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Tenants

Cape Town’s rental crisis: are digital nomads driving prices beyond reach for locals?

By | Rent, Tenants

Reprinted from Daily Maverick, by Rebecca Davis – 2024-12-04

We recently wrote about the tension between the benefits and drawbacks of short-term rentals such as Airbnb listings in the Cape Town rental market, where locals often have difficulty finding affordable rental accommodation. This article from the Daily Maverick shows there is another factor putting pressure on the market. 

Want to get tempers rising fast in Cape Town these days? Bring up the topic of digital nomads.

‘Hey, I work for a tech company,” began a Reddit entry from August 2024.

The author of the post, apparently American, proceeded to explain that he was considering moving his family to Cape Town.

“What sort of lifestyle is achievable with $200,000 [R3.6-million] to $300,000 [R5.4-million] a year? We have two children both primary school age and are aware of safety concerns.”

Not to worry, wrote back an apparently British digital nomad based in Cape Town.

“My 14-year-old would bus and train everywhere in London, he Ubers a lot here but it’s completely fine for him on his own if he’s streetwise. With the kind of money you’re on you can afford a driver for the kids anyway!”

Show this exchange to the average Capetonian these days, and chances are high that you will be met with something close to xenophobic rage.

Digital nomads – mostly young foreign professionals in tech, finance, media or insurance, who stay in Cape Town for months at a time working remotely – have become arguably the most hot-button issue of the moment.

John Maytham, host of the Afternoon Drive show on Cape Town’s most popular talk radio station, Cape Talk, says it is a topic which has the studio switchboards lighting up like a Christmas tree.

“I would say around 80% of the public reaction I get on this subject is negative,” Maytham told Daily Maverick.

From the perspective of the politicians at the City of Cape Town, this is an absolute no-brainer. Digital nomads already have jobs, so they don’t need employment here; they arrive with deep pockets and spend lavishly on food, entertainment and accommodation, pumping money into the local economy.

What’s the problem?

Log on to practically any social media platform and you will hear Capetonians arguing one case in particular: that digital nomads are disrupting the local markets through the weight of their (largely) Western currencies, driving restaurant and accommodation prices to levels completely unaffordable to locals.

“My mom was born and raised in Cape Town,” says Tiktokker Azee Green in a video viewed tens of thousands of times.

“I was born and raised in Cape Town, and I probably will never move out of home unless I live with someone else. I cannot afford to compete against the euro and the pound and the dollar.”

Tiktokker Jaxx-Amahle put things more bluntly in a video in late November.

“I suggest you heed this call and you listen closely: what is happening in Cape Town is unsustainable,” she tells the camera.

“That little Utopia is going to combust. And granted, at this stage, it is black and brown people who can’t afford to live in the city so no one cares – but white South Africans, you are next, I promise you. Because the rand is the rand is the rand. It’s not the euro and it’s not the dollar. And you will also be outpriced living in that city.”

One of the complicating issues is just how little data there is on this matter. In fact, there’s none.

The City of Cape Town admits that it does not know how many digital nomads are living and working in Cape Town.

Alderman James Vos pointed Daily Maverick to the Cape Town Digital Nomads Facebook group, which he said had 4,800 members. In fact, it has almost 17,000 members – but this is an obviously unreliable metric, since some members appear to be locals, and naturally not every digital nomad will be a member of the group.

Vos’s point was, however, that the number of members on the group paled in comparison with the Facebook groups for other digital nomad hotspots, like Lisbon, Bali and Medellin in Colombia.

It is highly likely that Cape Town attracts far fewer digital nomads than some of its international counterparts in safer locations. Indeed, on the website Nomads.com, which ranks destinations for digital nomads based on public feedback, Cape Town is listed at only number 36 – lower even than Lagos (31), apparently because Lagos is perceived as safer.

Daily Maverick canvassed co-working spaces around Cape Town, popular for use as offices by digital nomads, as to what proportion of their members they estimated to be foreign nationals.

The year-round average is 10-15%, said Cape Town Office; about 10%, reported Cube Workspace. A “significant portion”, estimated Workshop17.

The implementation of the South African government’s remote work visa – introduced by Home Affairs in May, just before the elections, after lobbying from the Western Cape government since 2021 – should mean that in future there will be some nomad numbers available.

