City of Cape Town targets rate parity between Airbnb-style lets and hotels

Key topics:.Rates on short-term lets set to rise by about 135%Mayor Geordin Hill-Lewis says move aims to ease housing pressure.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Prinesha Naidoo and Antony Sguazzin.Cape Town plans to more than double municipal rates on homes that are rented out for short durations, including those listed on Airbnb Inc. and Booking.com, as a boom in private tourist accommodation drives up prices and stokes resentment among locals.South Africa’s second-largest city and the continent’s most expensive for real estate will introduce a bylaw in the coming months to ensure properties used primarily for short-term lets pay commercial tariffs on par with hotels and guest houses. About 26,500 housing units in Cape Town are listed in that category on Airbnb, more than double the number in Barcelona, Amsterdam, New York and Hong Kong, according to data aggregator InsideAirbnb. “We are correcting the imbalance in taxes,” Cape Town Mayor Geordin Hill-Lewis said in an interview this week. “An Airbnb is a decentralised hotel, so it has to pay the same rates and taxes a hotel does.” .The move will effectively raise the rates charged on the properties relative to their market value by 135%. Affordable rental accommodation in Cape Town, known for its natural beauty and outdoor lifestyle, has become increasingly scarce as owners opt to target the more lucrative short-stay market rather than long-term tenants. In 2025, a record 11.1 million passengers passed through the city’s main airport, while its cruise terminal welcomed 74 vessels with more than 170,000 passengers and crew. Home prices rose almost 30% in the five years through March 2024, data from the government statistics agency shows. The residential-property market is valued at some 1.2 trillion rand ($74 billion). The Democratic Alliance, South Africa’s second-biggest party, has led the coastal city of about 5 million people since 2006, with Cape Town consistently ranked as the best-run of the country’s eight major metropolitan areas. It has attracted thousands of families from other parts of the country where the provision of water, electricity and other basic services has sharply deteriorated. The relocation trend, known locally as semigration, has been the primary driver of competition for housing. Property in Cape Town still remains relatively affordable compared with other major global cities, a dynamic that has drawn foreign buyers and added pressure to the market by pushing up prices. That’s particularly evident in affluent areas including the Atlantic Seaboard, where prime apartments sell for an average of $5,800 per square meter, Henley & Partners data show. The planned bylaw will require platforms to share a list of short-term rentals advertised on their sites with local authorities, and talks suggest they will be willing to do so, Hill-Lewis said. The measure is “the next step in the process of ensuring that no one is able to game the system by paying residential tariffs while operating a commercial enterprise,” he said. .Other major cities have tried to limit short-term rentals in bid to prevent locals being priced out the market by tourists and digital nomads. In London and Paris, authorities have capped the length of time units can be rented out to 90 days annually, while hosts in some parts of California must apply for a controlled number of short-let permits. New York restricts letting for stays of fewer than 30 days and Barcelona has stopped issuing licenses, meaning legal short-term letting will end after 2028. “Market-manipulation tactics always have the same result – entrenching inequality by slowing the development of new accommodation stock,” Hill-Lewis said when asked why Cape Town opted for a different approach. Improving supply by making it easier to develop housing is among the city’s key policy measures, he said. Local authorities have accelerated the release of land that can accommodate 120,000 affordable units in areas close to economic opportunities, streamlined development approvals and provided incentives to companies building micro-flats in townships, he added. .Dedicated rentals listed on Airbnb account for 0.9% of all formal-housing units in Cape Town, a 2024 company report shows. Its hosts welcomed more than 700,000 guests in the city a year earlier, contributing about 14.4 billion rand to annual gross domestic product, it said. The municipality will be able to estimate how much additional revenues the new bylaw will bring in once a formal register is established, Hill-Lewis said. .© 2026 Bloomberg L.P.

City of Cape Town targets rate parity between Airbnb-style lets and hotels

Key topics:

Related Stories