War on Airbnb in South Africa

Airbnb-style short-term letting in South Africa is increasingly triggering legal disputes in sectional title schemes where owners clash with conduct rules, tax obligations, and municipal regulations.

Between record tourism numbers, mounting pressure on housing supply in cities like Cape Town, and new regulations, short-term letting has shifted firmly from side hustle to serious business.

Alongside the opportunity, there is a growing – and increasingly litigious – tension playing out in sectional title schemes, where short-term letting is colliding with building rules.

South Africa now has tens of thousands of Airbnb listings, with the majority being entire homes or apartments rather than spare rooms. In Cape Town alone, listings exceed 20,000.

While hotels and guesthouses still dominate overall capacity, Airbnb’s scale and flexibility have reshaped the market – and, increasingly, the dynamics within residential communities.

According to Gillan & Veldhuizen’s senior associate, Kayley Leverton, this is where the friction starts for many sectional title schemes.

When a property development is established, it comes with management and conduct rules that bind all of its owners.

In newer schemes, short-term letting is often specifically addressed. In older buildings, it’s a grey area that is now being tested.

“At its core, these disputes are rarely about Airbnb itself – they’re about whether owners are complying with the rules they agreed to when they bought into the scheme,” Leverton said.

In a recent court matter, a body corporate had clear conduct rules that restricted short stays to a certain number of days.

Despite repeated warnings and fines, several owners continued operating Airbnb units in contravention of the restriction.

“The body corporate ultimately had to approach the High Court for an interdict. The court granted the order, requiring the owners to stop the short-term letting. If they continue, they face contempt of court,” Leverton explained.

This, she said, is a reminder that ownership rights are never unlimited. “They are always subject to the scheme’s rules and applicable law,” she said.

Rising compliance and tax pressure reshape the short-term rental market

Leverton noted that there is no denying the appeal of short-term letting, which can generate significantly higher returns than traditional leases, particularly in tourist-heavy areas.

However, that upside is being weighed against very real downsides – noise complaints, security concerns, increased wear and tear on common property, and a sense of transience in what were designed as residential communities.

At a broader level, the conversation has moved beyond individual buildings. As more units shift to short-term letting, fewer remain available for long-term tenants.

This pushes up rental prices and limits locals’ access. While that debate is gaining traction, Leverton said that, for now, it sits largely outside the courtroom.

“Our courts apply the law as it stands. The broader housing debate is unlikely to influence outcomes unless and until legislation changes,” she said.

That said, change may be on the way in the form of proposed amendments to tourism legislation, which aim to create a more balanced framework between economic growth and housing needs.

Another shift happening quietly in the background is compliance. “SARS is certainly getting wise to the income being generated from short-term rentals,” Leverton said.

Many owners are unaware that short-term letting – typically under 28 days – is not VAT-exempt, unlike long-term residential rentals.

On top of that, there are also municipal considerations. For example, the City of Cape Town requires properties used for short-term letting businesses to be reclassified and charged commercial rates.

Earlier in 2026, the city signalled a significant shift in how short-term rentals are treated. Under its draft 2026/27 rates policy, properties used predominantly for short-term letting may be reclassified and charged commercial rates.

In some cases, this reclassification could result in increases of up to 135%. While widely referred to as an “Airbnb tax”, the city has been clear that this is not a new tax.

Rather, it is stressed that it is simply the enforcement of an existing distinction between residential use and commercial activity.

This move, together with a proposed short-term letting by-law expected to be released for public comment, points to a broader trend.

Short-term rentals are no longer treated as informal or incidental income streams, but as structured commercial operations that must comply accordingly.

“It’s questionable how many owners are actually updating their property status,” Leverton said. For those running multiple units or operating at scale, the gap between “side income” and “commercial activity” is narrowing fast.

Schemes urged to act early as enforcement challenges grow

When things escalate, body corporates have a few options, including internal enforcement through fines, referral to the Community Schemes Ombud Service (CSOS), or court proceedings. However, litigation is not always simple.

“These processes can be costly and time-consuming, and not everybody corporate has the resources to pursue them,” Leverton explained.

Each case is also fact-specific. Not all conduct rules are the same, and enforcement depends heavily on how clearly those rules are drafted and applied.

For anyone currently running – or considering – short-term letting in a sectional title scheme, Leverton said the starting point is simple: read the rules.

“If the conduct rules restrict short-term letting, those restrictions will generally be upheld. Ignoring them is what leads to disputes,” she warned.

For schemes without clear provisions, Leverton explained that the window to take action is before any problems arise.

“If there’s an appetite to regulate short-term letting, the rules need to be amended properly, by special resolution. And that requires a 75% vote, which can be difficult to achieve once opinions are divided,” she said.

She advised schemes to review conduct rules in detail, start conversations early if changes are needed, keep records of complaints and disturbances, and treat short-term letting as a regulated activity.

While short-term letting is here to stay, Leverton said the environment around it is changing through court action, increased enforcement, and shifting municipal policy.