If you own a property in Cape Town and occasionally make it available on Airbnb, Booking.com or another short-term letting platform, you may have heard about the City’s proposed new Short-Term Letting By-law.
While the headlines may make it sound as though Cape Town is preparing to ban Airbnb, that is not what the proposed By-law does. Instead, the City is looking to introduce a formal registration and monitoring system for short-term letting and, importantly, to distinguish between occasional home-sharing and properties that are effectively being operated as commercial accommodation businesses.
The draft By-law is currently open for public comment, with submissions being accepted until 5 October 2026.
So, what is the City trying to achieve?
The City’s stated objective is to ensure that properties being used predominantly for commercial short-term accommodation are correctly classified for municipal property rates purposes.
At present, the City’s Rates Policy already provides that commercial accommodation businesses should pay commercial property rates. The proposed By-law is intended to give the City a practical way of identifying properties that are being operated in this manner.
The City says the aim is also to create a more level playing field between short-term rental businesses and established accommodation providers such as hotels, guesthouses and B&Bs, which already operate as commercial businesses.
The important 50% threshold
One of the most significant aspects of the proposal is the 50% threshold.
Under the City’s amended Rates Policy, a property that is available for short-term letting for more than 50% of its total annual room-night capacity may be classified as a business and commercial property.
For example, a two-bedroom property has 730 potential room nights in a year (2 bedrooms × 365 days). If the property is made available for short-term letting for more than 365 of those room nights, it could fall into the commercial category.
Importantly, the calculation focuses on availability for short-term letting, rather than simply the number of nights that guests actually stay. In other words, a property that is available to book throughout the year could potentially cross the threshold even if it is not occupied every night.
This distinction is particularly important for property owners who operate seasonal accommodation.
Not every Airbnb host will automatically be affected
The City has specifically stated that the proposed changes are not intended to penalise people who occasionally let part of their primary residence to supplement their income.
Properties used for occasional or part-time short-term letting may continue to be treated as residential properties, provided they comply with the City’s Rates Policy requirements and remain below the applicable threshold.
Similarly, a property rented to a tenant on a genuine long-term lease as the tenant’s primary residence is not considered short-term accommodation for these purposes.
Registration could become compulsory
If the By-law is adopted in its current form, properties advertised on booking platforms will have to be registered with the City.
A City-issued Short-Term Letting registration number would then have to be displayed on the property’s online listing.
The proposed rules would also place obligations on booking platforms. Platforms, owners and operators would be required to provide information to the City, including information relating to availability and occupancy. A platform could also be required to remove a listing that does not display a valid City-issued registration number.
This means that short-term letting may become considerably more transparent from the City’s perspective, with the City able to use information from booking platforms to determine how a property is actually being used.
What happens if a property becomes a commercial property?
This is potentially the biggest financial consideration for owners.
A property that is determined to be used for commercial short-term letting could be moved from the residential to the business and commercial property rating category.
The City has indicated that any changes to property rating categories arising from this process are intended to take effect from 1 July 2027, giving owners time to understand and adapt to the new system.
It is therefore worth remembering that the proposal is not simply about whether you are allowed to advertise your property on Airbnb. It could have a direct impact on the property’s ongoing municipal costs.
And there are penalties for non-compliance
The proposed By-law also contains enforcement provisions.
If adopted in its current form, an owner, operator or booking platform that advertises or facilitates short-term letting contrary to the By-law, fails to display a valid registration number, uses a cancelled registration number or otherwise fails to comply with the By-law could commit an offence.
The draft currently provides for a fine, imprisonment for up to six months, or both, upon conviction.
That makes this more than simply an administrative registration exercise. Property owners who operate short-term accommodation will need to take the requirements seriously if the By-law comes into effect.
What should property owners do now?
The By-law is still a proposal and the public participation process has not yet concluded. Property owners therefore do not need to rush to change their arrangements based solely on the draft.
However, if you currently operate an Airbnb or other short-term rental, this is a good time to:
Review how frequently your property is made available for short-term letting.
Determine whether you could potentially exceed the 50% annual room-night threshold.
Check your property’s current municipal rates classification.
Review the rules of your homeowners’ association or body corporate, particularly if the property is situated in a sectional title development.
Keep records of your short-term letting availability and bookings.
Consider how a possible move to commercial property rates could affect the profitability of your investment.
Keep an eye on the final wording of the By-law and the City’s implementation timetable.
It is also important to remember that a City registration number would not necessarily override other restrictions that may apply to a property, such as zoning requirements, sectional title rules or homeowners’ association rules.
Have your say
The City of Cape Town has invited residents, property owners, operators and other interested parties to comment on the proposed Short-Term Letting By-law.
Public comments are open until 5 October 2026 and can be submitted to the City via its public participation channels or by email to STL@capetown.gov.za.
The proposal is an important development for Cape Town’s property market. Short-term letting has become an increasingly significant part of the city’s tourism economy, but it also raises questions around housing availability, neighbourhood impact and fairness between residential property owners and commercial accommodation businesses.
For now, the key message for property owners is simple: Airbnb is not being banned, but the days of treating a full-time short-term rental simply as an ordinary residential property may be changing.
As the public participation process progresses, property owners should stay informed and understand how the proposed rules could affect both the use and the costs associated with their property.