Check-in or checkmate? Airbnb in sectional schemes

• Airbnb growth is clashing with sectional title rules, triggering rising disputes and court action across Cape Town’s residential schemes.
• Higher returns from short-term letting are offset by compliance risks, regulatory pressure, and growing resistance from residents and trustees.
• Owners must treat short-term rentals as regulated businesses, not informal income streams, or risk fines, litigation, and forced shutdowns.

Boom meets regulation

Short-term rentals, led by platforms like Airbnb, have shifted from casual side income to a core part of the property economy. In Cape Town alone, listings exceed 20,000, with the majority being entire homes or apartments rather than spare rooms.

This rapid growth has been fuelled by:

• Record tourism numbers
• Investor demand for higher yields
• Flexibility compared to long-term leases

But the surge is colliding with two realities:

• Mounting housing pressure, with fewer long-term rentals available
• Tightening regulation, particularly from the City of Cape Town, which is moving to formalise and monitor the sector

Within sectional title schemes, this tension is even sharper. What was designed as residential living space is increasingly being used for transient accommodation, often in conflict with building rules.

When ownership meets rules

Every sectional title scheme operates under management and conduct rules that bind all owners. While newer developments often address short-term letting explicitly, older schemes frequently sit in a grey area now being tested.

According to Kayley Leverton, Senior Associate at Gillan & Veldhuizen Inc., disputes are rarely about Airbnb itself, but about compliance:

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“At its core, these disputes are rarely about Airbnb itself, they’re about whether owners are complying with the rules they agreed to when they bought into the scheme.”

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In a recent case:

• A body corporate had clear rules restricting short stays
• Owners ignored warnings and fines
• The matter escalated to the High Court
• The court granted an interdict forcing owners to stop short-term letting

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As Leverton adds: “Ownership rights are never unlimited. They are always subject to the scheme’s rules and applicable law.”

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The balancing act: income vs impact

The appeal of short-term letting is undeniable. In high-demand areas, it can generate significantly higher returns than traditional rentals.

But the trade-offs are increasingly visible:

• Noise and disruption from frequent guest turnover
• Security concerns in shared buildings
• Accelerated wear and tear on common property
• Loss of community cohesion

At a city level, the impact goes further:

• Units shift away from long-term tenants
• Rental supply tightens
• Prices rise, particularly in central and coastal areas

This creates a widening divide between investor returns and residential stability.

SARS, rates and the compliance catch-up‍

A quieter but critical shift is happening in compliance. The South African Revenue Service is increasingly scrutinising short-term rental income. Many owners are unaware that:

• Short-term rentals (typically under 28 days) are not VAT-exempt
• Income must be declared and may trigger additional tax obligations

At municipal level, the City of Cape Town is tightening enforcement:

• Properties used predominantly for short-term letting may be reclassified as commercial
• Rates could increase by up to 135%
• A new by-law and registration system are on the way

The message is clear: short-term letting is no longer informal, it is regulated business activity.

Where disputes really land‍

When conflicts escalate, body corporates have several enforcement options:

• Internal fines and penalties
• Referral to the Community Schemes Ombud Service (CSOS)
• Court action

However, enforcement is not simple:

• Legal processes are costly and time-consuming
• Outcomes depend heavily on how clearly rules are drafted
• Not all schemes have the resources to litigate

As a result, disputes are becoming more frequent and more complex.

What should owners (and trustees) be doing?‍

For owners, the starting point is straightforward: Understand the rules before listing.

If conduct rules restrict short-term letting, they are likely to be upheld. Ignoring them is what typically triggers disputes.

For trustees and body corporates:

• The time to act is before conflict escalates
• Ambiguity in rules creates risk for everyone

Amending conduct rules requires a 75% special resolution, which becomes harder once divisions emerge among owners.

Practical advice 

• Review your scheme’s conduct rules in detail before listing
• Clarify whether short-term letting is permitted, restricted, or silent
• Engage trustees early if you plan to operate regularly
• Ensure tax and municipal compliance is up to date
• Keep detailed records of bookings and guest activity

Advice: Trustees and schemes 

• Audit existing rules and identify grey areas
• Start early discussions with owners about regulation
• Document complaints, disturbances, and incidents
• Apply rules consistently to avoid legal challenges
• Seek legal guidance before disputes escalate

Short-term letting isn’t going away, but the environment around it is changing rapidly.

In sectional title schemes, the shift is clear: what was once a flexible income stream is now a regulated, scrutinised and often contested activity.

For owners and trustees alike, success will depend on one thing above all: treating short-term rentals not as a loophole, but as a structured, rule-bound part of the property market.

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