Cape Town is about to reshape the economics of short-term rentals. Mayor Geordin Hill-Lewis recently confirmed plans to introduce a municipal bylaw that would require properties primarily used for short-term stays to pay commercial rates — the same tariffs applied to hotels and guesthouses. The result? A 135% increase in property taxes for affected listings. The move has sent ripples through the city's booming short-stay market. But before you panic, it's worth understanding exactly what's being proposed, who it affects, and where mid-term rentals — like those listed on roam&root — stand. Why Is Cape Town Doing This? Cape Town has more Airbnb listings than Barcelona, Amsterdam, New York, and Hong Kong — roughly 26,500 as of late 2025. Over the past decade, thousands of residential properties have been converted into full-time short-stay accommodation, effectively operating as decentralised hotels. The problem? These properties have been paying residential rates while generating commercial income. Meanwhile, hotels and guesthouses — competing for the same guests — pay significantly higher municipal tariffs. Mayor Hill-Lewis has been blunt about the rationale: "An Airbnb is a decentralised hotel, so it has to pay the same rates and taxes a hotel does." But taxation is only part of the story. The explosion of short-term rentals has contributed to a sharp rise in housing costs for Cape Town residents. Home prices climbed nearly 30% in the five years leading up to March 2024, and long-term tenants increasingly find themselves priced out of neighbourhoods where holiday lets dominate. What Exactly Is Changing? The proposed bylaw includes two key components: 1. Commercial rate classification Properties that are primarily used for short-term rentals (typically stays under 30 days) will be reclassified from residential to commercial for municipal billing purposes. This means their rates bill — calculated as a percentage of the property's market value — will jump by up to 135%. 2. Platform data sharing Short-term rental platforms like Airbnb and Booking.com will be required to share listing data with the municipality. This will allow the city to identify which properties are operating as de facto commercial accommodation and should be billed accordingly. The bylaw is expected to be formalised in the coming months, with a formal register of short-term rental properties to follow. Who Is Affected? The key phrase in the proposal is "primarily used for short-term rentals." This targets properties that operate as full-time or near-full-time short-stay accommodation — the kind of listing that's occupied by a rotating stream of tourists staying a few nights at a time. Think of it this way: if your property functions more like a hotel room than a home, the city wants it taxed like one. Who is NOT affected? This is where it gets important for our community. Mid-term rentals — stays of one to six months — are fundamentally different from short-term lets. They serve a different market (relocators, remote workers, students, professionals on contract) and function as primary residences for the duration of the stay. Properties listed on roam&root cater to this mid-term segment. Our minimum stay requirements mean your property is being used as a home, not a hotel room. Under the proposed bylaw, properties that are not primarily used for short stays would continue to be classified — and taxed — at residential rates. In other words: if you're hosting through roam&root, this rate hike is not aimed at you. The Bigger Picture: Housing Affordability Cape Town's approach is notably different from other global cities. Rather than imposing outright caps or bans on short-term rentals (as London, Paris, New York, and Barcelona have done), the city is focusing on taxation and housing supply. Officials argue that restricting rentals can actually worsen inequality by discouraging new property development. Instead, the city is: - Accelerating land releases for affordable housing - Simplifying planning approvals for new developments - Supporting micro-flat projects in townships near economic hubs The additional revenue from commercial-rate classifications will likely support these housing initiatives — though the city has said it will only be able to calculate the exact figures once a formal register of short-term rentals is in place. What This Means for the Cape Town Rental Market For hosts currently running full-time Airbnb operations, the financial calculation is about to change significantly. A 135% rate increase will eat into margins, and some operators may find it no longer viable to run properties as pure short-stay businesses. This could lead to several shifts: - Some properties may return to the long-term rental market, easing supply pressure for residents - Others may pivot to mid-term rentals, where demand is strong and the regulatory environment is more favourable - Professional operators running multiple listings may consolidate or exit the market For mid-term rental hosts, the outlook is actually positive. As the short-stay market tightens, demand for well-managed mid-term accommodation is likely to grow — both from relocators seeking quality housing and from property owners looking for a sustainable hosting model. How roam&root Hosts Are Positioned roam&root was built for the mid-term rental market from day one. Our platform connects property owners with tenants staying one to six months — remote workers, relocating professionals, students, and families settling into Cape Town life. This model offers several advantages in the current regulatory climate: - Residential rate classification — your property remains a home, not a commercial operation - Lower turnover costs — fewer changeovers, less wear and tear, reduced cleaning and management overhead - Stable, predictable income — monthly payments rather than volatile nightly rates - Responsible hosting — contributing to housing availability rather than reducing it We believe good hosting and responsible housing policy can coexist. The city's proposed changes reinforce what we've always known: mid-term rentals are a sustainable, community-friendly way to earn from your property. What Should You Do Now? If you're a property owner in Cape Town, here's our practical advice: 1. Don't panic. The bylaw is still being finalised. Details on implementation, thresholds, and timelines will become clearer in the coming months. 2. Review your rental strategy. If you're running a full-time short-stay operation, now is the time to model the financial impact of a 135% rate increase. 3. Consider mid-term rentals. If the numbers no longer work for nightly stays, mid-term hosting offers a compelling alternative — strong demand, lower costs, and favourable tax treatment. 4. List on roam&root. If you're ready to explore mid-term hosting, we make it straightforward. Create a listing, set your availability, and connect with quality tenants. Frequently Asked Questions Does the 135% rate increase apply to mid-term rentals? No. The proposed bylaw targets properties primarily used for short-term stays of fewer than 30 days. Mid-term rentals — typically one to six months — remain classified as residential and are not affected by the rate hike. When does Cape Town's short-term rental rate hike take effect? The bylaw is still being finalised and no enforcement date has been officially confirmed. The city is expected to publish further details in the coming months, including the formal register of short-term rental properties. How will Cape Town identify short-term rental properties? Platforms such as Airbnb and Booking.com will be required to share listing data with the municipality. This will allow the city to determine which properties are operating as de facto commercial accommodation. Can I avoid the rate increase by listing on multiple platforms? No. The classification is based on how the property is used, not where it is listed. If a property is primarily used for short stays, it will be reclassified regardless of the booking platform. What counts as "primarily used" for short-term rentals? The city has not published a precise occupancy threshold. However, the intent is to target properties that function as full-time or near-full-time tourist accommodation rather than occasional holiday lets. Will Cape Town ban short-term rentals like other cities? No. Unlike London, Paris, New York, and Barcelona — which have imposed caps or outright bans — Cape Town has opted for a taxation-based approach, reclassifying affected properties to commercial rates rather than restricting them. How much more will affected hosts pay in property rates? Up to 135% more. Properties reclassified from residential to commercial will pay the same municipal rate tariffs as hotels and guesthouses, calculated as a percentage of the property's market value. Is switching to mid-term rentals a viable alternative? Yes. Mid-term rentals serve relocators, remote workers, and professionals on contract. They remain residentially classified, offer more stable monthly income, and carry lower turnover and management costs compared to nightly short-stay operations. The information in this article is based on public reporting as of early 2026. The proposed bylaw has not yet been finalised, and specific implementation details may change. This article does not constitute legal or tax advice. Property owners should consult with a qualified professional regarding their individual circumstances.