Daily Maverick’s questions to Home Affairs regarding the take-up of the remote work visa went unanswered via email and WhatsApp for a week.

The new visa allows digital nomads to stay in South Africa for up to three years. Crucially, if they are spending more than six months here in a year, they need to register with SARS to pay tax.

This could go some way towards mollifying public resentment since one of the major current critiques of digital nomads is that they benefit from South African public services and spaces (roads, beaches and so on) for months on end without paying tax beyond VAT.

The question is whether digital nomads will bother to secure a remote work visa – when under the current system it is perfectly possible for them to stay in South Africa for long periods without one.

On forums like Reddit, one of the selling points of Cape Town as a digital nomad destination is how easy it is to live there indefinitely after initially entering on a 90-day tourist permit.

“You can practically stay here forever without being a resident,” one poster enthused.

“Come into the country, extend [your tourist visa] for another 3 months to 6 months. After 6 months you take a vacation and come back. Just repeat.”

Many nomads do what they term a “border run” or a “visa run”, instead of extending their tourist visa.

Amy, a Canadian digital nomad, explained the system in a 2023 YouTube video.

“Another way to get around this visa extension [issue] is by doing a visa run, which is what I did. In order to do a visa run you need to go to a non-neighbouring country for an unspecified amount of time,” she said.

Amy ended up taking a holiday in Zanzibar for two weeks.

“There aren’t any hard rules about how long you should be gone. However, if you’re only gone for about three or four days, and then you come back and try to get a fresh visa, they might only give you a week or two weeks because they think you’re just trying to do a visa run.”

To work in South Africa, even remotely, without a work permit is technically illegal.

Online, nomads swap tips: “Yes you can simply come to SA on a tourist visa and work from there. Nobody cares. Just tell the immigration officer you’re there for tourism.”

Are digital nomads skewing Cape Town’s rental market?

It depends on who you ask.

Neil Viljoen, a ReMax estate agent working largely in the City Bowl and Atlantic Seaboard areas, says the arrival of digital nomads has been a “massive player in the market”.

Viljoen said that many Cape Town-based property agencies now target digital nomads in their advertising.

“We have people coming for three, four, five months at a time and they pay good money. For a one bedroom, they’ll pay R25,000-R30,000 a month.”

Online, a common refrain from digital nomads is that Cape Town allows them to live “a 5-star lifestyle on a 3-star budget”: 3-star by Western standards.

Dutch vlogger Chris Schaap explained in a 2022 video: “You really have two options: you either stay in the City Bowl, or near the ocean”.

Showing viewers his 65 square-metre one-bedroomed apartment, Schaap said: “For an entire month, I pay around €1,600 [R30,451]. I think this is incredible value for money if you compare this to a short stay anywhere in Europe or North America”.

For locals, the Cape Town rental market in the central and coastal suburbs is eye-wateringly expensive; the median Western Cape salary in 2022, the most recent year for which Stats SA has released data, was R5,500 a month.

Of late the rental stock has also been shrinking due to the high number of properties being used either for short stays or for AirBnBs: as has been widely reported, Cape Town now has more AirBnB listings than cities like Florence, Berlin and Barcelona.

Alderman Vos strenuously defended Cape Town’s mushrooming short-term rental industry to Daily Maverick, saying that AirBnB “supported almost 50,000 jobs and contributed more than R23.5-billion to the South African economy in 2022”.

This year, videos on social media have shown hundreds of Capetonians queuing to view a single rental property, while stories abound about locals being outbid for rentals by foreigners who can offer six months’ rent or more upfront.

“It’s a symptom of a broader issue,” Ndifuna Ukwazi’s Jonty Cogger told Daily Maverick: the prioritisation of the luxury residential market, which caters for less than 10% of Capetonians.

Thus far, the City of Cape Town has shown no appetite to introduce regulation to cap rents – though Cogger points out that this would not be unprecedented for the city. He says that during apartheid, suburbs like Thornton had rent control for white tenants.

Cogger acknowledges that the question of “how much [government should be] willing to get involved in property markets” is a vexed one, due to the concern of dissuading investment. But foreign investors are themselves a disruptive force in the Cape Town property market.

