As of August of this year 2022, the Government will begin to regulate the technological platforms that facilitate the supply of real estate for short term rentals to tourists and individuals in the country, such as the Airbnb model, which accounts for 95% of the negotiations of this type.
The Minister of Tourism, David Collado, informed that the first measures will be evaluated to regulate all types of negotiations involving the rental of houses, apartments, cabins and all types of space for recreation or for seasonal vacation lodging.
“Already the General Directorate of Internal Taxes (DGII) has a draft on the mechanism that the Government will use to regulate and tax the operations of the rental model with digital mechanisms” and, in fact, “it has already made a public hearing”, Collado told Diario Libre.
Approximately three months ago, the Minister of Tourism expressed his interest in regulating this sector of the real estate sector, not only to regulate the competitiveness of the market, but also to promote it as real estate tourism.
In this regard, the National Association of Hotels and Tourism of the Dominican Republic (Asonahores) does not consider that short term lodging through platforms is a competition for the hotel sector.
However, they emphasize that they face unfair competition due to the non-compliance with health and safety standards, among others, required of hotels.
The lack of regulation opens the way to “an offer that is advantageously cheaper for not having to comply with these requirements that hotels do comply with and, therefore, places a ceiling on the price per room that can be placed on the product”, said Andres Marranzini, vice-president of Asonahores.
He highlighted the progress made by the DGII in the regulatory framework to organize this type of business, which is growing without regulation, and pointed out that the important thing to consider is that, as far as possible, distortions in the supply should not occur, causing undesired effects in one model or another.
Asonahores conducted a survey in 2019 on the supply and demand models of real estate for short term rentals online in Argentina, Colombia, United States, Barcelona, Spain, Holland, England, France and Dominican Republic by level of risk for clients. The Dominican Republic reached the highest levels of risk and vulnerability due to non-compliance with several laws, including violation of the tourism law and mandatory tourist license for residential rentals.
Based on the published data, Marranzini advocates that regulators evaluate the mechanisms of countries that have successfully regulated this real estate sector to apply a regime “perhaps not as broad as for hotels, but a step in that direction is a guarantee for the future of the brand and the destination we sell”, he said.
He also indicated that the country needs to have a wide range of alternatives for tourists.
“The reality is that audiences are different and for tourists a destination must have a range of offers, so both models must coexist smoothly, regulated and without causing aggressive price distortions due to the lack of requirements”, he said.
He pointed out that in the Balearic and Canary Islands there are movements in that sense, that is to say, precedents in moving backwards after being pioneers in the proliferation of the platform model.
The reality is that more than 300 cities in the world regulate the platforms, with different models, but they pay tribute for the sale of the service, assuming their responsibility as withholding agent.
The properties to be offered as rental properties must be registered and authorized for that purpose and, of course, with registration controls in different formats of the guests entering and leaving the properties, the businessman pointed out.
Another risk posed by the rental of real estate for short stays through digital channels is that the owner has no way to evaluate the client who will rent the space, so it risks breaching condominium rules, if the property is in a residential area or housing projects for housing.
In this context, Asonahores specifies the need to divide the model in cities and residential areas whose risk impact is even greater, due to security issues, costs and the change of dynamics in these residential areas.
“The residential areas where the sale of residences for these models is imposed are pushing the price of housing, removing families who can no longer support these increases, and decide not to live in those areas”, said Marranzini.
He added that, according to the experience of other countries, it is almost impossible to implement a traditional rhythm of life while in the environment there is evidence of the entry and exit of unknown people who respond to different customs.
On the subject, he argued that there are countries that have limited with certain norms and rules this type of coexistence. “We see some that do not allow the mixing of residences and tourists, others that designate exclusive zones for residents, etc. In tourist areas it is a little more complex, but they are also minimally regulated”, he said.