news.

POSSIBLE PITFALLS OF RENTING YOUR PROPERTY AS AN AIRBnB IN S.A.
Niel Cloete
4 June 2018

Modern technology has made it possible for travellers to book the best, most convenient or luxurious accommodation in various cities across the world. Well-known electronic applications such as LekkerSlaap, Airbnb, Uber and TripAdvisor have afforded today’s travellers with the ability to travel to and book accommodation in a variety of exotic destinations at the touch of a button and from the convenience of the touchpad associated with their device.

Some Investors in real estate (especially in big cosmopolitan cities) have found that renting accommodation to travellers by making use of applications such as Airbnb have proven to be more beneficial than traditional leasing models. In fact, some of them have gone so far as to state that they’ve struck proverbial gold as they’ve been able to pay off the mortgage on their property in half the amount of time. This is seemingly occasioned by the higher revenue generated through applications such as Airbnb.

Investors may however have lost sight of the fact that the use of modern day applications do not necessarily relieve them from the slightly less modern town planning legislation and ordinances which deal with, amongst other, the use of property in various demarcated areas.

The Tshwane Town-Planning Scheme 2008 (as promulgated on 13 November 2014) contains the following categories of buildings (under which an Airbnb may possibly be categorized) for which permission may be sought to operate same as such:

1.         Business Building
2.         Guesthouse
3.         Habitable Room
4.         Hotel

Rezoning of property is not a straight-forward affair. In order to rezone your property, we would recommend the appointment of a professional town planner for purposes of drafting and submitting the requisite application to the city council. In this application they will address, amongst other, the relevant provisions of the applicable town planning scheme, deal with restrictive title conditions and legislation which regulates property developments such as the National Building Regulations and Building Standards Act 103 of 1977 and possibly the Spatial Planning and Land Use Management Act (more often referred to as “SPLUMA”) 16 of 2013.

In making application to the City Council to conduct an operation from an investment property which is akin to one of those listed above, the following factors, amongst other will also have to be considered especially when the property is situated in a sectional scheme:

a.         Are there any prohibitions or exclusions contained in the conditions of establishment of the town (suburb) preventing use of the property in the manner for which use is sought in the application;

b.         Whether occupation of a sectional title unit would not contravene paragraph 9 of the Prescribed Conduct Rules as recorded in Rule 7 of Annexure 2 of the Sectional Titles Schemes Management Act which requires adherence by any person to whom a right of occupation has been granted to the “Conduct Rules” of the relevant Sectional Title Scheme;

c.         The requirement imposed upon an owner of a sectional title unit to notify the body corporate of any change of ownership or occupancy in his section in terms of Section 13(1)(f) of the Sectional Titles Management Act 8/2011;

d.         The provisions of section 13(1)(g) of the Sectional Titles Management Act 8/2011 which state that:

“….when the purpose for which a section or exclusive use area is intended to be used is expressly or by implication on or by a registered sectional plan, not use nor permit such section or exclusive use area to be used for any other purpose: Provided that with written consent of all owners such section or exclusive use area may be used for that purpose as consented to.”

It is clear that a legal duty is imposed upon the owner to obtain the requisite permission prior to cashing in on property rentals by making use of the various advanced modern applications.

Failure to do so may have dire financial consequences. In particular Section 36 of the City of Tshwane Land Use Management By-Law (as promulgated on 2 March 2016) stipulates that an owner of such property is guilty of an offence if he/she permits land (which includes property) to be used in a manner other than permitted by the Land Use Scheme. The penalty provision stipulates in Section 36(3) that any person convicted of an offence in terms of this By-Law, shall be liable to a fine of not less than R5000.00 or a period of 12 months’ imprisonment.