GROUNDUP: Airbnb bylaw doesn’t do enough to address Cape Town’s housing crisis

The City of Cape Town insists our housing crisis is supply-made: housing would be cheaper if there were more of it. Mayor Geordin Hill-Lewis and his team often point to the 14,000 affordable homes they say are on the way, even as those homes remain, for now, largely unfunded and unbuilt.

But why is the City not more concerned about the 23,000 existing homes – thousands more than the housing pipeline – that could be used for long-term rentals but instead operate as short-term listings on Airbnb? This doesn’t register as a concern in its draft Short-Term Letting Bylaw, which proposes commercial rates on properties listed for more than half the year.

About 84% of Cape Town’s 27,000+ Airbnb listings are entire dwellings, not spare rooms or backyard cottages that bring in additional income for locals who occasionally let them out, as in the platform’s original purpose.

Stricter regulation need not force a trade-off between housing and jobs. We agree with leaders in the hospitality sector, like Anton Gillis, who have advocated for regulation and pointed out that hotels operate with “a high staff-to-guest ratio that drives job creation”, unlike Airbnbs.

Gillis cautions that “history shows that unchecked proliferation [of short-term rentals] causes long-term damage to cities, often hollowing out neighbourhoods and eroding the local tax base”.

Airbnb listings tend to be concentrated in certain areas and skew to the higher end of the market. But their effect doesn’t stay there, thanks to a cascading effect called downraiding.

When a flat is removed from the long-term market in, say, Sea Point, its would-be tenant goes searching in Vredehoek, outbidding and displacing someone who lives there, who then moves to Woodstock, doing the same to a family who lives there. This process eventually pushes the most precarious residents, who have just got a foothold in the city, further out again, until they wind up an hour and two taxis from work and the amenities Cape Town offers.

Downraiding sets off a chain reaction that drives up rents and displaces people across the city. This phenomenon is not unique to Cape Town – it’s part of the hyper-financialisation of housing: the home reimagined primarily as a financial asset.

But what is unique to Cape Town is our history of spatial apartheid, which we as South Africans – and our apex court – expect the City to redress through responsible policymaking. As Stellenbosch Business School Professor Armand Bam recently wrote about the city: “If access depends entirely on who can pay the highest price, old exclusion survives without needing an old law.”

Exercise in reclassification

In fairness, the City’s draft bylaw does some genuinely useful things: it requires registration and forces platforms to share their data and pull unregistered listings. These are three of the four key policy interventions that global research from the data and advocacy group Inside Airbnb found to be most effective at protecting locals from Airbnb’s damaging effects.

But at its core, the City’s proposal is essentially an exercise in reclassification “for property rates purposes”, with no mention of or attempt to manage the retrogressive effect of short-term letting on the long-term stability and tenure of the residents who make our city run.

The Cape Town Collective Ratepayers’ Association, comprising 45 civic bodies and about 100,000 properties, warns that the draft bylaw “may not be sufficient to alter the commercial incentives that favour short-term letting over long-term residential tenancies”, and believes it falls short of “protect[ing] the residential character of affected neighbourhoods”.

We agree with this assessment. The current draft proposes a cover charge that does nothing to help locals stay rooted in neighbourhoods they love and homes they can afford. (It’s also worth noting that an unscrupulous host can easily evade the bylaw’s proposed 50% availability threshold: our peak season, October through March, can easily pass as 49.9% of the year.)

What do we propose? That missing fourth pillar, to start. A primary-residence requirement – when combined with registration, platform data sharing and accountability – is the most effective approach for “long-term housing protection”, according to Inside Airbnb. When cities only allow people to list a home if it’s the place they actually live in, as opposed to uninhabited “investment vehicles” with absentee owners, a distorted market course-corrects to prevent a few dominant commercial mega-hosts from swallowing up supply and hollowing out neighbourhoods.

It’s time to refuse the false choice between tourism and housing. Smart policies can support both.

In 2018, the City of Vancouver in Canada passed a principal-residence restriction; it was so effective at returning homes to the market, without any discernible cost to tourism, that in 2024 the policy was extended province-wide. The City of Vancouver saw record numbers of visitors in 2024 and reports that renters “pay an average of $147 (CAD) less each month than they would have if the City had not restricted [short-term rentals] to a host’s principal residence”.

Every place has its own context and requires its own creative solutions; it’s the job of policymakers to search without bias and find ways to learn from cities that are making life easier and more affordable for locals.

Regulating short-term letting will not solve our housing crisis on its own. Responsible regulation has to sit alongside the harder work of actually building promised homes, releasing well-located public land for social housing, unlocking national funding and instituting more mechanisms for rent stabilisation – like tying increases to inflation.

Increasing supply through building is the long, slow work of a decade. Plugging the leak caused by Airbnb is something our policymakers can do now. Additionally, just as the mayor has proposed ringfencing water and electricity revenue for related services, we propose ringfencing revenue from the short-term letting bylaw to fund affordable housing projects.

The City’s draft bylaw is open for comment until 5 October, offering us a rare chance to shape public policy in a way that will deliver meaningful, material change for families, pensioners and young professionals who are struggling to stay in the city they call home. DM

Leila Kidson is co-founder of the social design studio OCTOPI and a member of the Rent Control Group, a voluntary collective of artists, tenants, engineers and activists who care about housing, communities and justice.