“These developments keep going up and it’s fair to assume that they’re being bought up in batches by foreign investors.”

Alexa Horne, managing director of DG Properties, says the two major factors driving the Western Cape property boom are international investors and domestic semigration.

“These are primarily South African professionals and international investors seeking lifestyle and economic opportunities, not necessarily foreign digital nomads,” Horne told Daily Maverick.

She said the primary influences on Cape Town’s steep property prices were the sense of economic stability brought by the GNU, the reductions in load shedding, interest rate cuts and the city’s lifestyle appeal.

“Digital nomads might contribute marginally to rental demand, but they’re not the primary catalyst for our property price increases. They’re a visible trend, but not the fundamental economic driver many assume them to be.”

Yet that doesn’t stop them being scapegoated.

A report in Vox about digital nomads in Mexico City offers a revealing clue as to why:

Many residents acknowledge that it’s unproductive to blame foreigners for structural issues like housing, but they often have no other outlet for their frustration. As one Mexican blogger put it, “I feel like I can’t do anything directly against the housing bubble, but at least I can get some sort of satisfaction out of taking it out on what I’ve appointed as one of its representatives.”

“Digital nomads, go home!”

These stickers can be found around Mexico City: just one of the global spots where hostility towards digital nomads has been rising steadily over the past few years.

One digital nomad based in the Canary Islands received over 400 “bullying” messages from locals, calling her a “coloniser” after she posted a video online about one of her co-working ventures.

There are many places worse hit by the impact of remote workers than Cape Town. Costa Rica has seen sleepy beach spots rendered unaffordable to families who have spent annual holidays there for generations.

In digital nomad communities, there are certain ways of digital nomading considered more socially responsible than others. Some maintain that it is more ethical to stay in a hotel than in a residential property; others believe that it is incumbent on digital nomads to get involved in volunteer activities for NGOs in their host cities.

On Reddit, one common bit of advice nomads share is to avoid identifying themselves as digital nomads due to the growing antipathy.

Doubtless as a result of this rancour, Daily Maverick found it very difficult to persuade digital nomads in Cape Town to speak to us, despite reaching out to both individuals and online nomad groups.

The sole individual willing to talk to us asked to be identified only as Taylor from Toronto, who works remotely in logistics and who is currently undertaking her third three-month stint in Cape Town.

“Cape Town has blown up this year on the digital nomad scene, I think because the electricity problems were brought under control,” Taylor told Daily Maverick.

“Before then, it was the one thing you would hear all the time: South Africa is so beautiful and so affordable, but the electricity issues make it not that great for remote working. Now it’s like that roadblock is out of the way.”

She said the general consensus was, however, that Cape Town was less desirable as a digital nomad destination than places like Bali and Thailand because of the safety issue, particularly for female travellers.

Taylor was aware of the negative image of digital nomads in places like Spain and Portugal, but said that she hadn’t experienced any personal hostility in Cape Town.

“In practice I find that people in Cape Town are extremely friendly,” she said. DM


For further information

If you are a property owner, Airbnb host, or tenant with any questions on rental housing legislation or landlord–tenant relations, contact one of our eviction attorneys on 086 099 5146 or simon@sdlaw.co.za. Simon Dippenaar & Associates, Inc. is a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban working hard to help landlords and tenants maintain healthy working relationships.

Further reading:

The rise and rise of Airbnb

By | Tenants

Can Cape Town accommodate both tourists and residents?

Anyone looking for a flat to rent in Cape Town knows the city has a housing crisis. In popular areas, desirable properties are snapped up as soon as they come on the rental market, having been viewed by multiple hopeful prospective tenants. The rise of short-term rental platforms like Airbnb has been blamed by some for a dramatic shift in the housing market and the difficulty faced by locals trying to find affordable rental accommodation. But the reality is far more complex. Airbnb is only one factor influencing the housing market, and its impact is not exclusively negative. Short-term lets bring advantages as well as disadvantages. We look at both sides of the story.

Short-term lets

In the last few years, and especially since the Covid-19 pandemic, Cape Town has seen a surge in the popularity of short-term rentals. In areas like the City Bowl and Atlantic Seaboard, Airbnb listings have increased by 190% since 2022. According to Inside Airbnb, Cape Town has 23,564 listings, which attract an average price of R2367 per night. Most of these are entire homes. However, this is not the only source of pressure on the housing market.

