Commercial Short-Term Letting compliance updates to City Rates Policy
16 April 2026
Cape Town’s Rates Policy requires that commercial property rates be paid for premises used for commercial short-term letting. This does not apply to people supplementing their income by renting out some of their residence for some of the time, or for long-term rentals. To improve compliance for commercial short-term letting properties incorrectly paying residential rates, a Short-Term Letting By-Law draft will go out for public participation in due course. In preparation, the City’s proposed Rates Policy 2026/27 includes by-law related updates tabled as part of the draft Budget process.
The forthcoming By-law aims to improve compliance with the City’s existing Rates Policy, which already requires that commercial property rates be paid for premises used for commercial short-term letting. Commercial rates do not apply to people part-time letting some of their residence to supplement income, or to long-term rentals, as these properties are considered the primary residence of the tenant.
To improve compliance for commercial short-term letters, the By-Law will propose mechanisms for the City to source data on a property’s short-term letting availability directly from online letting platforms.
The By-law will further outline the process for determining if a residential property’s short-term letting availability ratio exceeds 50%, in which case the property will be categorised as ‘business and commercial’ by the Municipal Valuer.
The 50% ratio is arrived at by calculating the portion of nights a property’s total bedrooms are available for short-term letting over a 365-day period. This calculation is now set out in the 2026/2027 Rates Policy draft ahead of the proposed By-law.
Over time, the City has been working to systematically identify commercial short-term letting properties where residential rates are incorrectly being paid instead of commercial rates.
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.
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 using a property for commercial short-term letting paying the correct rates category required of a commercial business - as hotels, guesthouses, and BnBs already do.
Public participation on the proposed By-Law will be announced in due course, and the City is further engaging with stakeholders.
In the interim, the amended Rates Policy is available for public comment until 30 April 2026 as part of the broader City Budget public participation process, see: https://www.capetown.gov.za/City-Connect/Have-your-say/Issues-open-for-public-comment/draft-budget-for-2026-2027 .
For more information on the envisaged Short-term Letting By-Law and related Rates Policy updates, please see https://resource.capetown.gov.za/cityassets/Media%20Centre%20Assets/CCT-short-term-letting-FAQs.pdf
Published by:
City of Cape Town, Media Office
