Thread: Panama Government Plans To Halt Short Term Apartment Rentals To Tourists

I can't say that I agree with this decision.

This is a very "anti-capitalist" move in my opinion.

What's your thoughts on this?

http://www.panama-guide.com/article....90824173340173

Probally the people who own the hotels sit on the board on the Panamanian Association of Hotels.... It is like an old boys club like any were else....

This was our chance I thought for lower hotel rates at last, as people renting at condo's would force the hotel owners to charge a more reasonable rates.

Maybe the hotels should just lower their prices, so the prices would be the same price as other countries with the same GDP, here in Thailand prices are like less than half for hotels.... If the prices were not so high for the hotels people would rather go there as they are more handy..

Also I come to Panama for a month at a time, so if they make it 45 days, it really screws things up for guys like me, so now I have to rent a place for 2 months....

I guess if you buy a place why can't you do what you want? I am a libertarian, so I like free markets..... But I realize a person needs some laws right?

Although, I would not be happy if I bought a condo, and there was diffrent people in the condos next to me every night, so perhaps at least two weeks to a one month stay in a condo would be better for all those involved.... So there are not so many transient people coming and going...

Also it seems that Panama just in the last year, is becoming less and less free all the time, with so many new laws coming in and more like the west which I dispised and wanted to move away from. If this continues it will turn many people off from Panama.... This is just one example of about 20 I could mention on this board, all in the last 12 months.

Before I go though, it Just sounds like a bit of sour grapes for the fat cats that own the hotels that chrage these inflated room rates if you ask me....

With the possibility of so many apartments becoming available soon, the Panamanian government is going to have to allow short-term apartment rentals. However with current government new gusto of collecting taxes, I am pretty certain short term apartment owners will have to pay taxes and the special ATP fees that most tourist establishment already have to pay. If you really think about it, regulated short term apartments paying their fair dues really isn't a totally undesirable prospect.

I think that if it is your primary business and you say own twenty units and do nothing but short term rentals then fair enough. However they probably aren't getting the normal hotel kickbacks on inflated taxi prices, $12 a night wi-fi cards, 'visitor supplements' etc. For Mr Average Owner however, with one appt trying to make ends meet when he is not using it I say no. They will have problems collecting taxes from him anyway.

A good suggestion from Bel-Air is to lower the prices to meet the market demand. After all, they had no compunction in jacking them up when times were good. For example I saw the Parador hotel go from around $40 a night in early 2007 to almost double that today.

My opinion is -- in the end "fighting things" and "banning things" and "making things illegal" is almost always a bad move. Instead, taxing them the same as a hotel would is probably the smartest way to go.

That way the govt. gets their share... And the free market dynamics can flourish.

I know that when I travel - I love to rent an apartment instead of a hotel. You always get more space... it's cozier... and it's cheaper. Plus, it puts natural pressures on the hotels to adjust their rates to a reasonable level.

Now, the hotels will be free to charge crazy prices without having to deal with competition from apartments. I think this is bad for everyone except the hotel owner.

And I agree with Bel-Air... Over the last few months, we've really seen an incredible change in how they are creating MORE laws, enforcing them... becoming stricter... cutting down free market dynamics... However, I think Martinelli has good intentions and he's doing his best to make this country a "First World Country". It will be interesting to see how it all evolves.

Matt

In the end it will just result in a few websites being taken down, a bunch of Panamanians losing the jobs for handling the reservations after which this little economy will continue to work and thrive in the informal sector of the economy.

