offerings are more or less commercial. On one side of the spectrum you have traditional hotels and guest houses which are renting out rooms and apartments on this platform. Then you have big players who are using Airbnb as their main channel to rent out luxury houses, apartments and rooms. Furthermore you have a lot of private persons who saw it as an opportunity to earn some extra money and who bought some extra rooms, apartments or houses to be offered on Airbnb more or less exclusively. Finally you find also the type of person who said: "Why should I work? I split-up my house, rent out one part and I enjoy my life".
Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is merely a broker and receives percentage service fees (commissions) from both guests and hosts in conjunction with every booking. It has over 3,000,000 lodging listings in 65,000 cities and 191 countries, and the cost of lodging is set by the host.1
If you are following the international news you know that this phenomena has caused many problems and social tensions in countries around the globe. These range from problems with all kinds of emissions over tax fraud up to the changing character of neighbourhoods. And maybe most importantly, the rising of apartment and housing prices, making it literally impossible for local people to live at certain places.
Major problems with Airbnb:
- Housing affordability
- Tax avoidance/fraud by hosts
- Regulation avoidance by hosts
- Emissions (noise, waste, etc.)
- Conflicts between owners and tenants (Airbnb sublease)
- Conflicts between house/apartment owners (co-owned resorts and residences)
- Fraud with Airbnb offerings
There are 3 typical stakeholders who rally against an unregulated evolution of Airbnb and who have successfully pushed law enforcement and new regulations: 1. People living in neighbourhoods affected by the negative effects of Airbnb, 2. Hotel, guest house and apartment owners, who are offering their entities the “classical way” and as such are subject to severe taxes and regulations and 3. Revenue departments of governments fighting tax fraud. Hotels, guest houses and apartment owners find it understandably very unjust, that competitors can offer exactly the same service over Airbnb without being subject to the related taxes and regulations . All this has triggered protests and rallies, political debates, enforcement of law and in many countries severe extra regulations.
Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city's zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement. In some tax jurisdictions, Airbnb will take care of calculating, collecting, and remitting local occupancy tax on your behalf. Occupancy tax is calculated differently in every jurisdiction, and we’re moving as quickly as possible to extend this benefit to more hosts around the globe.2
Important to highlight is the “enforcement of law” issue. In many countries there is a well established regulatory framework which can easily be applied to Airbnb offerings. Thus it is merely a question of enforcement rather than a question of introducing extra regulations. For example it is crystal clear in any country, that Airbnb revenues are subject to taxes and in most countries a professional Airbnb offering falls under the same regulatory framework as a hotel or guest house.
If you search on Airbnb for Mauritius you can find more than 300 offerings currently available. Including properties being already booked and properties inactive for the time being, the effective number might be much higher. As a comparison there are currently 152 registered guest houses3 and 957 registered tourist residences4. So this is huge! You'll find the whole range from a simple room for MUR 300 per day up to a luxury villa for more than MUR 50'000 per day.
If you have a closer look you'll also find the whole range of the above described types of offerings:
- Traditional hotels and guest houses which are renting out rooms and apartments on Airbnb
- Big players who are using Airbnb as there main channel to rent out luxury apartments and houses
- Private persons who bought some rooms, apartments or houses to be offered on Airbnb more or less exclusively
- The “artist of life” who splits-up his house, rents out one part and enjoys his life
One very important question is the legal status of Airbnb rooms, apartments and houses. Let's say I'm renting out rooms or apartments to tourists. If I'm doing that as a guest house, resort, hotel or residence, I have to follow regulations set-up by the government. Now the key question: Can I just change the label while still doing exactly the same thing and forget about the regulations? I'm renting out rooms and apartments but I'm not a guest house, resort or residence, I'm just “doing Airbnb”. If we approach this question with reason we might say, it depends. If I'm renting out my own apartment or house – meaning the object which constitutes my main point of living - while I'm holidays, I'm certainly not a guest house, resort or residence. But for all the other cases I'm doing exactly the same thing as a guest house, resort, hotel or residence. If I have extra rooms, apartments or houses, in which I seldom or even never live, for the main purpose to rent out to tourists (tourist visa) and other visitors (business visa) I should have to follow exactly same regulations as any classical competitor has to. Now we all know that this is not (yet) the case. So what about the law in Mauritius?
