Rawson Property Group Raises Concerns Over Proposed Commercial Rating of Short-Term Letting Properties
The Rawson Property Group has expressed concern over the City of Cape Town’s proposal to classify certain short-term letting properties as commercial properties for municipal rating purposes.
Under the proposed approach, properties used predominantly for short-term letting, such as Airbnb-style accommodation, may in future be charged commercial property rates rather than residential rates if they are available for short-term letting for more than 50% of the total annual room nights.
According to the City, the intention is to ensure that properties operating in a manner similar to hotels, guesthouses and accommodation businesses are rated consistently with their use.
Tony Clarke, Managing Director of Rawson Property Group, said that while there is logic in distinguishing between genuine commercial accommodation businesses and ordinary homeowners occasionally letting out their homes, the practical implementation of such a policy may create unintended consequences.
“Where a property is effectively being run as a full-time accommodation business, there is certainly an argument that it should not necessarily enjoy all the same municipal rating treatment as a primary residential home,” said Tony Clarke, Managing Director of Rawson Property Group.
“However, there is a very important distinction between an investor operating multiple units as a business and an ordinary homeowner who may let out their property for a few weeks a year to help offset rising costs.”
Clarke warned that the proposal could place additional financial pressure on property owners at a time when many are already facing higher municipal charges, insurance costs, interest rates and maintenance expenses.
“The risk is that the City could unintentionally penalise homeowners who rely on occasional short-term letting income to help cover their bond repayments, rates and other costs,” Clarke said.
He added that there may also be practical concerns around how the City intends to determine whether a property exceeds the proposed threshold and whether the administrative burden will create uncertainty for owners.
“There will need to be very clear definitions, fair thresholds, transparent enforcement and an appeal process. Property owners need certainty around when they remain residential and when they are considered commercial.”
Clarke said that while Rawson supports fair and consistent rating principles, the City should ensure that any new approach is carefully balanced so as not to discourage tourism accommodation, reduce supply or create unnecessary pressure on homeowners.
“Cape Town’s short-term letting market plays an important role in tourism, job creation and supplementary household income. Any policy change needs to recognise that there are many different types of short-term letting activity, and a one-size-fits-all approach may not always be appropriate.”
The City of Cape Town is expected to consider the proposed amendments during the 2026/27 budget approval process, with implementation potentially taking effect from 1 July 2026 and possible commercial reclassification from 2027 onwards.
For more information, contact 21 658 7100 or email marketing@rawsonproperties.com
