It’s that time of the year when everyone wants to holiday at the sea but there’s no more space available. If you are a property owner and want to let your house or apartment for short-term rentals as weekend or holiday accommodation it is advised that you familiarise yourself with the Municipal Planning By-laws.
While the influx of tourists is welcomed as the largest contributor to our economy, the disruptive power of the online industry has also reared its head in our towns. Airbnb, booking.com and Lekkeslaap.co.za and many other online platforms have become the norm for people traveling these days. For less than you’d pay for a hotel room, you can rent accommodation that puts you right in the middle of things, wherever you are, without the discomfort of a backpackers.
But this has a direct impact on the formal accommodation industry. To this end the Overstrand Municipality has begun serving notice to Airbnb and other private accommodation owners in Rooiels and Pringle Bay that they have 30 days to comply with the Municipal Land Use Planning by-law of 2015 by submitting a consent use application, or else face legal action. There is, however, no guarantee that the application will be granted. For even under 150m², the application cost is R230, properties between 150m² and 400m² pay R612 and those above 400m² pay R2 908, according to the municipal tariff list.
The letter states under the heading “Unauthorised Activity (Tourist Accommodation)” that there are “reasonable grounds” to suspect that the owner of the property is “operating a tourist accommodation facility”. This, the letter says, is “utilising land in a manner other than prescribed by a zoning scheme without the approval of the municipality” and is an offence.
“What this actually means is the municipality is seeking to level the playing field between registered and unregistered accommodation. Those who run formal, licensed establishments have to jump through many hoops and have higher operating costs because of higher rates and taxes, labour law conditions and insurance. Unregistered establishments can therefore not only undercut on price, but there is the added concern that the minimum levels of standards are not being kept to,” says local hotel and B&B owner Clinton Lerm.
But, says Tinka van Dyk, Chair of Hangklip/Kleinmond Tourism Bureau Executive Committee, in the past, the consent use approval was generally not applied to self-catering houses, which make up the largest portion of available accommodation in the area.
“It could thus have a negative impact on the total amount of bed nights in the Overstrand as some property owners who let their establishments for a short period of the year, might consider not letting their houses as it will not be financially viable to pay the fee for the consent use application and if approved, the municipal business tariff on a monthly basis,” said Tinka.
The facts bear this point out. A total of 78% of rentals in the Overstrand comprises entire homes. Yet, 60% of rental properties on Airbnb are only available for one to six months of the year and 71% of properties are only booked for one to three months. So, homeowners are clearly only renting their homes out for a few months per year.
Tinka, who is clear that she is not against the by-law, warns of other unintended consequences if owners stop letting out their properties. “This will impact negatively on the income and employment opportunities generated by letting agents and establishment owners. “
“This sector employs a fair portion of our local unskilled and semi-skilled workforce. The purpose of the consent use and more importantly, the regulatory implications thereof, should be carefully weighed up to ensure establishment owners comply with the necessary laws, standards, etc. but it should, at all times, stimulate tourism.”
At the heart of the issue are the municipality definitions of “guest rooms”, a “guest house” and “tourist accommodation” when applied to land that has been zoned as residential. A guest room refers to “a limited number of rooms that are let on a permanent or temporary basis to paying lodgers or guests, provided that the dominant use of the dwelling unit concerned shall remain for the living accommodation of a single family”.
In this case, the municipality is very clear. You are allowed to let no more than two bedrooms per property and no more than five guests or lodgers can “be supplied with lodging or meals at any one time”. Guest rooms are not allowed to be converted to or used as separate dwelling units and no cooking facilities are allowed, except for a kettle. There needs to be one on-site parking bay for each guest room and there are restrictions on the advertising that can be displayed. Although not specifically mentioned in the Overstrand Municipality Zoning Scheme, guest room owners are encouraged to have third-party liability insurance.
Tourist accommodation, according to the municipality “means the letting of rooms or individual units on a temporary basis to paying lodgers or guests, and includes a guest house, bed and breakfast, backpacker establishments, and camp sites, provided that the use complies with the requirements of any other relevant legislation”.
As far as the municipality is concerned, if you are renting out an entire house or flat on a short-term basis, or are renting out more than two rooms, even if the owner or a manager lives on the property, then this is defined as tourist accommodation. Higher municipal tariffs apply although one is allowed to apply for a rebate, which ranges from 100% down to 25%, to soften the financial impact. Tourism accommodation operators are required by law to have insurance over and above a normal householder’s public liability designed to cover the guests, their goods and the property.
Pam Nel, a Tourism Grading Assessor for the Tourism Grading Council of South Africa (TGCSA), says: “Imagine a tourist falling off a balcony or down a flight of stairs, being robbed or injured on the property. If the owner doesn’t have relevant insurance and indemnities, one incident could be ruinous to the owner and our industry in Hermanus.”
According to Pam, the issue is about more than just complying with the law. It’s also about the community putting its best foot forward and ensuring that there is a common standard that visitors can trust. “For years we have endeavoured to improve the standards in the accommodation industry in Hermanus. A star grading benchmarks the property so that the consumer has a guarantee of standard.
“Many graded properties make use of Airbnb as a source of customers – and many customers only book Airbnb properties that are benchmarked. With TGCSA Star Grading available at an 80% discount – making it very affordable – why would anyone not want the assistance of a professional consultant?” asks Pam.
The TGCSA has a category for self-catering villas, apartments and cottages. Public liability insurance for the accommodation industry can be easily purchased from a broker.
Airbnb in the South Africa
- Airbnb in South Africa
- Over 35 000 hosts across SA
- 65% of hosts are women
- Typical host earnings in the past year were $1 900 (approximately R26 000)
- Approximately 1 million guest arrivals in the year ending May 31, 2018
- Cape Town is the most popular destination
- South Africa is growing 65% Year-on-Year (YOY) but George has grown 88% and Plettenberg Bay 77%
- 40% of hosts claim that they use Airbnb earnings to help make ends meet
- 47% claim they use Airbnb to help afford staying in their homes
Note: Although Airbnb acknowledges that some hosts are small hotels, B&Bs or guesthouses, for the purposes of determining what income hosts receive, Airbnb assumes all hosts are private households since they say they are not able to determine which hosts fit in which groups.
Source: Airbnb in South Africa: The Positive Impact of Healthy Tourism, published by Airbnb, September 2018
Airbnb in the Overstrand
- 1 870 active rental properties with 1 235 active hosts
- 79% annual growth in rentals
- Average rental rate is R1 475 per night. Average rental revenue in November 2018 was R12 400
- Average occupancy of 32% in November 2018 (was 54% in December 2017)
- 78% rent an entire house, 22% a private room
- Average rental size is 3 bedrooms for 6 guests
- 40% of properties are available full time (22% for 10-12 months, 18% for 7-9 months)
- 224 hosts manage 879 properties, 991 are managed by individuals
- 77% of properties are booked for 1-3 months, 19% for 4-6 months
- Only 10 properties are booked for 10-12 months
- In 2010 there were 5 rentals. In 2015, 471. In 2016, 1 234. In 2017, 2 204. In 2018, 3 036 to date
Source: https://www.airdna.co/vacation-rental-data/app/za/western-cape/overstrand/overview Airdna analyses properties on Airbnb and Homeaway