Digital nomads row — Cape Town mayor suggests tax on short-term rentals to protect locals

Hill-Lewis says a process is under way to change tariffs for those operating short-term rentals, adding that there needs to be an “equal playing field” in the accommodation sector. 

As Daily Maverick has reported, digital nomads occupy short term-rentals along the Atlantic Seaboard, much to the ire of residents, who feel they are being priced out of accommodation in the city as owners rent out apartments and homes to digital nomads who spend weeks working remotely. 

Read more: Cape Town’s rental crisis: are digital nomads driving prices beyond reach for locals?

Advocacy project Inside Airbnb reported there were about 25,816 listed rentals on the short-term rental platform by 28 December 2024, largely concentrated along the Atlantic Seaboard, in the southern suburbs and along the city’s coast. 

While these nomads often appear on social media taking in the city’s tourist attractions and entertainment venues, there is a downside: activists claim the housing crisis in the city is worsened by these visitors. Writing in Daily Maverick, Ndifuna Ukwazi’s Zacharia Mashele and Buhle Booi say this drives up rental prices, making it difficult for locals, particularly low- and middle-income households, to secure affordable housing.

In a wide-ranging interview with Daily Maverick this week, Hill-Lewis said he agreed with sentiments that short-term rentals need to be taxed “appropriately”. 

“You can’t come into a very tourism-rich market and basically run a small hotel… if you’re running a permanent Airbnb, that’s what it is, but you’re not taxed like a hotel, you’re taxed like a private house,” he said. 

The mayor said a process was under way to convert “permanent Airbnbs where people are not just renting out a room or renting out their granny flat” from residential to commercial tariffs. 

“I think that’s only fair,” he said, adding: “There has to be an equal playing field.” 

He explained that he could not tell developers of major hotel chains that they needed to pay business tariffs in the city because they run hotels while others who run operations like these on a much smaller scale do not. 

Processes in the City’s revenue department were under way to change these tariffs for those for whom this is a main business. 

“So, for me, that’s about an equal playing field, no questions asked there.” 

Read more: After the Bell: Saying no to digital nomads

Hill-Lewis is not the only government official to add to the discussion about short-term rentals and their impact. 

The issue was raised in Parliament in October 2024. Senzo Nkala, the tourism department’s director of policy planning and strategy, told MPs on the tourism oversight committee that the department was looking into regulatory frameworks, including an approach to short-term rentals. 

He said that when the department did consultations on the Tourism White Paper, for the development and promotion of tourism, there was an intention to support long-term rental markets and prevent large property owners from monopolising housing supply for short-term rental purposes, which can lead to rising rental costs and the displacement of long-term tenants.

According to the Parliamentary Monitoring Group, Nkala said that during consultations, estate agents had raised concerns about unregulated short-term rentals. They had complained that property owners bought a number of properties for short-term rental use without involving agents, leading to neighbourhood disruptions such as noise and nuisance complaints.

The department, Nkala said, intended to start extensive consultations with key stakeholders, focusing on how threshold-based rules could be implemented to balance market access with regulation and public interest.

In its impact report on Cape Town, short-term rental platform Airbnb said it had “long led calls for short-term rentals to be regulated”, and that regulation would help provide policy certainty for hosts and guests, and create a level playing field for all operators. 

In September 2023, the department and Airbnb also signed a memorandum of understanding, which includes a national registration system and a national database for short-term rentals in the country to “provide transparency into the short-term rental market”. 

“While taxing short-term rental owners like commercial properties may be a step towards regulating the market, it does not address the root issue: the unchecked prioritisation of short-term profits over the right to housing,” said Jonty Cogger, an attorney at Ndifuna Ukwazi. 

He told Daily Maverick that without stronger protections for tenants, better rent controls and a commitment to well-located, affordable housing, “Cape Town will continue to cater to tourists and digital nomads at the expense of its own residents… the City must act urgently to ensure that housing serves people, not just profits.” DM