MAIN IMAGE: Grant Smee – CEO of Only Realty
Only Realty
Landlords need not fret just yet – as of March 2026, there are still no specific laws regulating short-term letting in South Africa. But thanks to Cape Town’s post-COVID tourism boom, there are increasing calls from policy makers, housing advocates and irate locals who’d like to see that change.
According to Grant Smee, CEO of Only Realty, while the rise of Airbnb has been raising concerns among body corporates for years – with many complexes banning short-term rentals over safety risks – pressure for a city-wide crackdown intensified in 2025 following the release of an explosive report revealing more than 26,000 Airbnb listings in Cape Town and ranking the city eighth in the world for Airbnb supply.
“That figure of 26,000 listings is striking on its own, but what really fanned the flame was the finding that roughly 70% of residential units in Cape Town’s CBD are either hotel-managed or listed on Airbnb,” says Smee.
“Consider the math: In a city already grappling with a severe shortage of long-term rentals, the median household income sits at around R14,000, yet a basic CBD Airbnb studio can cost roughly R36,000 for a 30-day stay. Small wonder the debate has caught fire among fed-up locals, and the City of Cape Town is listening.”
What changes the proposed regulations could bring
City officials are now weighing up a new by-law that would bring Airbnb operators in line with hotels. Under the proposal, properties used primarily for commercial short-term letting would be charged municipal rates at a commercial tariff rather than the lower residential rate – a shift that could see some owners’ rates bills double.
And Cape Town isn’t alone in tightening the screws. Nationally, the Department of Tourism is exploring policies that could cap the number of days a property may be rented out each year to balance tourism demand with local housing needs.
“Other proposals include mandatory registration for all short-term rental properties and the potential requirement that hospitality taxes be paid.”
Investors need to get ready for the new reality
“While these regulations are still in the proposal stage, many -myself included- see their implementation as inevitable,” adds Smee.
In the meantime, the City of Cape Town is urging Airbnb operators to self-regulate and review their property’s rates classification.
“But enforcement won’t rely on trust alone,” says Smee. “Officials are expected to use occupancy and availability data from Airbnb and other platforms to determine whether a property is functioning primarily as a commercial short-term rental and engage directly with owners whose data indicates that they should be paying commercial rates.”
Smee adds that this evolution of Cape Town’s short-term rental landscape is about compliance, not punishment.
“When residential properties begin operating like hospitality businesses – and generating significantly more revenue than they would by traditional long-term letting – it’s perfectly reasonable for municipalities to assess whether they should be treated like commercial operations instead,” notes Smee, adding that hotels already operate within strict regulatory and tax frameworks.
For investors, the real risk right now isn’t regulation – it’s uncertainty. “Property owners should begin stress-testing their investment assumptions. Ask yourself, if rates rise or occupancy limits are introduced, will the numbers still work?”
He adds that some investors may also need to consider hybrid strategies, shifting between short-term and longer-term rentals – depending on market conditions.
“Ultimately, the advice is simple: the investors who succeed in this market will be those who adapt quickly to the evolving regulatory landscape, rather than waiting for the dust to settle” he concludes.
