A Cape Town property that is let on Airbnb for more than half the nights in a year could be charged more than three times as much in rates under a new draft by-law. The city’s own rates calculator puts an inner-city property valued at R2.8 million at R1 274 a month as a residential property, and R3 945 a month as a commercial one.
The proposed Short-Term Letting By-law requires any property listed on platforms such as Airbnb, LekkeSlaap or Booking.com to obtain a registration number from the municipality and display it on the listing. A property that is available for short-term letting for 183 nights or more, that is, more than 50% of the year, will be re-rated as commercial. The city will then calculate rates using the same formula it applies to hotels and guesthouses.
Commercial rates are not a fixed figure. They depend on the property’s valuation, so the size of the increase will vary from property to property, but the city’s example shows how wide the gap can be.
Finance mayoral committee member Siseko Mbandezi told the media that the re-rating would start on 1 July 2027, “based on data from the proposed registration system”. He said the city has been working to identify properties used for commercial accommodation that have incorrectly been levied with residential rates. “The proposed by-law ensures fairness in the commercial accommodation sector,” he said. These are the city’s claims; they have not been independently verified.
Mayor Geordin Hill-Lewis has framed the change as a response to large operators who run multiple apartments as “decentralised” hotels while paying residential rates. According to a report by the Federated Hospitality Association of Southern Africa, the mayor told the association at a meeting in April that the by-law was meant to create a fairer environment in the hospitality sector. The move was linked to concerns from hotel investors who found it hard to justify new developments while short-term rental operators, subject only to residential rates, competed with them at scale. Hill-Lewis reportedly said that imbalance was discouraging investment in new hotels.
The city has not presented the by-law as a measure to reduce the effect of short-term letting on housing. But its own Inner City Local Spatial Development Framework states that 70% of the city centre’s residential units are used for commercial short-term accommodation, which effectively removes them from the local housing market. Inside Airbnb data shows 5 931 of Cape Town’s more than 27 000 listings are in the inner-city ward, and one host has 147 units listed there. The loss of potential housing has been blamed for worsening supply and pushing rental and purchase prices beyond the reach of middle-class residents.
For owners, the immediate question is whether their property will cross the 183-night threshold, and whether to object to the draft. Comments can be submitted through the city’s website until 5 October. The draft by-law’s main provisions are already in the rates policy the city adopted on 29 June.
Small-scale hosts who keep their letting below the 50% mark will not be affected, and the city says it will continue to support the tourism sector. However, those who rely on frequent short-term rentals may face a steep increase in operating costs, which could force a shift back to long-term leasing or a reduction in the number of units offered. Properties, or parts of them such as a granny flat, that are let without being listed on a short-term platform are not affected and do not need a registration number.
Whether the by-law will curb the growth of short-term rentals or simply raise the cost of doing business remains to be seen.
For now, the city invites comments, and the outcome will shape how Cape Town balances tourism income with affordable housing for its residents.