Short Term Apartment Rentals Now Illegal in Panama
Monday, August 31 2009 @ 10:18 AM EDT
Contributed by: Don Winner
Views: 14
By DON WINNER for Panama-Guide.com - On 13 August 2009 Panama's new Administrator General of the Tourism Authority of Panama issued Resolution Number 52, effectively making it illegal for anyone other than a hotel to rent out private property, apartment or house, for a term of 90 days or less. Their reasoning is that this activity of short-term private rentals of apartments is in effect an unfair business practice, and that these people are operating "on the margins of the law." The Director of the Tourist Authority, Salomon Shamah, feels people who offer their privately owned homes or apartment for short term rentals are in fact acting has hotels, but they are not paying the same 10% tax as required by the hotels, nor are they subject to the same standards of fire and safety inspections as the hotels. The resolution is clear - this activity is now prohibited in Panama. I suspect eventually they will reach some kind of a middle ground. For example, why not just allow private individuals to rent out their property on a short term basis if they want to, but with a requirement to first be registered with the Tourism Authority, to be inspected, pay taxes on income, etc. In reality people are going to continue to rent out their apartments on a short term basis, but they will just go underground now and operate in cash, so Panama makes less money in taxes from the income. In my humble opinion, this decision is 100% in favor of the hotels and hotel owners, and totally against the principles of private property ownership. The Tourism Authority would have done much better for Panama if they had first spent the time to find a middle ground, rather than coming down hard with both boots on a "NO". Why did they do this? One of the biggest owners who is doing this is Herman Bern who has about three buildings on Ave Balboa what are operating as "virtual hotels." It's not about the little guys, it's about Bern and a desire to kick him in the nuts.
Copyright 2009 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.

That's not quite how it works in Panama....

Just make them sign a 91 day lease. In this contract you take a deposit only applicable to damages done. Then they pay you on a weekly/daily basis. All of a sudden they stop paying - no damages were done and you return the deposit.

That's how the bigger guys will do it. You probably don't even have to take it that far.

Best, Ed
PANAMA BANK GUIDE - LIST OF BANKS IN PANAMA

So, if I understand you correctly, the tenant, who only wishes to rent for a week or so, signs a lease for 91 days. They "break" the lease after their week is up.

Sounds like an idea, but, (I'm always worrying), how do you explain to a renter that you wish them to sign a 91 day lease, when they have no intention of staying that long?

If they want to rent for 10 days you write in the contract that the rate is $90 per day for the first 10 days (the trial period you can call it). After that it's $350 per day. Then you should be OK both ways (staying shorter or staying longer).

i read in La Prensa newspaper today that theres in an incoming tax reform were the govt plans to tax less than 6 months apartment rentals to track the "virtual hotels" so that 91 day lease wont work much longer.

The government also tries to tax the transfer of bearer shares on corporations owning assets such as real estate in Panama....

A Belize corp is cheaper so no big deal there.

Only problem there is if you want to transfer property in Panama where the shares are registered with a Belize corp, the buyer has to be comfortable with a foreign corporation.

Originally Posted by No-Non-Sense-Matt

I can't say that I agree with this decision.

This is a very "anti-capitalist" move in my opinion.

What's your thoughts on this?

As a simpleton, my thoughts are as follows: Hotels are for tourists, apartments are for residents.

I think thats a fair and logical
assessment

Mike

Would this new law mean that a person could not rent a home short term on the Pacific Beaches? In December and January, we rented a home for 4 weeks in Gorgona. There are many homes in that area advertized for short term rental ranging fro 1 day to 2 months. Mostly owned by foreigners seeking to have some income from their properties when they are not there. There are no real hotels in that area at all so a whole industry would be destroyed if short-term home rentals are banned. Do any of you have information on the effect of this new law on that type of situation? Likewise for a lot of other areas of Panama including Bocas and the Boquete area - lots of homes for short term rental.

Yes Gordon, that is what it means.

It is a very ill-conceived law just as the reduction of the tourist visa down to one month from three was and that one got reversed after much prevaricating. It is not even as though they are offering the apartment owners the opportunity to register for short term lets and pay whatever. As it is they already have to pay 30 % tax on income derived from rentals.

Gorgona is an excellent example, there aren't enough hotels and if the goverment really want to implement this it will be the death knell for the tourist industry and real estate market there.

I expect that there will be much hot air spouted, backtracking and spurious arguments on classifications of tourists on this one before they eventually see sense and back down.

I thought this was just for apartments .I never heard any mention of houses .

If you own an apartment an there's always transient an new neighbors that might be an issue .

So, if your a tourist this would suck .On the other hand ,if you live there in your apartment this could be inviting.

Mike

Since it will be really hard to define apartment, I wonder where they will draw the line. What about a second home on a property? What about townhomes? What about suites with separate entrances which are often rented out? That's why I'm wondering how this will affect Vacation Rental Homes which is actually a big business around the world. It will be interesting to see how this new law is applied. If it is applied !

