Big changes for Airbnb and short-term rentals coming for South Africa – what you need to know

The Department of Tourism has confirmed that it is finalising the policy framework regulating short-term rentals in South Africa – which could have far-reaching effects on short-term letting owners, local residents, and the broader real estate market.

The rapid rise of short-term rentals in South Africa, led by platforms like Airbnb, has been met with mixed reactions.

While the sector has flourished (with Airbnb alone contributing billions to the local economy), the lack of clear regulation has led to growing concerns over the market’s housing affordability, competition with traditional hospitality, and the impact on local communities.

Looking at Cape Town in particular (which sports more Airbnb listings than tourist hotspots like San Francisco, Amsterdam, Berlin and Sydney), data analyst Melville du Plessis told BusinessTech that the availability of short-term rentals in the tourism-heavy city exponentially outstrips that of long-term rentals.

Du Plessis argues that the proliferation of short-term rentals targeted for foreign tourists due to its lucrativeness “inflates rental prices to a point where locals can’t compete.”

However, this is a claim that Airbnb strongly opposes.

Regardless, this is not a new argument.

In response to public pushback, Barcelona, for example, plans to ban short-term rentals like Airbnb by 2028, citing rising living costs and a housing crisis.

Barcelona mayor Jaume Collboni aims to convert 10,000 such rentals back into long-term housing.

At the tail-end of 2023, the South African government announced plans to regulate Airbnb and other short-term rental platforms.

In response to questions posed by BusinessTech, the Department of Tourism (DoT) confirmed that it “is finalising the tourism policy framework which will provide guidance on issues relating to short-term rentals,” to strike a balance between supporting tourism and addressing the abovementioned issues.

“The impact of the sector not being regulated includes, amongst other things, unfair competition for the regulated accommodation providers operating in the same space with short-term rentals and regulatory uncertainty for short-term rentals,” said DoT spokesperson Tasneem Carrim.

The DoT recently gazetted the White Paper on Tourism, which states that “short-term rentals will be regulated so they can be brought into the mainstream of the tourism economy while minimising negative impacts on existing businesses and jobs.”

It “proposes a differentiated approach to regulating short-term rentals,” appreciating both the benefits and negative impacts of the sector, said Carrim.

“It further calls for the implementation of thresholds on unregulated short-term rentals in line with international practices.

“The thresholds will be determined during the process of developing regulations in consultation with the tourism stakeholders to ensure a proportionate regulatory response,” added Carrim.

Airbnb itself has called for a national host registration system to improve oversight and data for regulation.

In 2023, Airbnb signed a memorandum of understanding with the DoT to strengthen collaboration.

Short-term rentals play an increasing role in South Africa’s tourism economy, but “insufficient information is available about the unregulated Short Term Rental subsector, and this hampers informed policy decision making,” said Minister Patricia de Lille.

“Access to the Airbnb data can only assist in informing better decisions,” added the Minister.

Airbnb supported the push for a national host registration system to improve transparency and enable cities like Cape Town to implement targeted regulations based on clear evidence.

The company said that supports balanced, evidence-based regulations, emphasising the importance of simplicity and fairness.

However, it warned against rushed regulations that could severely harm local economies, particularly the income of hosts who rely on these rentals to afford living in their areas.

What does this mean in simple terms?

In simple terms, Grant Smee, CEO of Only Realty Property Group explained that this legislative push is to “better manage the market’s impact on housing availability and affordability, particularly in tourist-heavy cities like Cape Town.”

The proposed framework would empower the Minister of Tourism to, among other things, limit the number of days a property can be rented through platforms like Airbnb.

“This regulatory move aligns with similar global efforts to balance tourism growth with the needs of local residents and addresses growing concerns around housing affordability and availability, the impact on traditional hospitality, regulatory and tax concerns, safety and job security,” said Smee.

What restrictions could mean for short-term letting owners

Smee believes that while little is known about the true impact on owners (and the short-term letting industry as a whole) he does speculate that over time may start to hamper buy-to-let property demand as restrictions tighten.

“With a succession of interest rate cuts underway, now is the ideal time for investors to purchase short-term letting properties,” said Smee.

“However, uncertainty around the new legislation is bound to have an effect on the market,” he added.

There are several potential impacts identified by the Only Realty Property Group CEO, which include:

• Income impact:

Stricter limits on the number of rental days per year or restrictions in certain areas would reduce the overall income potential for short-term rental property owners.

“Those who depend on this income as a primary or supplementary source could see a notable financial impact,” said Smee.

• Increased operational costs:

New regulations may require owners to obtain licenses, comply with zoning laws and adhere to safety and health standards.

“Meeting these requirements may involve added expenses such as application fees, property upgrades, or inspections which would cut into profit margins,” said the Only Realty Property Group CEO.

• More competition:

Smee adds that if restrictions are implemented to limit the number of rental days, owners may face greater competition during high-demand periods.

“This could lead to higher vacancy rates in off-peak seasons and might affect the pricing structure as more owners compete for guests within the limited available rental periods.”

Shift to long-term rentals:

For some owners, stricter short-term letting restrictions may make long-term rentals more appealing or necessary.

“While long-term leases offer more stable income, they may generate less revenue than short-term rentals – especially in popular tourist areas,” said Smee.

• Property devaluation: 

Smee speculates that in regions where short-term rentals are a primary driver of property values, restrictions could lead to a decrease in demand, potentially impacting property prices.

Going forward

Smee said that overall, it could help to reduce noise, crowding and housing shortages.

“In areas like Cape Town where prices are skyrocketing, some restrictions may be welcomed by locals as they look to get a foot on the property ladder – particularly with more interest rate cuts forecast,” he said.

“It will certainly be interesting to see how the industry navigates the changes and if it will in fact have the impact that some may anticipate” added Smee.

Read: South Africa’s top tourist hub – and it’s not the Western Cape