Short-term property letting in South Africa remains unregulated as of March 2026, but Cape Town’s tourism recovery has prompted city officials to consider new by-laws that could significantly impact Airbnb operators.

The city is weighing regulations that would require properties used primarily for commercial short-term letting to pay municipal rates at commercial tariffs rather than residential rates – a change that could double some owners’ bills.

Grant Smee, CEO of Only Realty, said the push for regulation intensified in 2025 after a report revealed more than 26 000 Airbnb listings in Cape Town, ranking the city eighth globally for Airbnb supply.

“That figure of 26 000 listings is striking on its own, but what really fanned the flame was the finding that roughly 70% of residential units in Cape Town’s CBD are either hotel-managed or listed on Airbnb,” said Smee.

The findings have gained traction in a city facing a shortage of long-term rentals, where the median household income sits at around R14 000, while a basic CBD Airbnb studio costs roughly R36 000 for a 30-day stay.

Nationally, the Department of Tourism is exploring policies that could cap the number of days a property may be rented out each year to balance tourism demand with local housing needs. Other proposals include mandatory registration for all short-term rental properties and potential hospitality taxes.

The City of Cape Town is urging Airbnb operators to self-regulate and review their property’s rates classification. Officials are expected to use occupancy and availability data from platforms to determine whether properties function primarily as commercial short-term rentals.

“When residential properties begin operating like hospitality businesses – and generating significantly more revenue than they would by traditional long-term letting – it’s reasonable for municipalities to assess whether they should be treated like commercial operations,” Smee said.

He advised property owners to stress-test their investment assumptions and consider hybrid strategies that shift between short-term and longer-term rentals depending on market conditions.

Body corporates have already responded to the short-term rental boom, with many complexes banning such rentals over safety concerns.

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