According to the opinion from The Panama Guide quoted in post 7:

"effectively making it illegal for anyone other than a hotel to rent out private property, apartment or house, for a term of 90 days or less"

It would seem from that, that it is prohibited for anybody to rent out any private property whether it is your luxurious finca, garden shed or guest cottage for less than 90 days unless you are a licensed hotel operator. It prohibits all short term rentals of any kind, not just apartments, unless it is an hotel.

It seems as though I have gotten out of that biz just in time, phew!!!!!!

Anything you do in Panama seems to be a risk .Especially if your an outsider .

I almost bought a condo an one of the leading reasons was that I was able to rent it out to cover part of my expences .This would of course be rented through the development .I found out between the taxes and the development charges that there wasn't much left for me .

Now, the government adds this on the poor property owners .

This along should change property values .I'm glad I didn't do the property thing.

Mike

I am getting database errors for this forum all the same (since about a week). Usually I do CTRL-C before posting. This time I had done a CTRL-C afterwards by mistake so all text is gone.

As always in Panama, things stop working and noone fixes it. I will stop posting in this forum for now and restart when I get an official notification that it has been fixed. I recommend that everyone else stops in the meantime too.

It's another mistake... However, I think we will see them "fix the situation" and allow home owners the chance to register and pay their taxes like the rest of the hotels. Or maybe I'm just a delusional optimist. Either way, it doesn't really change my life.

I just don't like seeing Panama becoming tougher and tougher by adding laws and rules (and enforcing them hard) and losing their capitalist edge.

Matt

To be honest, I am getting dissapointed in Panama more and more, more taxes more rules, it is starting to be what is the point of going to panama when it is the same as the country you came from...

So many laws and rules making Panama worse..

Were do I start?

immigrations laws
Investing laws
Resident Laws
Banking laws
Bank secrecy laws
Gun Laws
Anti Renting laws


Whats left?

Then there is more taxes and more tax auditors...

I getting disappointed with it all to be truthfull...

top it off with high hotel rates compared to other countries with the same capital GDP, and it is not good for tourists, investors, retire's or any one...

Were I gonna stay when I go to Panama for two months now? In some crappy little over priced hotel room?

Oh yes before I go


One more nail in the bubbled real estate Coffin..

Seems to be alot of ignorance there too .

I mean, if property isn't selling a logical thing would be lower the price .Don't hang on to a dream that isn't there .

One can go to Florida an buy houses (espesially upper end) for 50% discount .I also think the property values will come back quicker in Florida as compared to Panama .

So, why would I go to Panama to finalize my Pensionado .I ask myself this every day .
Mike

As far as I am concerned this might be the last straw...

I am sersouly thinking about Philippines now over Panama...

Now things are cheap in the Philippines, you can rent an bachelor apartment for $100 a month, $150 for a one bedroom, this is in cebu city.... These apartments in Panama would be like $850....

In the Philippines, You can also stay a year at a time, just leave for a day and you got another year....

I was going to be coming to Panama again for 2 months than to Colombia for two months, but were am I gonna stay now? I mean the high prices for hotels and apartments are way to bad already, but if you are forced to live in a hotel now for two months, I have second thoughts...

Just think about this, a nice hotel with the same size as a condo might be $150 a night, x60 nights that is $9,000 plus taxes and fee's...

A hotel with the same size as a two bedroom condo, that is new, might be $200 a day, so for two months $12000

That is alot of money if you ask me....

I rather go to USA like Vegas or Palm Springs California, were I could get a condo rental cheaper, so it would be like $2,000 or $3,000 for two months... Plus it is way way nicer and cleaner there....

Good grief I could live in a place in the Philippines for 2 years, including all living expenses not just a condo, I mean all living expenses for under $12,000....

Yes it is dirtier in the Philippines and more crowded but it is 10 times easier to get a girl friend as well....

Thailand is also nice to for short term stays, and there hotels and condo's are immaculate and also dirt cheap....

It is also not so cheap to be in Panama really overall if you are forced to live in a half decent hotel for a month or 2.. might be cheaper in some area's but the high priced hotels will more than make up for any other cheapness in the other area's...

Just my thoughts.....