Airbnb is a company that has enabled and organized a whole new segment of the real estate industry for furnished room and vacation apartment rentals. With a valuation of more than $25 billion USD it’s likely a company worth more than most or all of the global hotel chains combined. And for good reason, it’s a great platform with a great user experience for both hosts and their guests that filled a gap in the global hospitality/tourism market.
The problem with Airbnb in the eyes of the hotel industry and many governments around the world is that it is often illegal. The main issue is naturally insurance and tax collection but also that popular residential areas and buildings can be transformed into transient neighborhoods disrupting it’s residents along the way. And in Colombia too it was signed into national law way back in 2010 that the short term letting of apartments in residential buildings for less than 30 days was also to be illegal. The minimum is now 7 days in Japan, 30 in New York City, 45 in Panama, and in Berlin non compliant Airbnb hosts can now be fined up to $100,000 Euros. In cities like Amsterdam, San Francisco and London however tax collection agreements have at least solved Airbnb’s woes in those markets for the time being.
At Casacol for example we use Airbnb extensively in Medellin for connecting travelers with short, mid and longterm vacation rentals. For our renters, investors and for us as property managers it’s a fantastic tool and we respect all the Colombian laws, tax collection requirements, and individual building administration rules. This would put us in the minority of Airbnb hosts however and anyone following Airbnb in local Medellin news lately should take note. On TV, radio and print media there is an uproar of concerned residents mostly in Poblado about the use of Airbnb in their buildings. Often time these are high-end buildings where old-money Colombian families and retirees live and naturally they aren’t interested in seeing (mostly) foreigners entertaining themselves while on vacation.
And what’s happening at the moment is alarming but understandable. We’ve had a influx of property owners visit our office lately concerned about the fact that the building they own in is actually
raising the 1 month legal minimum to 3 or even 6 months. Because Colombian law also states that 70% of the owners in a condo building (propiedad horizontal or PH) can change the rules/by-laws (reglamento) of a building to their liking. If 70% of the owners of your building vote to stop Airbnb guests at security, or increase the minimum rental to 3 or 6 months there’s nothing that can stop that and that can mean trouble for your investment expectations. Concerned property owners call me and ask what they should do. And other than sell and buy something more suitable for investment, there’s not much you can do.
For example, all of our new developments go even 1 step further. In projects like Soul Medellin and Loma Verde Medellin we’ve implemented the use of hotel licenses to guarantee our existence in an increasingly regulated Airbnb world in Colombia. As local authorities and building administrations here in Medellin continue to put the squeeze on Airbnb rentals going forward, those who actually abide by the laws and operate in buildings that explicitly allow for the accommodation of tourist and vacation rentals should win over the long term.
Now is a fantastic time to invest in Medellin real estate but investors must understand the local trends that could affect the longterm suitability of your purchase as an income property.
Brad Hinkelman – [email protected]
Founder/Owner – Casacol SAS