Cape Town Airbnb-style letting rules face test over long-term housing supply

Cape Town's new proposed rules for short-term rentals have received cautious support from a major ratepayers' body, the Cape Town Collective Ratepayers' Association (CTCRA). While the CTCRA welcomes the City's Draft Short-Term Letting By-law, 2026, it calls for stronger measures to tackle the growing use of residential properties for short-term accommodation.

The main objective of the draft by-law is to enhance transparency in the rental market by requiring short-term rental properties to be registered with the City and display a registration number when advertised. Additionally, the City seeks access to information on the availability and usage of these properties for short-term stays to determine whether they are primarily homes or commercial accommodation businesses.

If a property is used for short-term rentals for more than half of the year, it may be classified as commercial, leading to increased municipal rates. Short-term rentals used for less than half the year may still be considered residential, provided they meet the City's requirements. The changes are expected to take effect from July 1, 2027.

Although the CTCRA supports the principle of proper regulation and fair contributions from commercial accommodation businesses, it expresses concerns that the financial impact may not be sufficient to alter the commercial incentives favoring short-term rentals over long-term residential tenancies. The association notes that owners could absorb or pass on additional municipal costs to visitors through higher nightly rates.

CTCRA highlights that many residents are concerned about the increasing number of homes being bought or operated mainly for short-term accommodation, balancing property owners' rights with the public interest in stable and affordable housing. The City aims to achieve three goals with the draft by-law: increasing municipal revenue, creating a fairer system between short-term rental operators and hotels, and encouraging more properties back into the long-term rental market.

While the CTCRA believes the draft may help with the first two goals, it remains uncertain whether it will significantly improve housing supply. The association suggests considering additional measures used in other tourism-heavy cities, such as limits on the number of tourist rental days per year, different rules for homeowners and investment properties, zoning restrictions, and tighter controls in areas with numerous short-term rentals.

The CTCRA encourages the City to engage seriously with resident and civic organization comments on the proposed by-law, which is currently under public participation until October 5, 2026.