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South Africa: The City of Cape Town is proposing closing a tax loophole for short-term rentals which would see them taxed the same as other short-stay accommodations instead of as residences.
The proposal targets residences used primarily as commercial properties. It would not affect residences which rent out rooms as short-term lets, classifying them as primarily residences, not commercial ventures.
ONLY Realty Property Group CEO Grant Smee estimated that there are 30,000 total short-term rentals in the city, 26,000 of them Airbnbs. The top six Airbnb portfolios in Cape Town own and control 681 total listings — 678 of those are entire houses or flats.
“Making sure they get the regulations and bylaws passed as quickly as possible to provide investors with a view on their properties is probably the best advice,” Smee said.
The City of Cape Town said it is conducting stakeholder engagement to cooperate with community members on the legislation. It encourages short-term rental owners and operators to come forward to pay correct rates before the law is implemented.
Following the example of some European countries, South Africa is working with Airbnb to develop a national registry of properties listed on their platform.
Highlights:
- The City of Cape Town is proposing a by-law to close a tax loophole, requiring properties used primarily as commercial short-term rentals to pay municipal rates at a commercial tariff rather than a lower residential rate.
- The proposed change would not affect homeowners who occasionally rent out a room in their primary residence or properties on long-term leases; it targets residences functioning as full-time commercial enterprises.
- Industry estimates suggest there are approximately 30,000 short-term rentals in the city, with 26,000 of those listed on Airbnb.
- The top six Airbnb portfolios in Cape Town control 681 total listings, 678 of which are entire homes or flats.
- The city is conducting stakeholder engagement and encourages short-term rental operators to come forward voluntarily to pay the correct commercial rates before the law is implemented.
- Following the example of some European countries, South Africa is working with Airbnb to develop a national registry of properties listed on the platform to improve compliance and oversight.