We consulted the legal framework and analysed it carefully. Doing so we had a very close look at “THE TOURISM AUTHORITY ACT 2006”5 which can be found among many other regulations on the website of the Mauritian Tourism Authority. Within this document we find the following definitions:
- "hotel" means any premises where - (a) lodging and sleeping facilities; (b) ancillary services and amenities; and (c) breakfast, meals and refreshments at reasonable hours, are provided against payment;
- "guesthouse" means any premises where lodging and sleeping facilities, and breakfast, are provided against payment;
- "tourist residence" means any premises, other than a hotel or a guesthouse, which offers sleeping accommodation to tourists, with or without meals, for a fee;
- “domaine” – (a) means any estate offering nature-based activities; and (b) includes any premises sustainably integrated in a natural environment, providing sleeping for a fee.
- “tourist accommodation certificate” means – (a) a hotel certificate; (b) a guest house certificate; (c) a tourist residence certificate; or (d) a domaine certificate,issued under section 25A in respect of a tourist enterprise specified in Sub-part I of Part A of the First Schedule;
- No person shall run or carry on a tourist enterprise specified in Sub-part I of Part A of the First Schedule unless he holds a tourist accommodation certificate.
- The tourist accommodation certificate shall, in the case of – (i) a hotel, be a hotel certificate; (ii) a guest house, be a guest house certificate; (iii) a tourist residence, be a tourist residence certificate; (iv) a domaine, be a domaine certificate.
So in which category fall the various Airbnb offerings? Well it depends the offering. If you offer lots of extra services as well as breakfast you are technically a hotel or guesthouse. If you don't offer any of these you are certainly a tourist residence.
"tourist residence" means..
- any premises, other than a hotel or a guesthouse > TRUE
- which offers sleeping accommodation to tourists > TRUE if your guests are also tourists (most likely meaning staying in Mauritius with a tourist visa)
- with or without meals > TRUE
- for a fee > TRUE
All the conditions are TRUE, hence this law applies in principle to all Airbnb offerings. Technically also the person who rents out his own place during his holidays, though it certainly would make sense to exempt this case from the regulation.
There might be one exception according to the “letter” but there is always also an interpretation according to the “intention of the legislative power” who wrote or approved the law. Most likely objects which are merely rent out to people with a residence permit (Expatriates, retired people, etc.) on a long term basis (> 12 months). But to which object does this apply in reality? Most likely to no one, because Airbnb is not a platform for such rentals and such objects are not offered on Airbnb anyway.
All this is in line with the communiqué Renting of Tourist Accommodation in Mauritius of the Mauritian Tourism Authority:
All owners of bungalows/villas/apartments/guesthouses/tourist residences/pensionnat/apartments which are being made available for rent for a period of less than 12 months, should be in possession of a Tourist Enterprise Licence delivered by the Mauritius Tourism Authority in order to operate as Tourist Residence or Guest House as per the provisions of the Tourism Authority Act 2006 as subsequently amended.
The problems in Mauritius are a mirror of the above, though the “housing affordability” is a more general problem, which does not mean it is less important. That most Airbnb players do not have a “tourist accommodation certificate” and are furthermore avoiding taxes is an open secret. In particular there are many problems with noise. If you are a house owner or a tenant you understandably have no fun, when the neighbour rents out his apartment or house on Airbnb, what goes along with all kinds of emissions. Though it might be in the Airbnb rules of the offered property, you have certainly a guest in while who makes some all night-long parties and an acceptable level of partying you have anyway to accept. These people come for holidays, so the noise emission is certainly much more intense than from a long term resident. There are also lots of conflicts between owners and tenants who are subletting their property on Airbnb, be it excluded in the contract or not. Finally there are also severe conflicts in co-owned housing areas and residences, when a owner suddenly rents out his apartment while to others want to use it for residence purposes only.
Airbnb has undeniably become an important factor in the tourism industry. This has triggered severe problems around the globe. These include housing affordability, tax and regulation avoidance/fraud by hosts, emissions (noise, waste, etc.), as well as fraud with Airbnb offerings. These problems have triggered protests, political debates and action around the globe. While law enforcement was in many countries the main issue, there are also extra regulations set-up where needed (to include Airbnb players in the regulatory framework, to ensure they are following the same rules as other market players, to limit capacities through licensing).
In Mauritius one can find a mirror of the problems one finds around the globe. Though Airbnb players would have 1. to obtain a “tourist accommodation certificate” and 2. pay taxes on their Airbnb revenues, it remains an open secret that most players are not doing so. So there is certainly a problem of "law enforcement". A stricter law enforcement would definitively be a first good measure to "counter balance" problems with AIrbnb. The need of owners to obtain a licence would ensure a certain quality standard and give authorities the possibility to control the supply and to ensure that taxes are collected properly.
- Vacation Rentals, Homes, Experiences & Places - Airbnb
- The Mauritius Tourism Authority
- The Mauritius Tourism Authority: Communique Renting of Tourist Accommodation in Mauritius