The City of Cape Town has announced plans to release a draft short-term letting by-law for public participation in response to recent media reports about the taxation and regulation of Airbnb-style accommodation, saying the move is aimed at enforcing its existing rates policy – not introducing a new tax.
Under the current policy, all premises primarily used for commercial accommodation businesses, including short-term letting such as Airbnb, are required to pay commercial property rates.
The proposed by-law aims to strengthen enforcement and prevent properties operating as commercial enterprises from paying residential rates.
Cape Town stressed that the draft by-law does not apply to primary homes that do occasional short-term letting, nor to long-term rentals, which will continue to be charged residential rates.
It said the proposal will not involve a new tax or rates increase despite some media reports suggesting otherwise. Only those operators who are uncompliant with the rates policy could see higher charges if they are found to be operating commercial short-term letting businesses while paying residential rates.
To improve enforcement, the city plans to use occupancy and availability data from short-term letting platforms to determine how a property is being used and to engage with owners whose data indicates they should be paying commercial rather than residential rates.
Further details, including the full draft by-law and the public participation timetable, will be released once council processes are completed.
In the meantime, the city has urged Airbnb and other short-term letting operators whose properties are primarily used for guest accommodation to approach the city to ensure they are correctly classified for rates purposes.
The city said it supports the tourism economy and recognises short-term letting as an important part of Cape Town’s accommodation mix but added that all commercial accommodation businesses must compete on equal terms by paying the correct rates category.
