Navigating Short-Term Letting in Sectional Title Properties: Key insights and Regulations for Landlords

• Sectional title owners must inform the body corporate and ensure tenants adhere to conduct rules under the Sectional Titles Management Act.
• Bodies corporate can impose restrictions like minimum lease periods or bans on short-term rentals, with rules needing CSOS approval.
• Landlords should communicate openly with the body corporate, stay informed on regulations, and ensure tenants understand property rules for success.

As short-term rentals, particularly through platforms like Airbnb, continue to rise in South Africa, many owners and tenants in sectional title properties are expressing concerns.

Complaints about noise, parking issues, property damage, and, most significantly, security breaches, have become common within apartment complexes, estates, and townhouse developments.
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While freehold property owners have greater freedom in renting out their properties, sectional title owners face more stringent rules and regulations.

According to Grant Smee, CEO of Only Realty Property Group, sectional title property owners are governed by a different set of laws, creating a complex landscape for those looking to enter the short-term letting market. "While freehold property owners can act more freely, sectional title property owners are bound by the Sectional Titles Management Act (STSMA), which places restrictions and obligations on them," Smee explains.

The Growing Concern in Sectional Title Communities

The rise in short-term lettings in sectional title buildings has led to an increase in tensions. Issues such as noise disturbances, parking shortages, and security risks, particularly with transient guests, have prompted many bodies corporate to enforce rules limiting or outright banning short-term rentals.

While these complaints generally come from a small minority of units, the overall impact on the community is driving changes in the regulations that may eventually push owners toward long-term letting strategies.

Smee, however, reassures that the majority of short-term rental experiences are positive. "We still strongly encourage short-term letting as a sound investment strategy, especially with the current low interest rates. Despite the concerns, we expect to see more short-term rental properties entering the market," he adds.

Rules and Regulations Governing Short-Term Letting

In terms of regulatory requirements, the Sectional Titles Management Act requires property owners to notify their body corporate when they lease out their units. Owners must also ensure that their tenants are informed about and adhere to the complex’s conduct rules.

Bodies corporate have the authority to implement and modify rules related to the use of individual units and common areas, and may impose restrictions such as minimum lease periods (e.g., six months) or even ban short-term letting altogether, although the latter is a rare measure. These rules must be reasonable, applied uniformly, and approved by the Community Schemes Ombud Service (CSOS).

In addition to body corporate regulations, municipal by-laws may also impact the operation of short-term rentals. Property owners need to ensure they understand their zoning restrictions and whether they require special permission for short-term letting.
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Furthermore, government is in the process of introducing new national regulations, which could include mandatory registration of short-term rentals, adherence to health and safety standards, and the payment of hospitality taxes.

Guidance for Short-Term Letting Landlords

While these rules and regulations may appear daunting, Smee emphasizes that issues related to short-term rentals are generally rare. "Most landlords welcome well-behaved, well-informed guests. However, a small number of guests may not fully understand or follow the building’s rules, leading to security risks if not properly screened."

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To help landlords navigate these challenges, Smee shares some valuable tips for success:

1. Open Lines of Communication: The key to avoiding conflicts is transparent communication. “Be open and engaging with your body corporate to work together and address potential issues proactively.”
2. Understand the Rules: Ensure you thoroughly review your sectional title scheme’s management and conduct rules. Familiarize yourself with any restrictions regarding short-term rentals.
3. Stay Informed: Keep abreast of changes in legislation, body corporate rules, and local by-laws. Understanding these updates will allow you to adapt your short-term letting strategy accordingly.
4. Tenant Collaboration: Before accepting bookings, thoroughly vet your tenants and ensure they understand the rules. Smee recommends providing easy-to-understand, bite-sized snippets of the body corporate rules, such as "Parking in Bay 1 only. Visitors must park in visitor bays and get prior approval from the landlord."

Making Short-Term Letting Model  work

Short-term letting remains an exciting investment opportunity for many property owners, and when managed properly, it can be highly profitable. While concerns about security and other challenges are valid, staying proactive, informed, and hands-on in managing your property is the key to navigating the evolving regulatory environment.

By following the right processes and maintaining clear communication with your body corporate and tenants, you can ensure a smooth and successful short-term rental experience, despite the changing rules.

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