Challenges with short-term letting in sectional title schemes in South Africa
Lessons from the Paddock Judgment
Body Corporate of the Paddock Sectional Title Scheme v Nicholl 2020 (2) SA 472 (GJ) (“the Paddock judgment”)
Introduction | Short-term rentals as an investment
A common property investment strategy is to acquire a sectional title unit and generate rental income, typically through a long-term lease, to secure consistent returns. However, ownership in a sectional title scheme is subject to a framework of management and conduct rules that govern how an owner may use and enjoy their unit. These rules apply equally to all owners and occupiers in the scheme.
In most traditional leasing arrangements, compliance is straightforward: the owner can incorporate the scheme’s rules into the lease agreement, ensuring that the tenant is aware of them and bound to comply. Challenges tend to arise when a unit is used for short-term letting, such as holiday rentals or Airbnb, where the turnover of tenants is higher and monitoring compliance becomes more complex.
This issue came under judicial scrutiny in the South Gauteng High Court in Body Corporate of the Paddock Sectional Title Scheme v Nicholl 2020 (2) SA 472 (GJ) (“the Paddock judgment”).
This article outlines the legislative framework, discusses the court’s reasoning in the Paddock matter, and considers the implications for owners and prospective purchasers.
The Legislative framework
Sectional title schemes are regulated by the Sectional Titles Act 95 of 1986 (“STA”), the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) with its regulations, and the Community Schemes Ombud Service Act 9 of 2011 (“CSOSA’).
A body corporate is automatically established once a person other than the developer becomes an owner of a unit in the scheme, and every owner becomes a member of that body corporate. Each scheme must adopt management and conduct rules to regulate the use and management of the property. In terms of section 10(3) of the STSMA, these rules must be reasonable and apply equally to all owners.
Amendments to the rules require the approval of the Chief Ombud, who considers the nature of the scheme and whether the amendments are reasonable. Once approved, the rules are binding on all owners and occupiers. The trustees are tasked with enforcing these rules, although the body corporate may appoint managing agents to handle the day-to-day administration.
The Paddock Case
The applicant in the matter was the body corporate of The Paddock, a sectional title scheme in Sandown, Sandton. The respondent, Nicholl, owned a unit in the scheme and rented it out through Airbnb. Following complaints from residents about security risks and allegations of inappropriate behaviour by short-term tenants, the body corporate amended its conduct rules to prohibit leases shorter than six months and to prevent units from being used for commercial purposes.
These amendments were approved by Community Schemes Ombud Service (“CSOS”). Nevertheless, Nicholl continued to operate her Airbnb, prompting the body corporate to seek a final interdict. In response, Nicholl brought a counter-application challenging the rules as unconstitutional, arguing that they infringed her property rights under section 25 of the South African Constitution by limiting her ability to generate income.
Court’s reasoning
The court examined whether the amendments complied with the STSMA, whether they were reasonable and applicable to the respondent, whether they amounted to an arbitrary deprivation of property in terms of section 25 of the South African Constitution, and whether the body corporate was entitled to a final interdict.
It held that reasonableness depends on the character and circumstances of the scheme. Disruption that may be acceptable in student accommodation could be intolerable in a quiet, low-density residential complex. In this instance, the Airbnb operation caused a level of intrusion and disruption that residents could not reasonably be expected to tolerate. The amendments satisfied section 10(3) of the STSMA, being both reasonable and equally applicable to all owners.
On the constitutional challenge, the court found that the amendments did not arbitrarily deprive the respondent of her property rights but rather constituted a justifiable limitation in the interests of the community. The body corporate was therefore entitled to the interdict, and Nicholl was ordered to cease operating her Airbnb.
Conclusion | Buyers must do their research
The Paddock judgment underscores several important principles for sectional title ownership. Owners are bound not only by the rules in place when they purchase a unit but also by any validly adopted amendments. The reasonableness of restrictions, such as prohibitions on short-term letting, is context-specific and will depend on the nature and character of the scheme. While property rights are constitutionally protected, they are not absolute and may be lawfully limited where necessary to protect the collective interests of the community. For prospective purchasers, thorough due diligence is essential—not only to understand the current rules but also to anticipate the possibility of future amendments that could impact intended use. Where rules have been validly adopted, compliance is not optional, and failure to comply may result in enforcement action through the courts or CSOS.
If you are interested in seeking our legal advice, please email info@tvdmconsutlants.com or contact 061 536 3138 today!
Meet the Author
Rizaar Smidt is a Community Schemes Consultant at TVDM Consultants.
Rizaar studied at the University of the Western Cape, where he obtained his LLB degree Cum Laude. He served his articles of clerkship at STBB, a leading law firm in South Africa, gaining extensive experience in Property Law, as well as General and Commercial Litigation. Following articles, Rizaar was duly admitted as an Attorney of the High Court of South Africa, whereafter he was retained at STBB and practised as an Associate Attorney in their Litigation and Dispute Resolution Department. During his tenure, Rizaar independently managed a demanding civil and commercial litigation portfolio, to read more about Rizaar, click here.
Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of TVDM Consultants. The content herein is for information purpose only, and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever, and no action should be taken on the basis thereof unless the application and accuracy has been confirmed by a legal advisor. TVDM Consultants and the author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content.
