Airbnb, Booking.com Rentals in Cape Town Face Tax Hike
Airbnb, Booking.com Rentals in Cape Town Face Tax Hike as the City moves to more than double municipal rates on properties mainly used for short-term rentals. The policy aims to alleviate pressure on Cape Town’s strained housing market and rising rents.
With an estimated 26,000 short-term rental units listed on Airbnb alone, Cape Town now surpasses global cities like Barcelona, Amsterdam, New York, and Hong Kong in short-term accommodation density. The decision highlights a growing tension between tourism, investment, and local housing needs.
Cape Town Housing Crisis Spurs Policy Change
The Cape Town housing crisis has intensified as demand for long-term rental stock far outpaces supply. Mayor Geordin Hill-Lewis explained that full-time short-term rental operators will now be charged commercial tariffs similar to hotels and guesthouses, potentially raising rates by up to 135%.
“The City is introducing this bylaw to identify commercial operators versus occasional hosts who rent a room or garden cottage,” said Hill-Lewis at a live event last week. “Properties listed for more than 60% of the year and fully available for booking are very likely commercial operations and will face higher tariffs.”
This measure seeks to redirect some properties back to long-term rentals, easing the burden on residents seeking affordable housing. Experts warn, however, that higher rates alone may not immediately expand supply, as market dynamics and enforcement play a crucial role.
Understanding the Airbnb Tax Cape Town and Booking.com Rentals Hike
Commercial Tariffs for Rentals
The new policy introduces commercial tariffs for rentals, equating full-time short-term operators with hotels for tax purposes. This is intended to close the loophole allowing properties to operate as de facto hospitality businesses without contributing appropriately to municipal revenue.
According to Nathan Scott, founder of The Real Estate Route, the intervention comes at a time when the city’s rental market is under strain. “It is a very grey area at the moment as to what defines a private host,” he said. Scott estimates that while there are around 26,000 listings, only 15,000–18,000 are actively generating bookings.
Impact on Short-Term Rental Rates
The policy could increase short-term rental rates as operators pass costs to consumers. While tourism may not be significantly affected, everyday travellers could see higher prices on platforms like Airbnb and Booking.com. The City maintains that the move is not anti-tourism but rather a tool to manage housing resources responsibly.
How the City Plans to Distinguish Business from Side Hustle
The City plans to enforce a threshold whereby properties operating more than 60% of the year and listed entirely for short-term bookings will be automatically classified as commercial. This move is meant to prevent small-scale hosts supplementing income from being unfairly penalised while ensuring full-time rental businesses contribute their fair share.
“Your granny renting out a spare room won’t face commercial tariffs, but properties operating year-round will,” explained Hill-Lewis. “We want to support residents, not deter tourism.”
This distinction is central to the Airbnb tax Cape Town initiative, balancing municipal revenue needs, housing availability, and tourism growth.
Housing Market Implications
Pressure on Long-Term Rentals
The ongoing Cape Town housing crisis has forced local authorities to act. Short-term rentals effectively reduce the number of units available for long-term residents, driving up rents across the city. By imposing commercial tariffs for rentals, the City hopes some investors will return properties to the longer-term rental market.
Nathan Scott warned that policy impact depends on enforcement. “Higher taxes may influence behaviour, but whether properties actually return to long-term use depends on compliance and exemptions,” he said.
Tourism and Investor Response
Despite fears, the policy is unlikely to deter tourism. Cape Town continues to attract visitors, digital nomads, and international tourists. Operators may simply adjust rates to absorb higher municipal charges, maintaining profitability while supporting municipal objectives.
“This intervention is about nudging investors back into long-term rentals without harming the tourism economy,” said Scott.
Short-Term Rentals: Definition and Challenges
Under current regulations, short-term rentals are defined as leases under three months. Foreign owners who occupy properties part of the year and list the rest for short-term lets fall under this classification. Critics argue this removes housing stock from the local market, particularly when profits flow offshore.
The City’s bylaw intends to require platforms like Airbnb and Booking.com to provide detailed listing data, ensuring accurate application of Booking.com rentals hike and other related measures.
Debate: Will Higher Rates Cool the Market?
The debate now focuses on whether commercial tariffs for rentals will genuinely increase long-term rental availability. Some experts suggest operators will pass costs to guests, maintaining short-term rental profitability. Others believe higher taxes will incentivise property owners to return units to the long-term market, helping ease rental shortages.
The City has yet to announce full details, but the bylaw is expected to be tabled in the coming months. It will clarify thresholds, exemptions, and enforcement strategies.
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Conclusion
The announcement that Airbnb, Booking.com Rentals in Cape Town Face Tax Hike marks a pivotal step in addressing the city’s housing shortage while balancing tourism growth and investment. With the new Airbnb tax Cape Town measures, full-time operators will pay commercial tariffs, potentially raising short-term rental rates and influencing investor behaviour.
How property owners respond, and whether enforcement ensures compliance, will determine if this intervention effectively increases long-term rental availability. Meanwhile, the City seeks to maintain a thriving tourism sector while tackling one of Cape Town’s most pressing social and economic challenges: the Cape Town housing crisis.
Mainstream Media References
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Bloomberg News — Airbnb, Booking.com Taxes to Rise in Tourist Haven Cape Town
This article details Cape Town’s plan to significantly increase municipal rates on short‑term rentals like Airbnb and Booking.com and apply commercial tariffs, aiming to ease the local housing pressure. Airbnb, Booking.com Taxes to Rise in Tourist Haven Cape Town (Bloomberg) -
2oceansvibe News — Airbnb Rates Set to Soar in Cape Town as Landlords and Locals Clash Over Housing
Coverage focuses on the City of Cape Town’s intention to more than double municipal rates on properties used for short‑term lets, linking the move to housing affordability challenges. Airbnb Rates Set to Soar in Cape Town (2oceansvibe)
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