Internal migration

The Western Cape has long been a destination for internal migration. About one in five of the province’s 7.433 million people was born elsewhere in the country, with two thirds coming from the Eastern Cape. Recently, inward migration has increased. Over the past 10 years, 295,908 people came to the Western Cape from other provinces, while 112,520 left, giving the province the highest inter-provincial net increase in the country at 183,388. (Source: StatsSA’s 2023 Migration Profile Report for South Africa, which analysed South Africa’s migration patterns.) One look at the number of Gauteng numberplates on our roads indicates that inward migration from Gauteng has increased, notably since Covid-19. Gauteng’s share of outmigration according to Census 2022 was 26.7%. This is an increase from 17.8% in Census 2011. Furthermore, the Western Cape is the place people are least likely to leave. Joburgers who come to Cape Town do so for a better life, with no intention of leaving, whereas people who move to Joburg often do so for economic and career advancement, with a very clear deadline in mind. Internal migration, whether from Eastern Cape or Gauteng, contributes to the shortage of housing stock. It’s inaccurate to attribute the entire problem to Airbnb.

Community concerns about short-term lets

Certain sectors of society have concerns about the negative effects of short-term lets and platforms such as Airbnb, and these concerns are legitimate. Some worry about the erosion of neighbourhood integrity and the displacement of families. When properties are converted to temporary accommodation, the stability enjoyed by long-term residents may be undermined. They may worry about noise and safety. They may feel a loss of cultural identity in areas that have historically defined Cape Town.

Undeniably, the growth in the short-term rental market has an impact on property affordability in the Mother City. It is not only rental prices that have been pushed up; property values are also rising, although this is driven by a variety of factors, including the attractiveness of Cape Town as a destination for both tourists and internal migrants. People relocating from Joburg remark on the high house prices here relative to their Gauteng property values. First-time buyers find it very difficult to get on the property ladder in Cape Town.

Advantages of short-term lets for communities

There are two sides to every story. Cape Town relies on tourism. As the rand has weakened over the years, South Africa has become an increasingly attractive destination for visitors from Europe, the UK, and the US. But even with a strong currency, hotel stays are expensive, especially when meals are factored in. The expansion of the accommodation market has made Cape Town accessible to a wider cohort of visitors. Furthermore, Airbnb has brought tourism into neighbourhoods that did not traditionally serve this trade, benefitting the local economy. Visitors occupying an entire house often buy groceries at local shops, dine in local restaurants, etc., supporting community entrepreneurs. There is an indirect, spin-off benefit in the increased need for support services, such as cleaners and Uber drivers.

Airbnb can also reveal previously “hidden” areas of Cape Town, taking visitors beyond the typical tourist areas. Allowing people to experience a more authentic side of Cape Town can encourage longer-term interest and engagement with the city and lead to return visits.

Furthermore, not all Airbnb hosts are wealthy tycoons with a portfolio of rental properties. Many are private individuals trying to supplement their meagre income. Many hosts move out of their own homes during the peak season and move in with family in order to make the entire property available to guests (a much more attractive proposition than a room in a shared home). Hosts report that Airbnb is a vital source of supplemental income which helps them make ends meet, as the cost of living continues to escalate.

The need for regulation

Proponents for both sides of the argument agree on the need for regulation. In response to a request from the Federated Hospitality Association of South Africa (FEDHASA), the Department of Tourism revealed its intention to regulate Airbnb and other home-sharing apps in April 2019 through the Tourism Amendment Bill. It published a green paper on the development and promotion of tourism in South Africa in October 2023, undertaking a policy review process that will inform the regulations in the Bill. Under consideration is a threshold for Airbnb locations in South Africa, including limits on how many nights a guest can book at one property. The aim is to keep properties available for long-term rental while still allowing homeowners to benefit from Airbnb during peak seasons. It’s hard to see quite how that would work; tenants want a home all year round. But requiring hosts to register with local authorities could provide greater transparency and more effective oversight of the short-term rental market.

