Airbnb ‘a small factor in high Cape Town rentals’

Platform calls on government to expedite host registration.

Accommodation platform Airbnb on Friday published research showing that its short-term rentals do not substantially reduce the availability of longer-term rentals in Cape Town, nor do they drive up rent significantly.

It however calls on government to expedite the creation of a host registration system “that would give authorities better visibility of hosting activity in their area and inform additional measures where needed”.

ADVERTISEMENT CONTINUE READING BELOW Read: Airbnb warns against overregulation in SA Airbnb regulations: Job creation must be the priority – Fedhasa

This seems to be a proactive strike after several global cities introduced restrictions on short-term rentals on the assumption that they displace units that would otherwise be available for city residents to rent for long-term residence.

These measures vary from limiting the number of nights that hosts may rent (such as 90 in London and 30 in Amsterdam) to geographical limits. In San Diego, for example, no more than 30% of housing units may be used for short-term rentals, while the cap is as low as 1% in other parts.

The New York City experience

New York City imposed major restrictions on short-term rentals a year ago, but that has made little difference to the shortage and associated high cost of housing, according to Airbnb.

The city now requires hosts to register with the city, be present in the residence while hosting, and host at most two travellers.

According to the Airbnb: “Consumers [in New York] are instead facing all-time-high hotel prices and residents facing all-time-high rents. Rent climbed 3.4% during the first 11 months of the law13 [restriction], suggesting that other factors are driving up rent prices, including the lack of new construction.”

Source: Airbnb

This is supported in an article published in Harvard Business Review.

Researchers Sophie Calder-Wang, Chiara Farronato and Andrey Fradkin write: “Despite fears that Airbnb may lead to rent increases, our research has found that short-term rentals are not the biggest contributor to high rents, especially when it comes to the most vulnerable segments of a city’s residents. Put simply, restricting Airbnb is not going to be an effective tool for solving the housing-affordability problems in many U.S. cities.”

What about Cape Town?

Airbnb’s research found that 700 000 of the two million people who used its listings in 2023 stayed in Cape Town.

Capetonian hosts have found this to be an extremely valuable additional income stream:

• Almost half say the extra income helps them to afford their homes;
• Half say the extra income helps them to afford the rising cost of living; and
• Almost half say the current economic climate is driving them to host more.

Hosts in Cape Town earned nearly R2.5 billion in 2023.

A typical listing in the city is rented for 38 nights a year, with a typical host earning R74 000 in the year, according to Airbnb.

Read/listen:
Airbnb’s impact on the SA economy
‘Rampant demand’ for short-term residential rentals in Cape Town

Airbnb says its Cape Town listings are located in a wide range of neighbourhoods, including some that do not typically benefit from tourism, such as Plumstead, Monte Vista and Bothasig.

Guests tend to follow recommendations made by their hosts when visiting restaurants and other facilities, which also benefit from the wider spread of short-term accommodation.

Airbnb states that guests using its platform who visited Cape Town in 2023 contributed R14.4 billion to its GDP and supported 42 000 jobs. Small business owners and their staff also benefitted to the tune of R7 billion during the period.

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Regarding its impact on the Cape Town housing market, Airbnb points out that the majority of its listings are not entire homes.

A listing may be for a spare bedroom, a dedicated part of a family home, or a home that is available for a limited period of time while the normal residents are travelling.

Listen/read: Airbnb clamps down on parties

“And not all entire homes on Airbnb would otherwise be available as long-term rental housing because in most cases it is already someone’s home.”

Airbnb found that ‘dedicated rentals’ – defined as entire-home listings on Airbnb that were booked for more than 90 nights in 2023 – represent just 0.9% of all formal housing units in Cape Town, and less than 1.5% of the number of additional housing units needed to meet the growing demand for housing over the next four years.

In addition, the number of Airbnb listings in Cape Town has not grown significantly since 2020.

The platform’s research shows that even if all its dedicated listings were suddenly added to the long-term rental stock in the city, the median rent would be reduced by only R69.

Clarity and purpose

Airbnb says for short-term rental rules to be effective, there must be clarity on the issue regulators are trying to resolve and what results the regulation should drive.

“Analysis of local data is the key first step to define these. Short-term rental rules must remain proportionate to the intensity of the activity and rules should be tiered and targeted, including at the neighbourhood level. In this manner, regulation will protect casual hosting, while helping local authorities to disincentivise more intensive hosting if needed.”

The platform, which has been working with the Department of Tourism for some time, says: “While evidence suggests dedicated rentals on Airbnb represent a small share of housing units in Cape Town, we believe that governments should have the tools and data to understand the impact of short-term rentals in their communities.

“That’s why Airbnb has long led calls for short-term rentals to be regulated,” it adds.

“Regulation would help to provide policy certainty for hosts and guests, and create a level playing field for all operators.”

Airbnb is calling for:

1. A simple and free national registration system for all hosts as an important first step to shape clear, evidence-based rules. A national registration system, together with data sharing with authorities, are key instruments to provide local authorities with the transparency they need to better understand the impact of short-term rental activity.
2. Regulation should be proportional to the level of intensity of the activity so that the rights of South Africans to occasionally rent the place they live in are protected. Casual hosting should not be limited or costly.
3. If needed, when dedicated rentals risk competing with long-term housing, local authorities should have the power to introduce evidence-based tools that disincentivise speculation.

Read: Rental property: To Airbnb or not to be?

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