The department of tourism’s new draft code of good practice for short-term rentals (STRs) has put the prospect of regulation for Airbnb-type properties under scrutiny as Cape Town’s shortage of affordable housing escalates.
France, Spain, the Netherlands, the UK and the US have already moved to binding rules and licensing regimes regarding the letting of apartments to tourists in Barcelona, Paris, Venice and the like. But South Africa’s STR sector has been largely self-regulated.
The new code, which provides guidelines to encourage “responsible, fair and sustainable” STR practices, is explicitly voluntary and makes no mention of rules or laws regarding short-term letting. However, industry players expect the department to introduce some restrictions later this year once legislative amendments to the Tourism Act — currently under consideration — are finalised.
Potential policy changes for STR come on the back of explosive growth in holiday accommodation booking platforms including Airbnb and Booking.com, coupled with a strong post‑pandemic rebound in international visitors. That has encouraged homeowners and buy‑to‑let investors to monetise their bricks‑and‑mortar assets for short‑term lets rather than for long‑term housing, usually at higher nightly rates and rental yields.
Some argue this has come at a steep social cost: upward pressure on rentals amid a dwindling supply of stock for those looking to rent a long‑term roof over their heads — especially in Cape Town.
Only Realty CEO Grant Smee says calls from policymakers, housing activists and irate locals for government intervention intensified last year following the release of a report showing there are 26,000 Airbnb listings in Cape Town. More worrying is that about 70% of residential units in the city’s CBD are either hotel-managed or listed on Airbnb, according to independent research project Inside Airbnb.
Body corporates of many sectional-title complexes in high tourist-demand areas such as Sea Point and Bantry Bay are already banning STRs because of safety concerns and noise disturbances. Smee says the authorities are taking note, which means policy changes to balance tourism demand with local housing needs.
He says likely interventions could include the capping of the number of days a property may be rented each year, mandatory registration for all STR properties, and higher municipal rates and tax charges. The City of Cape Town is already weighing the introduction of the same regulatory and tax framework for STR owners as those which apply to hotels.
Smee says residential properties operating like hospitality businesses are generating significantly more revenue than they would from traditional long-term letting. “So it’s perfectly reasonable for municipalities to treat these properties as commercial operations.” He says the shift in the STR landscape is about compliance, not punishment.
Still, policy changes are likely to translate into higher operating costs, additional administrative burdens and, ultimately, slimmer margins for investors. All this will prompt a rethink of buy‑to‑let strategies.
Nick Taylor, MD of the South African Short Term Rental Association (Sastra), says the industry expects Cape Town to give owners and operators a one-year grace period, until July 1 2027, to comply with proposed new bylaw requirements.
Sastra, founded in mid‑2024 to represent the interests of hosts, owners and industry stakeholders, has engaged widely with tourism bodies and policymakers to explore practical ways to regulate and professionalise the industry.
Taylor says the proposed terms of the STR bylaw, released with the City of Cape Town’s 2026/2027 draft budget last week, requires all owners of STR units to register with the city.
A key implication of registration is that owners will no longer be able to avoid paying municipal rates at the commercial instead of the residential tariff. Commercial properties are taxed at more than double the residential rate-in-the-rand tariff and do not qualify for rebates.
Owners would no longer be able to avoid paying municipal rates at the commercial instead of the residential tariff
Importantly, Taylor says whether the property will be categorised as residential or business/commercial will be based on a short-term letting availability ratio of at least 50% of the year. In theory, that means if you let your apartment for fewer than 182 days a year, or 16 days a month, it will probably not fall into the commercial taxation net.
Higher rates bills will inevitably push up operating expenses, which Taylor says could reshape the buy‑to‑let landscape, with some stock likely to return to the long‑term rental market. “Everyone will need to run their numbers and determine where they will ultimately get the better net rental yields — in the short‑ or long‑term letting market.”
He says it’s not yet clear if other municipalities will follow Cape Town’s lead, but it is likely South Africa will avoid the “pretty onerous” restrictions imposed on Airbnb-type lettings in many other countries. “While housing affordability is a real concern, our authorities’ approach is not to suffocate tourism.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.