Airbnb crackdown in South Africa

Airbnb has said it supports the Department of Tourism’s mention of implementing a national registry for short-term rental hosts but has yet to comment on its proposal of threshold-based guidelines.

This follows the department’s recent announcement that it is finalising its policy framework for the regulation of short-term rentals, to which it says it has adopted a differentiated approach.

“Airbnb has long led calls for regulation in South Africa and supports the implementation of a national host registration system,” Airbnb’s EMEA director of policy strategy, Velma Corcoran, told MyBroadband.

“A registration system would give authorities full visibility of hosting activity in South Africa and lead to more informed decisions about their impact and contribution.”

Corcoran explained that the short-term rental platform has been involved in several legislative and policy processes with the tourism department since 2019 and believes that the regulations implemented need to be proportionate and straightforward.

However, Corcoran reiterated that these regulations need to be evidence-based and thus, a national registry will allow the government to collect the necessary data to develop these rules.

The Department of Tourism’s policy planning and strategy director, Senzo Nkala, said the policy framework will emphasise threshold-based guidelines based on international standards.

For instance, it was suggested that if someone owns more than one listing, they will be required to register as a business and hosts who accommodate guests for longer than the threshold — 90 days was suggested — will need to do so too.

While she did not comment on the tourism department’s proposed threshold-based approach, she did point out that regulations should be tiered.

“Obligations linked to the registration scheme must be proportionate to the nature of the activity – with the lightest possible obligations for occasional hosts,” she said.

“Professional activity should be defined by the scale of letting activity, considering factors such as income generated, rather than any focus on primary or secondary homes.”

The public and traditional accommodation sector has been calling on the Department of Transport to implement regulations for the short-term rental market for years.

Most recently, Capetonian residents voiced their frustration, saying they were being priced out of the city’s housing market.

Cape Town-based Only Realty Property Group CEO Grant Smee explained that the Airbnb market can be particularly speculative, where hosts will rent a property and then rent out the property they own on Airbnb.

This diminishes the supply of long-term rentals, pushing the price up.

Smee said investors and speculators are also buying property specifically for Airbnb, often doing so at a premium because of the potential returns on Airbnb, increasing prices even further.

Data analyst Melville du Plessis recently compared the number of long-term rentals to short-term rentals in Cape Town Metro.

Of the 7,918 rentals available in the 61 square kilometre area, only 547 (6.9%) are long-term rentals.

While this metric does not compare total short-term listings to total long-term listings, it illustrates the supply of long-term listings.

It also excludes areas generally out of reach of most people’s budgets, such as Camps Bay, Fresnaye, and Clifton.

Short-term rentals prove far more lucrative when looking at the difference in return between the two markets.

Comparing the average daily rate, short-term rentals were 271% more expensive than long-term rentals.

Looking at the monthly return of short-term rentals and assuming a 50% occupancy rate, only three of the ten suburbs offer a higher income from long-term rentals.

Therefore, Capetonians are incentivised to list their properties on Airbnb and similar platforms rather than as long-term rentals.

Smee believes the proposed regulations could have a major impact on the short-term rental market, causing many to reconsider entering it.

“Ultimately, like any hospitality industry, your money is made on vacancy levels and the fewer nights you are empty, the more money you make,” said Smee.

“If the government limits how many nights you can rent the property out, that’s going to be a massive issue for almost all Airbnb owners.”