The short-term and Airbnb property rental sector plays a critical role in the Cape economy by supporting the growing tourism industry which is a key job creator and GDP contributor.
While these properties offer the potential of lucrative returns for investors and property owners/landlords, the sector has come under increasing scrutiny amid a shortage of affordable rental accommodation in certain areas across the City.
This has led to calls for regulation and there are now two proposed regulations in the pipeline which property owners, landlords and potential rental investors should take note of.
New Regulations for Short-Term and Airbnb Rentals
Firstly, the City of Cape Town has introduced a proposed 2026 Short-Term Letting By-law aimed at regulating residential properties used for short-term rentals which will effectively result in those operating primarily as businesses having to pay commercial property rates which could mean a cost increase of up to 135%. It is currently in the draft stage.
Secondly, the Department of Tourism gazetted an STR Draft Code (Code of Good Practice for Short-Term Rentals) on the 13th of March 2026. This interim framework requires hosts to act in good faith by informing guests of municipal bylaws and body corporate rules regarding noise or parking, while mandating that online platforms provide guest identity data to hosts to enhance security. This may also potentially involve added administration and costs.
Potential Impact of these Regulations
Increased Municipal Costs. Property owners and landlords whose properties will be deemed as primarily used for businesses will be required to pay commercial rates which could result in rates increases of up to 135%. This could involve additional administration and the higher cost could impact rental rates as it will be an additional property cost to contend with.
Regulatory Formalisation. The introduction of a Code of Good Practice by the Department of Tourism suggests a move towards greater oversight. Investors will be required to align more closely with formal hospitality standards and local bylaws which will add to the administrative burden and costs of compliance.
Mandatory Guest Data Sharing. Under the STR Draft Code gazetted on the 13th of March 2026, online booking platforms will also be required to provide guest identity data to hosts to improve overall safety and security within the sector.
Outlook for Short-term/Airbnb Rentals and Investments Remains Positive
On the upside, tourism remains a significant growth sector for the Cape and overall economy. It is a growing sector with the international airport recording a record-breaking 11.1 million two-way passengers in 2025, reflecting a 7% increase in both domestic (7.8 million) and international (3.3 million) travellers compared to 2024.
Most short-term rentals/Airbnb properties see strong occupancy rates during peak periods such as the summer months or when major events are hosted such as sporting or big conferences at the CTICC.
This results in high demand for short-term accommodation, and while this remains a drawcard for property investors, the benefit of a rental investment is that there is always the option of taking on long-term tenants should the need arise.
Seeff offers a comprehensive rental service with skilled area specialists who offer unique insights into local markets to provide the best guidance and rental solution to property owners, landlords and investors.
Contact your local Seeff Southern Suburbs and Constantiaberg agent/s today.