Your Sectional Title Unit and Airbnb

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Sectional Title Governance

Many people who own a second property are owners of a unit in a sectional title scheme for investment purposes. These units have largely been let to tenants for rental income, but more recently, Airbnb has changed the landscape of property rentals and how owners are able to derive an income from their investment properties.

The process to approval for extending a Sectional Title Units

Airbnb’s benefits to homeowners

The worldwide attention garnered by Airbnb and the overall convenience that these rentals offer travelers means that it has never been easier for owners to find short-term tenants. This has become an attractive alternative to longer term rentals as landlords are able to ask a higher rate over a two or three-night stay compared to an extended lease period, making this model very lucrative.

The risks

In turn, many permanent residents of sectional title schemes have found that the high number of people coming and going poses a security risk and also jeopardizes the reputation of the scheme, as these short-term tenants do not always adhere to the conduct rules.

Regulating Airbnb letting in sectional title properties

Short-term letting is currently not defined in the Sectional Titles Act 95 of 1986 nor in the Sectional Titles Schemes Management Act 8 of 2011. While it is easy enough to integrate new long-term tenants into the complex and ensure they receive a copy of the body corporate rules which need to be adhered to, short-term rentals pose an unusual challenge.

There has been widespread debate on the issue – some argue that Airbnb letting amounts to running a business while others state that Airbnb letting is no different than normal letting. The Ombud for community housing schemes has cleared up the confusion on the matter.

The Ombud has stated that a sectional title scheme is allowed to add a conduct rule forbidding short-term letting of any kind. However, the trustees will have to ensure that any such rule is properly approved by the owners in the scheme and administered. In addition, the Ombud commented and said “the rule should provide for trustees not to be unreasonable in its application”.

As it stands, many owners in a sectional title scheme feel that short-term rentals are not in the spirit of the Sectional Titles Act. The strategy in managing this process varies from city to city – for example Berlin has made it illegal for owners to rent out entire apartments to tourists without a permit from the city, imposing heavy fines for those found to be in contravention of this regulation.

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