Cape Town is a tourism city. Short-term letting is part of its economy, creates income for households and businesses, and gives visitors access to accommodation beyond the traditional hotel sector.

But Cape Town is also a city facing significant housing affordability and rental-supply pressures.

These two realities need not be in conflict. However, they do require a more sophisticated approach to regulating short-term letting (STL) than simply determining when a property should be treated as commercial for municipal rating purposes.

Communicare therefore welcomes the City of Cape Town’s proposed Short-Term Letting By-law and supports its objectives around registration, transparency, data collection, platform accountability, and enforcement.

We further believe the proposed by-law presents a much bigger opportunity.

Short-term letting is not only a rates issue. It is a housing issue.

Where a resident occasionally lets out a room in their home or temporarily lets their primary residence while they are away, the impact on the housing market is fundamentally different from that of an investment property operated year-round as tourist accommodation. The regulatory framework should recognise this distinction.

Not all short-term letting is the same

The debate about STL can easily become polarised between those who see it as an economic opportunity and those who see it as a threat to housing affordability. The reality is more nuanced. There is a meaningful difference between:

• genuine home-sharing, where a resident lets a room or part of their home while continuing to live there;
• occasional whole-home letting, where someone temporarily lets their primary residence while away;
• non-primary-residence STL, where a property is not the operator’s genuine home; and
• predominantly commercial STL, where a property effectively operates as tourist accommodation or part of a commercial accommodation business.

These forms of STL should not automatically be regulated in the same way.

Genuine home-sharing can provide supplementary household income without necessarily taking an entire dwelling out of the long-term rental market.

A property that is effectively operated as a full-time short-term accommodation business is different.

The greater the extent to which a property is removed from the permanent residential market, the greater its regulatory obligation should be.

This principle would allow Cape Town to support legitimate tourism and household income while taking action where residential properties are increasingly being converted into commercial tourist accommodation.

The City already has a housing policy mandate

This is not a new consideration for Cape Town. The City’s Human Settlements Strategy already recognises that short-term rental platforms can influence rental opportunities and commits the City to considering a policy response that creates broader benefit within the housing system.

The proposed by-law provides the City with an important mechanism to gather the information needed to make that policy commitment meaningful.

The opportunity now is to connect STL regulation with the City’s broader human-settlements objectives.

That means asking not only, “Is this property being operated commercially?” but also, “What is happening to the housing stock around it?”

Data should tell us where the pressure is

The registration system envisaged in the by-law could give Cape Town a much clearer picture of the scale and concentration of STL.

At a minimum, the City should be able to understand:

• where STL properties are located;
• whether they are primary or non-primary residences;
• whether an entire dwelling or only part of it is being let;
• how many days properties are available for STL;
• the concentration of STL within buildings and neighbourhoods;
• how that concentration changes over time; and
• how these patterns relate to indicators of housing pressure.

That information should be assessed alongside long-term rental availability, rental affordability and rental growth, residential occupancy, and other evidence of displacement. This would enable the City to move from assumption to evidence.

A 50% threshold cannot tell the whole housing story

Communicare supports retaining the proposed 50% annual room-night threshold for its intended purpose – determining whether an individual property should be classified as Business and Commercial for rates purposes.

But rates classification and housing-impact assessment are not the same thing.

A property could fall below the 50% threshold and still contribute to a concentration of short-term letting within a particular building or neighbourhood.

Conversely, a property exceeding the threshold may appropriately be classified as commercial without that classification, by itself, proving housing displacement.

The two questions therefore need to be treated separately.

The City should use the data generated through registration to understand STL’s impact at property, building, neighbourhood, and city-wide levels.

Regulation should be proportionate and targeted

If evidence demonstrates that the concentration or intensity of STL is contributing to significant housing pressure in a particular area, the City should have the ability to respond.

That does not mean imposing a blanket ban on STL across Cape Town, but rather using proportionate, evidence-based interventions.

These could include limiting new registrations for non-primary-residence STL in areas experiencing significant housing pressure, while continuing to allow genuine home-sharing and primary-residence STL.

The City could also consider annual limits on whole-home STL, as well as building-level limits where an excessive concentration of short-term rentals is changing the character of residential developments.

The principle is straightforward: regulate the impact, not simply the activity. Cape Town is not one housing market. Housing pressures differ between neighbourhoods, and regulation should be capable of responding to those differences.

International examples demonstrate that geographical differentiation is possible, with jurisdictions such as London and Amsterdam applying limits or controls that vary according to the circumstances of the property or neighbourhood.

If commercial STL creates additional revenue, some of that value should support housing

There is another opportunity that deserves consideration.

Where residential properties become classified as commercial STL, the City may receive additional rates revenue. The proposed framework should consider how that additional value can contribute to the housing system.

Communicare’s submission proposes that the City investigate whether a portion of additional STL-related rates revenue, and potentially fines and penalties, can be transparently reported and directed towards housing-related purposes.

That could include protecting existing residential stock, supporting affordable and social rental housing, housing research and monitoring, and enforcement designed to prevent excessive conversion of residential properties into commercial tourist accommodation.

This would create a stronger connection between the economic activity being regulated and the social challenge the regulation is intended, in part, to manage.

Protecting housing does not mean opposing tourism

This distinction matters.

Communicare is not advocating for a regulatory framework that undermines Cape Town’s tourism economy or prevents residents from earning supplementary income from their homes.

Nor should every short-term rental be treated as a threat to housing.

Our position is that a home that is occasionally shared is fundamentally different from a home that has effectively become a permanent tourist accommodation business.

Good regulation should be capable of recognising that difference.

Cape Town needs tourism. It also needs homes.

The policy challenge is to ensure that the growth of one does not unnecessarily come at the expense of the other.

The opportunity before Cape Town

The proposed STL by-law gives the City an opportunity to do more than improve registration and rates administration.

It can establish the foundations of an evidence-based framework that recognises the relationship between tourism, property use, and housing availability.

For Communicare, the principle is simple: legitimate home-sharing and tourism should be supported, while excessive commercialisation of residential housing should be appropriately regulated where it places pressure on the availability of homes for permanent residents.

Cape Town needs a short-term letting framework that is fair to residents, supportive of tourism, and responsive to housing realities.

Most importantly, it needs a framework that recognises that housing is not simply another asset class or another municipal rating category. It is where people live, build their lives, and participate in the city.

The STL by-law should help Cape Town manage its housing system in a way that protects that fundamental role.

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