Cape Town's Airbnb by-law: what buy-to-let buyers must know

Cape Town is not banning Airbnb, but its draft Short-Term Letting By-law would change the maths of buying an apartment to let to tourists. Every listing would need a City registration number. A primary residence made available for short-term letting for more than 50% of its annual room nights would be rated as commercial instead of residential, and a flat the owner does not live in is treated separately and is likely to be rated commercial whatever its availability. As at 7 November 2026 the by-law is still a draft and nothing in it is in force.

Where the by-law stands today

The City opened the draft for public comment from 5 August to 5 October 2026. The National reports that the process drew 1,467 submissions and that the City will assess them before it considers amendments. We could not find a final version or an adoption date.

Two things are separate. The Rates Policy, which already says commercial short-term letting should pay commercial rates, was amended in the 2026/27 budget process. The by-law is the registration and data-sharing machinery meant to enforce it. The City says it foresees moving identified properties onto commercial rates from 1 July 2027. The draft by-law leaves the grace period for its registration duties to a later notice.

What the draft would require

According to the City's FAQ, every property listed on an online booking platform would have to register and display a City-issued registration number on its listing. Platforms would have to remove any listing without a valid number, and would share availability and occupancy data with the City for registered properties.

The City says its intention is not to restrict short-term letting but to make sure commercial operators pay the same rating category as hotels, guesthouses and B&Bs. It also says tariffs themselves do not change and that the change does not affect your tax obligations to SARS.

How the 50% room-night test works

The 50% test is the City's gate for primary residences, meaning homes where the owner lives. The City multiplies the number of bedrooms by 365 to get a property's total annual room nights. It then adds up the nights each bedroom is listed as available and divides by that total. Above 50%, the property is commercial. At exactly 50% it stays residential, as the City's own example of a retiree letting one bedroom of a two-bedroom flat all year shows.

• One-bedroom flat: 365 room nights a year. Listed for the whole year, it scores 100% and is commercial (the City's own example).

• Two-bedroom flat: 730 room nights. Let for two summer months (62 nights per room), it scores 17% and stays residential.

• Our arithmetic for a one-bedroom flat: more than 182.5 listed nights tips it over, so about 183 nights or more. The City does not publish this figure itself.

What commercial rates could do to your net yield

The City's June 2026 rates schedule sets the 2026/27 residential rate-in-the-rand at 0.007010 and the business and commercial rate at 0.016910, a ratio of 1:2.41. Rates are charged on the municipal valuation, not your purchase price. Earlier press reports quoted 1:2.35, which was the March tabled figure; the adopted one is 1:2.41.

Here is a simple example, before any rebates, for a flat with a municipal value of R2.5 million:

• Residential: R2,500,000 × 0.007010 = R17,525 a year.

• Commercial: R2,500,000 × 0.016910 = R42,275 a year.

• Difference: R24,750 a year, or about R2,063 a month. If the valuation is close to the price, that is roughly one percentage point off your gross yield.

The City's residential reduction (R605,000 in the June 2026 schedule) is for owners who use the property as their primary place of residence, so a pure investor should not count on it. Your own bill depends on the valuation and the rebates you qualify for, so ask the City or your conveyancer for the actual figures.

The catch for investors: a flat that is not your home

The City's examples mostly describe owners who live in the property. But question 3 of its FAQ gives two routes to commercial status: (a) properties that are not primary residences and are used for commercial short-term letting, or (b) primary residences used or available for short-term letting for more than 50% of room nights. The 50% test belongs to route (b) only. A buy-to-let apartment that you will never live in sits under route (a), and the City's rates policy has long treated accommodation property that is not a primary residence as commercial accommodation.

So if you buy to let short-term, assume your flat could be rated commercial from day one, whatever its availability. The City has not published how it will tell "commercial" short-term letting from occasional letting of a non-primary home, so this is not settled. Ask your attorney to check the adopted 2026/27 Rates Policy wording and to confirm the rating category in writing before you rely on a residential rating.

For sectional title, the City says units are assessed one by one. In a block where owners are treated differently, your rates category depends on your own unit's use and listing history.

The rules the by-law does not cover

Body-corporate rules. The City says body corporates and homeowners' associations can set their own short-term letting rules and that it does not regulate them. A scheme can restrict Airbnb even where the City allows it, and a permissive scheme does not exempt you from City registration. Read the conduct rules and ask for the scheme's current position in writing before you buy.

Zoning. The City says there will be no zoning change and that the Municipal Planning By-law already allows short-term letting. Title conditions and the scheme's own rules still need checking.

Income tax. Rental income is taxable whatever the rates category. Speak to a tax practitioner about how to treat it.

Where this bites hardest

The market is large. The Outlier, using Inside Airbnb data and quoted by The National, counted 26,877 Airbnb listings in Cape Town in September 2025, up from 20,583 in September 2023. Many are in the inner city and along the coast, so the by-law will matter most to buyers looking at the Atlantic Seaboard and the City Bowl. We have no developments listed in these areas yet, so check each new project's own letting rules.

Questions to ask before you buy

• Do the scheme's conduct rules or the developer's title conditions allow short-term letting? Get the answer in writing.

• What is the likely municipal valuation, and what would the bill be at the commercial rate?

• Does the yield still work with commercial rates, and with a long-term tenant on residential rates?

• Is the seller's or developer's projected income based on short-term letting of a flat you will not live in, and has anyone confirmed the rates category in writing?

• Who will handle registration and platform compliance: you, or a management company?

The long-let fallback

The City says properties on long-term leases stay residential because the tenant lives there. If commercial rates make short-term letting marginal, a long let is the fallback. It usually earns less per night but carries lower running costs and fewer void periods. Work out both before you commit.