Short-term letting under the microscope: Comparing Cape Town’s proposed tariffs to the current position in Mossel Bay

Cape Town: Targeting short-term letting through tariff reform

According to recent reporting, Cape Town’s mayor, Geordin Hill-Lewis, has signalled plans to introduce new tariffs aimed specifically at properties used for short-term letting, including Airbnb-type accommodation.

The proposal appears to focus not only on zoning compliance but also on property rates. The City is exploring whether residential properties that generate income from short-term accommodation should be subject to higher tariffs than ordinary residential homes.

The reasoning is twofold:

Fairness in rates – Property owners who operate short-term letting businesses arguably place different demands on municipal infrastructure and services than ordinary households.
Regulatory alignment – Where properties are used in a manner that resembles hospitality businesses, the City may seek to align rates treatment with that reality.

This approach reflects a broader national shift: municipalities are no longer content to treat short-term letting as an incidental residential activity. Instead, they are increasingly classifying it as a commercial or quasi-commercial use — with financial consequences to match.

Importantly, even before tariff reforms are implemented, property owners in Cape Town must ensure their use complies with the applicable municipal planning by-law and zoning scheme. Where short-term letting exceeds what is permitted in a residential zone, consent use or other approvals may be required. If not obtained, the City may impose penalty rates under its authority confirmed in the Zibi decision.

For homeowners relying on Airbnb income, the message is clear: compliance is no longer optional, and the financial model of short-term letting must account for possible reclassification or increased municipal charges.

Mossel Bay: A defined but limited framework

The situation in Mossel Bay is more specifically regulated through its land use scheme by-law.

Under the current framework:

A property classified as a “dwelling house” may accommodate certain additional uses, including letting to lodgers and operating a bed and breakfast establishment.
A “bed and breakfast establishment” is permitted as part of a dwelling house, provided the dominant use remains that of a single-family residence.

However, strict development parameters apply:

No more than two rooms may be used for paying guests.
No more than four guests may be accommodated at any time.
The owner must reside on the property.
A guest register must be kept.
No weddings, conferences, or similar events are permitted.
Guest rooms may not be converted into self-contained units.
On-site parking requirements apply.
No more than three employees may be employed.
Alcohol may only be served to resident guests.

Crucially, where a property exceeds two rooms (four guests), it may fall outside the bed and breakfast parameters and be regarded as a guest house. Renting out more than four rooms may trigger business classification and business rates.

ALSO READ: Property owners beware: Municipalities nationwide targeting zoning contraventions

In practice, this means that limited short-term letting — within the two-room/four-guest threshold — is currently accommodated within Mossel Bay’s planning scheme without the need for rezoning. Beyond that threshold, however, the regulatory landscape changes significantly.

The broader implication for property owners

The contrast between Cape Town’s proposed tariff reforms and Mossel Bay’s defined thresholds highlights an important reality: compliance is intensely local.

Property owners cannot assume that because short-term letting is common, it is automatically lawful or financially neutral.

Municipalities are:

Auditing actual property use;
Applying penalty rates where use exceeds zoning rights;
Considering new tariff structures for income-generating residential properties; and
Tightening enforcement mechanisms.

For investors and homeowners alike, the key questions are:

Does your zoning permit your current level of short-term letting?
Are you operating within the development parameters of your local by-law?
Could your property be reclassified for rates purposes?

In towns such as Mossel Bay, modest short-term letting remains viable within defined limits. In Cape Town, the financial implications may soon shift as new tariffs are introduced.

The era of informal or assumed compliance is over. In today’s regulatory environment, proactive verification of zoning rights and municipal policy is not merely prudent — it is essential to protect the long-term viability of property investments.

Any property questions? Speak to someone who speaks property, fluently. Talk to Tonkin Clacey Mossel Bay. 27 Marsh Street, Mossel Bay. T:044-220 0240, [email protected]

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