Airbnb and Community Schemes: Latest Developments

In September 2017, the City of Cape Town launched a survey on short term rentals, in particular, online booking platforms such as Airbnb and Booking.com. The aim of the survey was to gather information that could be used to develop a policy or regulations that would satisfy the interests of all parties involved.

Then, on Friday, 12 April 2019 an amendment to the Tourism Bill was published which made it clear that these short term rentals would be legislated under the Tourism Act. To understand how this decision was reached, it’s worth taking a look how Sectional Titles dealt with short term rentals.

Sticking to the rules

Before professional bodies such as the Federated Hospitality Association of SA (Fedhasa) called on the government to take action against Airbnb, there were two main concerns around short term rentals as far as Sectional Titles were concerned. The first was the safety and security of residents. With more people coming and going, and keys, remotes and security codes being handed out the risk of a security breach increases.

Another concern was how bodies corporate could uphold and enforce their codes of conduct. What if guests parked in the wrong place, played their music too loudly or left a mess in a public use area? Who would be responsible for ensuring they follow the rules or issue them with a fine for misconduct? Ordinarily, the homeowner would be held accountable, but with tenants who are only present for a short period of time, the situation is tricky.

On top of these concerns, there was also the issue of zoning and insurance. Hotels and Bed & Breakfasts are considered commercial activities and so have to comply with municipal zoning laws and pay commercial insurance rates. Essentially, a homeowner who rents their property out to guests is able to bypass these rules, while reaping the financial benefits.

Lack of legislation

With no proper definition of short term letting in either the Sectional Title Act 95 of 1986 or the Sectional Title Schemes Management Act 8 of 2011, it was left up to the trustees of a Community Scheme to decide how to deal with the challenges posed by Airbnb rentals.

Short term rentals and tourism

Airbnb and other online short-term rental platforms have not only caused confusion among Sectional Title Schemes, they have also upset members of the local tourism industry. This is mostly because these short-term rentals are operated by individuals who do not have to abide by the same rules. The formal hotel sector simply cannot compete with short-term home rentals.

On the other hand, it would not make sense to deprive home-owners from using their property to generate an income. Clearly, some kind of legislation is needed. And as these short-term rentals have such an effect on tourism, it makes sense that the responsibility for regulating this sector lies with the Department of Tourism.

How will short-term rentals be affected?

The amendment to the Bill will allow the minister to specify certain ‘thresholds’ pertaining to Airbnb’s in South Africa. This could include how many nights a guest can stay or even, how much money homeowners are allowed to make from renting out their property. The Department of Tourism will also provide local government with more input regarding the zoning and location of Airbnb’s.

Protecting the shared economy

While homeowners who use the Airbnb platform will not be too happy about the government intervening in the short-term rental market, tourism bodies will appreciate the level playing field the regulations aim to create. Even Airbnb itself claims to be in favour of legislation that supports the growth of the market. This is what the government claims it wants too; legislation that enables private homeowners and hotels to benefit from tourism.

Have your say

If you are an Airbnb host and would like to voice your opinion on the bill, the government has invited all interested parties and representatives to submit their comments in writing. You have 60 days from 12 April, 2019 – which is when the bill was gazetted – to email Ms Setwaba at msetwaba@tourism.gov.za.

In the meantime, if you are considering using your property for some sort of short-term rental, it is important that you first approach the committee members of the community scheme.