If you operate a hotel in Cape Town, you are expected to behave like a business. Pay commercial rates. Meet fire and life-safety requirements. Comply with labour legislation. Carry appropriate insurance. Contribute to the tourism economy.
But if you own an apartment and rent it to tourists for six months of the year, the City of Cape Town is proposing that you can continue enjoying residential property rates.
Read that again.
Six months of commercial activity. Residential treatment. And we’re calling this regulation?
The City’s proposed short-term letting framework is meant to bring order to a market that has grown rapidly, often with little distinction between genuine home-sharing and professional accommodation businesses. The intention is commendable. The execution raises an uncomfortable question: is the City serious about regulating short-term letting, or simply trying to look like it is?
A 50% threshold doesn’t meaningfully distinguish a home from a commercial accommodation business. It gives commercial operators a generous runway before they face the same rates classification as other businesses. And those who benefit most aren’t ordinary Capetonians earning a little extra income. They’re the people who have turned residential property into accommodation portfolios.
Let’s stop pretending this is all about homeowners.
The romanticised version of Airbnb is familiar: a young couple rents out their apartment over December to help pay the bond. I have no issue with that. Genuine home-sharing has a valuable place in Cape Town’s tourism economy.
But let’s not confuse it with the commercialisation of residential housing. According to The Outlier, fewer than one in twelve Cape Town hosts control 40% of the city’s listings. Nineteen operators manage more than 50 properties each. Fifty properties. That’s not home-sharing. That’s a hotel portfolio without the hotel sign.
Under the proposed threshold, a qualifying property could be let to tourists for approximately 183 nights a year while retaining residential rates. I struggle to understand how anyone can call that incidental residential use, or why the City would consider it appropriate.
The City has already identified the problem. As reported by GroundUP, its own spatial planning work found that 70% of residential units in parts of the inner city were either hotel-managed or listed on Airbnb. Residential neighbourhoods are becoming commercial accommodation precincts, squeezing long-term rentals and the ability of ordinary people to live close to where they work.
You cannot acknowledge the commercialisation of residential housing on one page of a policy document and effectively subsidise it on the next.
Twenty percent. Not fifty.
I believe the threshold should be 20%, approximately 73 nights a year. Seventy-three nights provides flexibility. One hundred and eighty-three nights provides a business model.
At 20%, homeowners can still make meaningful use of their properties: summer holidays, major events, time away. Nobody is suggesting a family be penalised for occasionally letting its home. But when a property is consistently marketed to paying guests, the intention has changed. It has become an income-generating accommodation asset.
The threshold should also be based on availability, not occupancy. A hotel doesn’t stop being a hotel because its rooms are empty on a Tuesday evening. An apartment marketed to tourists for 200 nights isn’t primarily residential simply because only 120 were sold. Availability demonstrates commercial intention. Occupancy merely demonstrates commercial success.
And the City should aggregate availability across every booking platform, listing account and direct-booking channel, or sophisticated operators will structure around the rules.
Other cities have been willing to make difficult decisions. London limits short-term letting of entire homes to 90 nights annually without additional planning permission. Paris has moved to a 90-night limit for primary residences. Amsterdam has a 30-night limit. New York generally requires hosts to be present for stays under 30 days. Barcelona plans to phase out tourist-apartment licences by 2028. Their rules are not directly equivalent to Cape Town’s proposed rates threshold, but they share a recognition that letting residential properties as commercial accommodation without meaningful controls carries consequences. Being competitive doesn’t mean being permissive.
This isn’t about hotels fearing competition. That’s a convenient argument, and a lazy one. I welcome competition. Independent hotels, international brands, guesthouses, serviced apartments and short-term rentals all enrich Cape Town’s offering, and the market will choose. But choice for consumers shouldn’t mean different rules for businesses competing for the same consumer.
Hotels carry these obligations at real cost, and rightly so. Our own HAMAC South African Hoteliers Report found that 58% of hoteliers reported profits at the same level or worse than five years earlier, with labour, utilities and regulatory burdens among the biggest pressures. Meanwhile, many short-term rental operators don’t participate in the voluntary 1% TOMSA tourism levy that funds destination marketing, yet benefit from the same promotion, infrastructure and demand.
Regulation should be proportionate to scale and risk, but proportionate is not the same as preferential. The activity, not the business model, should decide whether the rules apply.
The City’s proposals for registration, listing identification and platform data-sharing are sensible, and I support them. But I cannot support a framework that recognises the problem and then draws the line so generously that significant commercial activity continues under residential rates. The City should lower the threshold to 20%, measure availability across all channels, protect genuine primary residences, address the disparity in safety, taxation and tourism obligations between operators, and be transparent about who benefits from the threshold it chooses.
The question isn’t whether Cape Town should embrace short-term letting. Of course it should. The question is whether we can distinguish between someone sharing their home and someone running a commercial accommodation business from residential property. A home rented occasionally is a home. A property marketed to tourists for half the year is a business.
Cape Town doesn’t have a shortage of proposed regulations. It has a shortage of political courage to distinguish a home from a hotel.
By Anton Gillis, CEO of HAMAC and Platinum Hospitality Holdings
