Legal Position with Regard to Short-term Letting in South Africa

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• The recent surge in popularity of global accommodation websites such as Airbnb, enables property owners in South Africa to let their properties to holiday makers from all over the world. In recent years, these opportunities have been exploited by property owners around South Africa in particular, property owners in Sectional Title schemes and Homeowners Associations which are situated in coastal towns and cities where there is a burgeoning demand for secure and affordable self-catering holiday accommodation.

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• Understandably, an increasing number of property owners prefer the higher income generated from short-term letting over the traditional forms of renting out their properties on long-term leases.

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• In order to keep up with this trend, certain Sectional Title schemes and Homeowners Associations have taken steps to regulate short-term letting and in certain instances, they have taken measures to prohibit them. 

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• The question arises whether it is legally permissible for a Body Corporate or a Homeowners Association to restrict or prohibit owners from conducting short-term letting in their schemes. In a Sectional Title scheme, an owner acquires extensive rights to the use of his section. However, this general principle is subject to the provisions of the Sectional Title Schemes Management Act of 2011 (“the Act”) which binds not only all the owners of sections in the scheme but also includes any person occupying a section in the scheme. Although the term ‘occupier’ is not defined in the Act, it is submitted that an occupier must also include those tenants who are occupying units in terms of short-term leases. 

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• Although short-term letting is not specifically provided for in the Act, there are various provisions in the Act which provides guidance on this issue.

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1. Section 4 of the Act provides that a Body Corporate retains the power to do all things necessary for the enforcement of its Rules and for the management and administration of the common property in the scheme.

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2. Section 13 (d), (e) & (f) of the Act which provides that an owner must:-

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4. use and enjoy the common property in such a manner as not to interfere unreasonably with the use and enjoyment thereof by other owners or other persons lawfully on the premises;

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5. not use his or her section or exclusive use area, or permit it to be used in a manner or for a purpose which may cause a nuisance to any occupier of a section;

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6. notify the body corporate forthwith of any change or ownership or occupancy in his or her section.

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• A Sectional Title scheme is allowed to make its own rules, or amend its existing rules provided that any amendments are approved by the Community Schemes Ombud Service (CSOS). Once the amended Rules have been approved by the Ombud, the new rules are valid and binding on all owners and occupants in the scheme.

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• Should a Sectional Title scheme wish to limit or prohibit Airbnb activities in its scheme, it must first obtain the approval of the Body Corporate, authorised by a special resolution passed by at least 75% calculated both in value and in number of the votes of the members of the Body Corporate who are represented at the general meeting, or agree to in writing by members of the Body Corporate holding at least 75% calculated both in value and in number of all the votes.

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• In recent years, our Courts have been called upon to determine disputes involving the regulating and prohibition of Airbnb activity in Sectional Title schemes as well as in Homeowners Associations. In the Judgment of Body Corporate Paddock Sectional Title Scheme vs Nicholl 2020 (2) (SA) 472 (GJ), the Court held that an amendment to the Conduct Rules of a Sectional Title scheme which prohibited short-term rentals were in compliance with the Act. In this case, a Body Corporate had adopted a Special Resolution amending its Conduct Rules by prohibiting leases shorter than 6 months. The owner contended that the amended Rules were unfair and unreasonable and contrary to her constitutional right to freely deal with her property as intended in Section 25 of the Constitution of South Africa which provided for private ownership rights. In this case, notwithstanding the owner’s constitutional rights of ownership, the Court ruled that the scheme’s Conduct Rules as amended which prohibited short-term rentals did not violate the owner’s constitutional rights of private ownership and accordingly, the owner was ordered to desist with her Airbnb activities in her unit.

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• Having regard to the legal developments as regards the regularisation of Airbnb accommodation in South Africa, property investors should exercise caution when acquiring investment units for income derivation purposes. In particular, potential property investors in Sectional Title schemes as well as Homeowners Associations should familiarise themselves with the Conduct Rules of those schemes prior to acquisition to confirm that short-term letting in those schemes is not forbidden or restricted.

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