The purpose of this note is to: i) inform about the amendments to the Mexico City Tourism Law (the “Tourism Law”); ii) the Mexico City Housing Law (the “Housing Law”); and iii) the Mexico City Reconstruction Law (the “Reconstruction Law”) which aim to regulate temporary tourist accommodation services offered through digital platforms in Mexico City, as well as to set fair competition between shortterm tourist accommodations and the traditional hotel sector (the “Amendment”).
The Amendment was published in the Mexico City Gazette (the “Gazette“) on October 3rd, 2024, becoming effective today, October 4th, 2024. The Amendment adds a Fourth Paragraph to Article 61 Sexies of the Tourism Law, adds Article 36 bis to the Housing Law, and a paragraph to Article 22 of the Reconstruction Law. Interested parties can access the Gazette Publication to review the details of the approved Amendment.
Background
Prior to the Amendment described in this note, the Government of Mexico City had already introduced certain reforms to the Tourism Law in response to the growth of short-term tourism through digital platforms. These reforms impose various obligations, including the creation of a short-term digital platforms registry and the requirement to obtain additional permits. The goal is to promote fairness among tourism service providers and ensure greater certainty for end-users of such digital platforms. Further details on these reforms may be found at the following link: Reforms and Additions of Various Provisions to the Tourism Law of the Federal District (now Mexico City).
As a result of the aforementioned reform, there is now an obligation to update the Mexico City’s Tourism Registry. Further details may be found at the following link: Tourism Registration of Mexico City.
Another relevant precedent to this Amendment, aimed at reducing gentrification and promoting access for lower-income groups, was the amendment to the Civil Code of the Federal District (now Mexico City), along with the Mexico City Housing Law. This amendment limits rent increases to the inflation rate reported in the previous year and seeks to promote the construction of social housing. Further details can be found at the following link: Amendments to the Mexico City Civil Federal Code and Housing Law.
Mexico City’s Congress considers that the accelerated growth of short-term tourism through digital platforms (such as Airbnb) has caused significant disruptions in the functioning of the City’s housing market, leading to gentrification [1] and an excessive increase in housing prices.
In response to this concern, the Congress of Mexico City approved the Amendment, setting forth a maximum occupancy of 50% (fifty percent) annually for accommodation units listed on digital platforms with the goal of regulating the tourist rental market and limit the permitted length of stay.
The Congress of Mexico City considers that this Amendment provides a comprehensive solution to address the effects of gentrification, primarily through regulating digital tourism by setting limits on the number of nights people can rent a property through digital platforms.
Reforms
Firstly, the decree to the Amendment that had more relevant impact was the addition of a fourth paragraph to Article 61 Sexies of the Tourism Law, which limits the renewal of the registration of properties participating in tourist accommodation schemes. Specifically, it establishes that property owners must report the annual occupancy of their properties to the competent branch of the Mexico City government, and the registration will not be renewed for properties that have had an occupancy rate exceeding 50% (fifty percent) of the nights per year. If this limit is exceeded, the property will lose its registration as a tourist accommodation and if the owner wishes to continue offering it for a longer period, they must comply with the provisions of the Mexico City Commercial Establishments Law (concerning permits, licenses, operating hours, restrictions, safety measures, etc.). Properties that cannot renew their registration for exceeding the occupancy percentage may reapply for registration one year after the denial.
Secondly, the addition of Article 36 Bis to the Housing Law, establishes that properties under social, popular and rental housing programs (as classified by the competent authority in accordance with applicable law and regulations) shall not be used for purposes other than those intended by the program.
Specifically, these properties may not be used for temporary tourist accommodation schemes, such as those provided for in the Tourism Law. This restriction also applies to social, popular and sustainable housing, built under the application of Regulatory Norm Number 26 [2], ensuring that these properties fulfill their original social purpose and are not used for commercial tourist purposes.
Thirdly, a paragraph is added to Article 22 of the Reconstruction Law, which prohibits the use of housing units rebuilt under this law for purposes other than those intended by the reconstruction program. Specifically, it states that these homes may not be used for temporary tourist accommodation schemes like those provided in the Tourism Law.
Purpose of the Amendment
The purpose of the Amendment is to strengthen the regulation and control of properties in Mexico City, particularly in three key areas:
I) Tourism: to control the occupancy of properties listed in digital platforms, promoting fair competition with the tourism sector.
II) Housing: ensure that properties allocated to social and popular housing programs maintain their original purpose, prohibiting their use for tourist stays and preventing increased gentrification. This ensures that resources intended to address housing issues are not used for commercial purposes.
III) Reconstruction: protect rebuilt homes under the Reconstruction Law, prohibiting their use for tourism purposes, ensuring they are used exclusively for the housing needs of affected individuals.
The Amendment imposes modalities of property rights that must be analyzed in connection with constitutional and conventional legislation, as it restricts property rights in an attempt to balance other interests (gentrification, hospitality, civil protection, urban development).
Soon the Firm will share a comprehensive analysis of the Amendment from a constitutional stance and the potential defense against the detrimental effects on human rights.
[1] The buying and renovation of houses and stores in deteriorated urban neighborhoods by upper- or middle-income families or individuals, raising property values but often displacing low-income families and small businesses.
[2] The regulation was issued to promote the production of social interest housing, popular interest housing, and sustainable housing.