The Chair of FEDHASA, Rosemary Anders, summarises: “We need to ensure that government and local authorities implement sustainable tourism policies that protect the economy, local communities and residents’ rights while simultaneously providing attractive accommodation options for tourists. This approach necessitates frameworks that safeguard all stakeholders.”

For further information

If you are a property owner, Airbnb host, or tenant with any questions on rental housing legislation or landlord–tenant relations, contact one of our eviction attorneys on 086 099 5146 or simon@sdlaw.co.za. Simon Dippenaar & Associates, Inc. is a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban working hard to help landlords and tenants maintain healthy working relationships.

Further reading:

Prescribed charges

By | Electricity, Tenants

How long are you liable for municipal charges?

If you own a property, you are responsible for payment of certain charges to your municipality. If you are a tenant, you may pay your own utility costs or you may have an “all-in” rent, in which the landlord accommodates the cost of electricity, water and sewerage, etc., within the rental amount, and they pay the municipality directly. The property owner must always pay the property rates. What happens if you fail to pay the municipal charges you are liable for, either as owner or occupier? Is there a statute of limitations on debt to the municipality? The answer is complicated. In this context, the law refers to “prescribed charges”.

What does “prescribed” mean? 

A charge is prescribed when the law considers the debt too old for the creditor to enforce collection. A creditor can still demand payment of prescribed charges and include them on an invoice, but the defence of prescription may be used by the debtor to avoid payment. 

The National Credit Act 34 of 2005 (read with the National Credit Amendments Act 19 of 2014) makes it unlawful for a municipality to invoice a consumer for prescribed charges, or to collect them.

When do municipal charges prescribe?

The prescription of municipal charges is covered by the Prescription Act, Act 68 of 1969, read with current case law. In South Africa, refuse, rates and sewerage charges prescribe after a period of 30 years. However, water and electricity charges prescribe after a period of just three years. Water and electricity can easily be disconnected by the municipality for non-payment, unlike refuse collection or sewerage, which may explain the shorter prescription period.

Principles of prescription of municipal charges 

There is a mild anomaly in the way the prescription period is set for municipal charges. Debts generally fall due when the customer (the debtor) receives the invoice. The prescription period theoretically starts running when the debt falls due. However, we have all experienced times when our municipal bills arrive later than usual. In this case, prescription starts running when the knowledge of the claim should reasonably have come to the creditor’s attention. In plain English, if the municipality fails to invoice consumers for an extended period, then prescription starts when it reasonably ought to have done so, and not when the invoices were eventually despatched. 

Prescription is “interrupted” and the prescription period restarts if a consumer has admitted liability for the charge unambiguously and unequivocally. This can be problematic if a consumer signs an acknowledgement of debt for charges under dispute, to procure a payment plan or arrange for reconnection of services which were terminated due to non-payment. 

Payment of a prescribed charge and interruption of prescription

Once an amount has been paid, it cannot prescribe. Even if you made the payment in ignorance of this condition and in error, you cannot claim a reversal of the prescribed amount, or a refund of the amount paid. If a municipality has summonsed a consumer for an unpaid amount, this amount does not prescribe. 

Part payment of a debt, or acknowledgement of part of a debt, can interrupt the prescription period for the whole debt. This is sometimes an issue when a municipality sends out invoices based on estimated readings for an extended period of time. If a consumer either pays or admits liability for the charges raised on estimated readings, and the municipality then reconciles the consumer’s account with the actual readings and raises further charges, the new charges cannot prescribe.

Do you need further information? 

Prescription should not arise if you pay your bills on time. If you think you have been invoiced inaccurately or unfairly, relying on the prescription period is not the most appropriate way to avoid paying a charge you believe is unfair. If the charge is for water or electricity, you are likely to be disconnected. If the charge is for rates, refuse or sewerage, 30 years is a long time to be in dispute with the council! 

If you have any questions about your bill, speak to your municipality in the first instance. If you are in financial difficulty and are unable to pay your bill, it will usually agree to arrange a payment plan, but it’s important to make contact as early as possible and not as a last resort.

If you have done this and are still in dispute, SD Law can help. We are a firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We help landlords and tenants maintain healthy working relationships and we can also resolve matters with municipalities. Contact one of our attorneys on 086 099 5146 or simon@sdlaw.co.za if you need help with any property issues.

Further reading: