Holiday property investments offer an excellent way to take advantage of the consistent growth within the South African tourism industry. In Cape Town especially, many property owners are making the transition from long term to short term rentals.
As a holiday destination, Cape Town offers plenty of attractions, beaches and activities for visitors, making this city an ideal choice for prospective property investors. Platforms such as Airbnb are making it easier than ever for property owners to rent out their apartment or villa to visitors. While many budding investors can’t wait to transform their homes into guest properties, not all of them stop to consider the legal aspect of holiday property investments however.
Keeping Holiday Property Investments Within the Law
How do you make sure that you are legally permitted to rent your property out to visitors on a short term basis? What regulations apply specifically to properties in the Cape Town area? The following guidelines will help you ensure that your holiday property investments stay within the right side of South African law.
City of Cape Town Guest Accommodation Policy
The City of Cape Town Guest Accommodation Policy of 2009 is a massive 60 page document that comprehensively covers all aspects of guest accommodation. Within this document, specific clauses are given that relate to factors such as land use (residential vs commercial), council bylaws that may apply to individual areas within the city, zoning requirements, the broader tourism development framework and others.
Self-catering apartments are permitted without council approval in some zones, including General Residential Sub-Zones, Local Business Zones 1 & 2, General Business Sub-Zones and Mixed Use Zones. Permission is required from the council in Community Zone 2 and Transport Zone 1. Guest houses are permitted without council approval in General Residential Sub-Zones and Local Business Zone 1, but require permission in Single Residential Zone 1 (Conventional Housing) and 2 (Incremental Housing) as well as Local Business Zone 1, Agricultural Zones and Rural Zones. To determine what zone your property falls into, you will need to contact the City of Cape Town or consult a legal specialist to find out whether permission is required to operate a holiday rental establishment.
In addition to zoning areas and general land use requirements, there are also a number of other criteria that may be considered, regardless of whether your property is within an area that requires permission. You may need specific permission to serve alcohol to paying guests, certain requirements may be present for parking, other rules may apply to signage and certain areas may be subject to heritage or environmental restrictions. The simplest way to ensure that your holiday property investment is fully legal and by the book is to consult your lawyer or speak to an experienced holiday rental property manager before you get started. Taking the time to do your homework in advance will save you a great deal of potential stress in the long run.
Ratepayers Associations, Sectional Titles & Other Requirements
Once you have a better idea of whether your holiday property investment is legal in the eyes of the council, you will also need to find out whether other permissions are required. In some areas, you may need permission from the local Ratepayers Association. In residential areas that already have a high number of self-catering properties, certain guidelines may be in effect. Similarly, councils in some areas may require permission to be granted by neighbours before starting a guest house or self-catering holiday home.
In the case of sectional titles, permission might be required from the body corporate. If there is no specific information on holiday apartment letting in your purchase agreement, make sure that you consult your body corporate to find out what regulations may apply. With the growth of aparthotels in Cape Town, many complexes are divided into residential and guest areas, with communal areas that can be shared.
Other things that you may need to consider include liquor licensing, if you plan to sell alcohol on the premises, insurance that is suitable for this type of business, inspections from the Health Department as well as Fire Department, tax and employee registration, SABC television licenses and DSTV licenses.
While it may seem like a lot of work, making sure that you have all your bases covered well in advance is the best way to succeed with holiday rental investments. Once you know that your venture is fully legal and prepared, you can focus on creating a solid return on your investment, through smart vacation rental strategies that make your initial planning well worth the time and effort. To learn more about working with an experienced holiday rental property manager, contact Totalstay today and let us know how we can assist.