Property owners renting out accommodations for short-term stays in Cape Town may face a significant increase in municipal property rates, which is set to take effect from July 2027 under a proposed new by-law.
The City of Cape Town plans to classify properties rented out for more than 50% of their annual capacity per room as commercial accommodation rather than residential property. This could lead to a substantial rise in monthly payments for hosts who actively use their properties for short-term rentals for most of the year.
For instance, the publication GroundUp used the City's rate calculator to compare central city property valued at 2.8 million rand. Current rates for residential property are approximately 1274 rand per month, whereas in the commercial category, they reach 3945 rand per month. This represents an increase in expenses of 2671 rand monthly, equivalent to over 32,000 rand annually.
The proposed regulations also require all properties listed on booking platforms to register with the City and display the municipality's short-term rental registration number in their listings. Furthermore, booking platforms, owners, and operators must provide information regarding the availability and occupancy of the properties.
However, not all hosts will be affected equally. The City states that commercial rates will not apply to those who occasionally rent out part of their home for extra income, and properties rented out for no more than 50% of annual capacity may remain classified as residential.
These changes come against the backdrop of continued growth in the short-term rental market in Cape Town. According to data from Inside Airbnb, cited by GroundUp, there are over 27,000 Airbnb listings in the city, nearly 6,000 of which are located in the city center.
The City asserts that the goal of the proposed by-law is to ensure that properties used as commercial accommodation pay the appropriate taxes while continuing to support short-term rentals as part of Cape Town's tourism economy. For hosts, the deadline to monitor is October 5, 2026, when the public comment period for the draft by-law concludes.