Umdloti Airbnb-style rentals hit by steep municipal rates increases

The growth of Airbnb-style rentals and eThekwini Municipality’s subsequent recategorisation of these properties as commercial have left Umdloti property owners facing sudden steep rates increases.

One resident who shared his municipal bills with the Courier appears to have been hit with a 260% rates increase on a one-bedroom beachfront apartment used for holiday accommodation.

“They are killing the goose that lays the golden egg,” he said, warning of “devastating” job losses among cleaners, electricians, laundromats and restaurants if property owners withdraw from holiday letting.

While supporting reasonable regulation, he questioned the “unannounced” rerating and scale of the increase, saying it could wipe out up to two-thirds of the current market.

Umdloti Resort general manager Trevor Jarvis said the changes followed a physical inspection in May by consultants who apparently identified unregistered Airbnb-style rentals on online booking platforms. He said invoices reflecting the higher rates arrived about two months later without further consultation.

Equal playing field

Umhlanga Tourism said the recategorisation aims to prevent unregistered operators from undercutting compliant businesses, ensure minimum accommodation standards and protect the area’s reputation as a tourism destination.

To be compliant, Airbnb-style accommodation businesses must register with their local Community Tourism Organisation (CTO) – in this case, Umhlanga Tourism – as well as the Department of Economic Development, Tourism and Environmental Affairs (EDTEA) and the local municipality.

eThekwini Municipality spokesperson Senzelwe Mzila said the process was taking place metro-wide in accordance with the Local Government: Municipal Property Rates Act, 2004 (MPRA), and the municipality’s Property Rates Policy.

He said it was the standard process for determining how properties should be rated and should not be viewed as a “crackdown” on short-term rental owners.

Mzila said a flat is not automatically classified as residential. Under the MPRA and eThekwini’s Rates Policy, how the property is used determines its category.

A flat used as a permanent home is residential, while one regularly rented to holidaymakers is considered commercial accommodation and rated accordingly. The policy specifically includes holiday flats and apartments in its definition of commercial accommodation.

Mzila said qualifying Airbnb-style properties could receive rates rebates of up to 64%.

Owners who believe their property has been incorrectly categorised can lodge an objection with supporting documents. If dissatisfied with the outcome, they may appeal to the Valuation Appeal Board.