09 February 2026
Source: Published by: City of Cape Town, Media Office
All premises primarily used for commercial accommodation businesses (including short-term letting) are required to pay commercial property rates under the City’s existing Rates Policy. To improve compliance, a draft Short-Term Letting By-Law will soon go out for public participation.
Fun Facts:
Not applicable to primary residences that do some short-term letting, or to long-term letting – residential rates still apply.
The aim is fairness: commercial short-term letting operations must pay commercial rates under the City’s existing Rates Policy.
Not a new tax or rates increase on all short-term letting properties, but rather a measure to improve compliance with the existing Rates Policy.
Thorough stakeholder engagement and guidance will be available to the sector throughout the public participation process and beyond.To improve compliance with the existing Rates Policy, a draft Short-Term Letting By-Law will go out for public participation in due course. The proposed by-law will make it harder to game the system by only paying residential rates while operating a commercial short-term letting enterprise.
Under the City’s existing Rates Policy, all premises primarily used for commercial accommodation businesses (including short-term letting) are required to pay commercial property rates.
This does not apply to properties mostly used as a primary residence with some short-term letting, for whom residential rates continue to apply. Furthermore, long-term rental is also not considered a commercial enterprise as the property is used as a primary residence by the tenant.
Over time, the City has been working to systematically identify non-complying properties where residential rates are incorrectly being paid.
The proposed by-law will aim to take these efforts a step further to improve Rates Policy compliance and ensure fairness in the accommodation sector.
Some compliance matters looked at:
– sourcing occupancy and availability data directly from short-term letting platforms to determine the primary use of a residence
– engaging with those whose occupancy data shows they should be paying commercial rather than residential rates
Further details, including the full draft by-law and public participation schedule will be made available after following all due Council process.
In the interim, the City encourages short-term letters not to wait until new measures are introduced to promote compliance, but rather to approach the City now to ensure the correct commercial rates category is paid on residences primarily used for short-term letting.
The City continues to support the tourist economy in the strongest terms and regards short-term letting as an important sector for servicing diverse tourist needs.
However, the City believes that the playing fields for businesses should be equal, with all those running short-term letting enterprises paying the correct rates category required of a commercial business.
Incorrect media reporting
The proposed draft By-law does not introduce a new tax or a tax hike as incorrectly reported by some media, but rather a measure to improve compliance with the City’s existing Rates Policy, which already requires short-term letters to pay commercial rates for properties primarily used for this purpose.
Only those who currently don’t comply with the existing City Rates Policy could experience an increase if they operate a commercial enterprise but are currently paying residential rates.
End
Published by:
City of Cape Town, Media Office
