Airbnb Hosts in Cape Town May See Tripled Fees

A new regulation aims to control short-term rentals in Cape Town by mandating registration and implementing commercial rates for properties that are available for short-term letting for 183 days or more annually.

Residents can submit their objections and feedback regarding the proposed regulation through the city’s website until 5 October.

The draft Short-Term Letting By-law specifies that all properties in the city listed on booking websites such as Airbnb, LekkeSlaap, and Booking.com must be registered with the municipal authority.

No property may be listed in the city without first obtaining a registration number, which must be displayed on the listing.

If a property is available for rent for over 50% of the nights in a year (183 nights), it will be classified as commercial rather than residential.

The city will then assess property rates on a commercial basis, comparable to the rates imposed on hotels and guesthouses.

Properties or portions thereof, like a granny flat, rented out without being listed on short-term letting platforms will remain unaffected and will not need a registration number.

Read/listen:

Airbnb in Cape Town – bubble or bargain?

Cape Town’s Airbnb rethink raises concern over property and tourism

While the exact commercial rates will vary depending on the property, they could be more than three times the residential rates.

For example, according to the city’s rate calculator, a residential property valued at R2.8 million in the inner city has a current monthly rates bill of R1,274. In contrast, a commercial property of the same value would incur a monthly rates bill of R3,945.

Even though the by-law is open for public commentary until 5 October, its key provisions have already been incorporated into the city’s latest rates policy adopted on 29 June, which defines “commercial accommodation” as “a property used for providing accommodation… where a primary residence is let out for short-term stays exceeding 50% of the total annual room nights.”

Additionally, residential property is defined as one “used or available for short-term letting for 50% or less of the total annual room nights.”

Leveling the hospitality field

When announcing the draft by-law, finance mayoral committee member Siseko Mbandezi mentioned that changes to property rating categories would take effect from 1 July 2027, “based on data from the proposed registration system.”

Mbandezi noted that the city is working to identify properties designated for commercial accommodation that have been incorrectly assessed with residential rates.

“The proposed by-law seeks to ensure fairness in the commercial accommodation sector,” he stated.

However, he affirmed that the city continues to support the tourism economy “in the strongest terms” and views short-term letting as a vital sector that meets diverse tourist demands.

“Nonetheless, the City believes that the conditions for businesses should be equitable, with all entities utilizing property for commercial accommodation paying the appropriate rates.”

Read: Inner-city Cape Town: No room for locals

A report from the Federated Hospitality Association of Southern Africa (Fedhasa) indicates that Mayor Geordin Hill-Lewis informed the association during an April meeting that the proposed short-term rental regulation aims to foster a fairer environment within the hospitality industry.

Reportedly, Hill-Lewis conveyed that the new rules would “confront large commercial operators managing multiple apartments as ‘decentralized’ hotel businesses while still paying residential rates.”

Read: Cape Town mayor advocates for affordable housing in reelection campaign

This initiative responds to concerns from hotel investors who are struggling to justify new hospitality developments amidst competition from short-term rental operators who are benefiting from residential rates.

Hill-Lewis reportedly stated that this disparity is hampering investment in new hotels, even as the number of tourists continues to grow.

Impact of short-term rentals on housing

The city does not present the new by-law as a strategy to mitigate the effects of short-term letting on the local housing market.

However, the city’s Inner City Local Spatial Development Framework (LSDF) reveals that 70% of residential units in the city center are utilized for commercial short-term accommodation, effectively removing them from the local housing market.

Approved by the council on 30 October of last year, the Inner City LSDF indicates that merely 30% of apartments or houses in the inner city are available for long-term leasing or occupied by their owners, while the rest “are either hotel-managed or Airbnb units.”

Read:

Cape Town affordable housing projects inch forward

How a company is making affordable housing possible

The Inner City LSDF encompasses the Foreshore and the central business district up to Orange Street, extending from Tennant Street on the southeast District Six side to Buitengracht on the northwest Bo-Kaap side, including De Waterkant. This area predominantly corresponds to ward 115.

As of 2018, there were 8,327 residential dwelling units (apartments) recorded in this area. Planners estimated a potential increase to 11,815 units by 2024, though the current figure remains unknown.

Currently, data from Inside Airbnb indicates that of the over 27,000 listings in Cape Town, 5,931 are located in ward 115.

The revenue generated from these listings is not being distributed among an equivalent number of apartment owners. Instead, it is concentrated in the hands of a relatively small group of individuals or companies that own multiple apartments.

Inside Airbnb reveals that only 1,777 of the inner-city listings are associated with hosts having a single listing, while over 40% belong to hosts with ten or more units. Notably, one host has listed 147 apartments or entire homes in the inner city on Airbnb.

The ongoing reduction of potential housing units for Capetonians has sparked debate for several years, being cited as a key factor exacerbating the housing supply shortage and driving rental and purchase prices beyond the affordability of middle-class residents.

Many new developments in the inner city focus on constructing micro-apartments, which are ill-suited for families seeking permanent accommodation.

In 2024, the housing advocacy organization Ndifuna Ukwazi (NU) opposed a micro-apartment development planned for the corner of Bree and Prestwich streets in the inner city.

In objection to the proposed 40-story structure containing 442 apartments ranging from 15 to 30 square meters, attorney Jonty Cogger highlighted that, despite the city’s pressing need for affordable housing, nearly all new developments in central areas cater to short-term rentals by offering “very small micro-apartments.”

Read: Cape Town housing activists celebrate landmark Tafelberg court victory

“Considering average household sizes, these apartments will never accommodate traditional families. Airbnb not only constricts our housing supply but also alters our urban fabric inappropriately,” Cogger stated.

NU argues that permitting micro-apartments without stringent affordable housing conditions threatens to exacerbate the existing housing crisis by leaving residents with few options for stable, long-term living accommodations.

© 2026 GroundUp. This article was first published here.