Juan Jose Lopez-de-Silanes
Basham, Ringe y Correa, Mexico City
juanjoselopez@basham.com.mx

Ana Ocampo
Basham, Ringe y Correa, Mexico City
aocampo@basham.com.mx

Introduction: A city in transition

Mexico City is undergoing a transformation shaped by global trends in mobility, technology and urban attractiveness for residents/investors. The rise of remote work and digital platforms has enabled individuals to live and work across borders, contributing to a new wave of urban migration. This phenomenon – often labelled as ‘gentrification’ – is not merely the result of local tourism policies, but rather a reflection of broader structural forces including globalisation, digital labour markets and the commodification of urban space.

In this context, the city’s recent shift from promoting creative tourism to regulating short-term rentals must be understood not as a reversal of causality, but as a reactive attempt to manage the consequences of global urban dynamics.

Tourism policy and the limits of local regulation

During 2022, Mexico City launched an ambitious initiative to position itself as the ‘Capital of Creative Tourism’, under the leadership of the then-Mayor, Claudia Sheinbaum, now President of Mexico. Developed in partnership with UNESCO and Airbnb, the programme aimed to attract digital nomads, foster cultural exchange and stimulate local economies through creative and experiential tourism.

The strategy aligned with global trends in urban revitalisation and digital mobility and was initially celebrated as a forward-thinking model for post-pandemic recovery.

By 2024, public discourse in Mexico City began to focus increasingly on the issue of gentrification, particularly the displacement of long-term residents and the growing presence of foreign occupants in traditionally local neighborhoods. This shift in narrative placed pressure on the government to respond, and the most immediate action taken was to reverse earlier tourism-oriented policies by introducing a series of regulatory reforms.

In response to mounting pressure, the city government initiated a series of regulatory reversals, culminating in the July 2025 announcement of a comprehensive housing and rental policy package. These measures included rent caps tied to inflation, the creation of a Fair Rent Index for high-speculation zones and new restrictions on short-term rentals, including a 50 per cent annual occupancy limit and mandatory registration of hosts and platforms.

While these reforms are presented as efforts to protect housing affordability and preserve community identity, their timing and scope raise critical questions. Do they genuinely aim to prevent displacement and promote equitable urban development, or are they primarily designed to respond to public sentiment through populist gestures?

The lack of operational clarity – such as the absence of functioning registries for hosts and platforms, undefined enforcement mechanisms and contradictory legal provisions between civil and tourism law – suggests that the reforms may be more symbolic than structural. In a city shaped by global mobility, digital labour markets and transnational investment, addressing housing pressures requires more than reactive regulation; it demands a coherent, forward-looking urban strategy.

Legal fragmentation and implementation challenges in housing and tourism regulation

Between 2024 and 2025, Mexico City introduced a series of reforms across civil, tourism and housing law aimed at addressing rising housing costs, regulating short-term rentals and protecting tenant rights. These reforms include:

• Tourism Law Reform (April 2024): establishing a mandatory registration system for hosts and digital platforms offering short-term rentals, imposing a 50 per cent annual occupancy cap per property, and introducing reporting obligations. However, as of mid-2025, the required registries and technical guidelines remain inactive, leaving operators without a clear compliance pathway.
• Civil Code Reform (August 2024): capping rent increases to the annual inflation rate reported by Banco de México and mandating the digital registration of lease contracts within 30 days of signing. These measures aim to stabilise rental prices and improve transparency in the housing market.
• Policy Package (July 2025): introducing additional measures such as the creation of a Fair Rent Index for high-speculation zones, the establishment of a Tenant Rights Ombudsman and the announcement of a forthcoming law on fair and affordable rents. These initiatives are framed as part of a broader strategy to promote a ‘habitable, affordable city with local identity and rootedness’.

However, despite their stated objectives, these reforms suffer from legal and operational inconsistencies. For instance, the Civil Code permits lease contracts for at least one year, while the Tourism Law restricts short-term rental use to 182 nights annually, creating a conflict between civil and administrative interpretations of occupancy. Moreover, the absence of functioning registries and enforcement mechanisms undermines the legal certainty required for property owners, tenants and investors to comply with the law.

Another point to be considered is the fiscal disparity between short-term rentals and the hotel industry. Short-term rentals (STRs) are subject to a five per cent lodging tax, compared to 3.5 per cent for hotels. This 1.5 per cent differential is significant for investors and operators, especially given the additional regulatory burdens imposed on STRs. When combined with occupancy limits and compliance costs, the result is a higher operational expense, which is ultimately passed on to the end user.

This cost structure discourages alternative forms of tourism, including not only leisure segments such as sports, gastronomy and nature tourism – as recognised by the Tourism Law – but also medical, wellness, cultural and educational tourism, which often rely on flexible and affordable lodging options. The reduction in supply of short-term rentals disproportionately affects middle- and lower-income travellers, who depend on well-equipped accommodation that allow for longer, more economical stays.

The 2026 World Cup: a policy stress test

The 2026 FIFA World Cup presents a unique stress test for Mexico City’s urban governance, exposing the limitations of its current regulatory framework for short-term rentals and housing policy. While the city anticipates an unprecedented influx of visitors, the legal and operational constraints – particularly the 50 per cent occupancy cap, the lack of functioning registries and the fiscal asymmetries between lodging sectors – risk leaving much of the housing stock underutilised. Moreover, federal courts have affirmed that, in the absence of formal implementation mechanisms, the obligations imposed by the Tourism Law are not yet enforceable, further complicating the legal landscape.

Beyond the immediate logistical and fiscal concerns, the current approach threatens to undermine the city’s broader goals of inclusive and diversified tourism. If Mexico City is to successfully navigate the World Cup and its long-term urban challenges, it must move beyond reactive regulation and embrace a coherent strategy – one that harmonises legal norms, ensures fiscal equity and supports both economic opportunity and social inclusion. Only then can the city position itself as a truly global and sustainable destination.