New Airbnb tax for Cape Town homeowners

Cape Town’s proposed short-term letting rules could create new financial and governance risks for homeowners in sectional title complexes and homeowners’ associations (HOAs).

The City of Cape Town’s draft Short-Term Letting By-law has attracted attention mainly because of proposed changes to municipal rates. However, the impact on community schemes could be a bigger concern.

This is according to Van Deventer Dowlath & Marx, and to Johlene Wasserman, Director and Head of Community Schemes and Compliance.

The public comment period for the proposed short-term letting By-law opened on 5 August 2026, and it will close on 5 October 2026.

Following the consultation process, the City is targeting early 2027 for the adoption of the by-law, with proposed rating category changes taking effect from 1 July 2027.

“While much of the initial coverage of Cape Town’s draft ‘Short-Term Letting By-Law’ has naturally focused on host tariffs, the city has repeatedly clarified that the proposed changes do not constitute a new tax,” Wasserman said.

“However, what hasn’t received attention is the impact on the hundreds of thousands of residents living in body corporate schemes and HOAs.”

The draft by-law proposes a mandatory registration system for short-term rentals. Properties listed on platforms such as Airbnb and Booking.com would need to display a city-issued registration number.

Booking platforms would also be required to remove listings without a valid registration number. The city would receive availability and occupancy information for registered properties as part of the system.

The proposed test for determining whether a property should be rated as business and commercial is based on availability rather than actual bookings.

The threshold is 50% of total annual room nights. This is calculated by multiplying the number of bedrooms by 365 days.

“Critically, this calculation is measured against listing availability on platforms, not actual nights booked,” Wasserman said.

If a property exceeds the threshold, it could be moved into the business and commercial rates category through the city’s supplementary valuation process.

She said she supports the principle of charging commercial rates where a property is being used as a commercial accommodation business.

However, Wasserman cautioned that the availability test does not always reflect how a property is actually being used.

A homeowner who makes a property available for two months over December and January would have an availability rate of about 17%. A property listed year-round would have an availability rate of 100%.

The problem, she said, is that the system could treat a property that is available year-round but receives relatively few bookings the same way as a full-time short-term rental.

Cape Town’s Airbnb rules could create problems for community schemes

One of Wasserman’s main concerns about the proposed By-laws relates to the wording of the city’s frequently asked questions (FAQ) document.

FAQ 21 states that bodies corporate and HOAs “will not be affected by the proposed change” and that they can set their own rules for short-term letting.

Wasserman noted that this wording could be misunderstood, as the city is not suggesting that short-term letting itself falls outside municipal regulation.

“Rather, FAQ 21 appears to mean that the city does not determine the private governance rules adopted by bodies corporate and HOAs.”

“However, stating that bodies corporate and HOAs will not be affected is a well-intentioned sentence but one that could be misconstrued.”

In particular, Wasserman warned that homeowners could confuse municipal registration with permission to operate a short-term rental.

“A city short-term letting registration number is an administrative registration for the purposes of the municipal short-term letting and rates-compliance regime.”

“It is not, in itself, permission to conduct short-term letting and does not override a community scheme’s valid rules or other private-law restrictions.”

This means an owner could receive a city registration number while still being prohibited from short-term letting under the rules of their sectional title scheme or HOA.

Wasserman said she wants the by-law to make this distinction explicit to avoid disputes between owners and trustees.

The proposed short-term letting system could also change how trustees and directors approach it. “Trustees have historically debated short-term rentals as a security, noise, and amenity issue.”

However, from July 2027, their rules could also have direct financial consequences. For example, a scheme could limit the availability of short-term letting to 90 nights per year.

If owners comply with such a rule, their properties would remain below the city’s 50% availability threshold. Schemes without restrictions could leave owners exposed to reclassification at commercial rates.

According to Wasserman, any changes to sectional title conduct rules must also follow the required process. These changes require a special resolution.

Changes must also be reasonable, apply equally to owners using their units for substantially the same purpose, and be approved and certified by the Community Schemes Ombud Service.

What trustees, directors and managing agents should do now

The proposed new rules have also raised questions around accommodation operated by bodies corporate and HOAs themselves.

“Plenty of bodies corporate and HOAs list guest suites, visitor flats, caretaker accommodation, or clubhouse cottages on booking platforms,” Wasserman said.

The draft does not clearly explain how the registration and room-night calculations would apply to these properties.

There are also concerns around single-title developments, including some share-block, life-right and retirement arrangements.

“If a single resident lets short-term, the draft offers no mechanism to isolate that use, which exposes the entire property to commercial rates,” Wasserman said.

She added that the city needs to clarify how short-term letting by an individual occupier would be treated where multiple residents share one rateable property.

Going forward, Wasserman urged trustees, directors and managing agents to review the draft before the public comment period closes.

“Trustees, directors, and managing agents should read the draft by-law now, and submit formal public comments before the 5 October deadline.”

Submissions from named complexes carry substantial weight. She also recommended that schemes review their short-term letting rules and consider how the proposed rates system could affect their owners.

“Schemes should also now put short-term letting on their next agenda, review their letting rules, and ensure that their submissions ask for specific clauses for community schemes and single-title developments before the system goes live.”