Short-term rentals have caused some strife for Lowcountry locals in the past, but the city of Charleston’s policies have become a model starting to be used by neighboring municipalities like Folly Beach and Mount Pleasant.
“In about 2016, when you really started to see the book for short-term rentals, there was an onslaught of rentals in residential areas,” said Daniel Riccio, director of livability for the city of Charleston. “Noise complaints increased; trash complaints increased; parking complaints increased. And at that time, there were really no ordinances to regulate these short-term rentals. There was nothing we could really do to hold these property owners accountable.”
That’s when Charleston officials put together a task force of city staff, local business owners, local residents, Realtors and others, all of whom had a stake in the short-term rental game. They came up with an ordinance which requires a city-approved permit for anyone who wants to advertise on any short-term rental platform — like Airbnb.
It was a compromise, Riccio said, that sought to address residents’ concerns without over-policing those who wanted to rent out space to short-term guests. “Some were for it; some were against it,” he said. Ultimately, the draft proposal was passed by City Council in 2018.
“We’re the No. 1 city in the world — everyone wants to visit Charleston,” Riccio added. “So you want to give them a residential quality of life within these neighborhoods, but with less of the impact on actual residents from the short-term guests coming in daily. [The ordinance] has curbed that quite a bit. Complaints have reduced with parking, noise, trash, all of it since enforcement began.”
Neighboring areas facing challenges
Dustin Abney, CEO of Portoro, a Charleston-based short-term rental management company, said the permit process in Charleston has most operators happy.
“It’s very clear and well-defined,” he said. “It’s easy to understand, and the process isn’t really that daunting to get a permit.”
But nearby, Folly Beach’s recent decision to set a hard limit on the number of short-term rentals to 800 units has made it difficult for operators to find middle ground. The challenges are exacerbated by the number of rental spaces currently exceeding 1,200, which is about half the island’s residences.
“It presents a challenge to anybody who wants to operate a short-term rental in that area in the future,” Abney said. “You don’t know how long it’s going to take to get a permit. There is an argument to be made that you want to keep Folly Folly … but it’s hard to argue how you can limit someone’s property rights.”
Before North Charleston implemented a clear policy similar to Charleston’s, Abney said it was “sort of the wild, wild West.” There was plenty of interest from residents who wanted to look into short-term rentals, but with no policy in place, it was a huge risk for would-be operators, who would have gone in blind, not knowing if they would end up on the right side of any future policy.
“That’s why it’s important for places to get in front of these issues,” Abney said. “Cities are doing themselves a big disservice if they’re sleeping on this. The rules are rapidly changing, but people still want unique experiences. There’s a greater way to explore areas and experience places. Short-term rental gives you that.”
Right now, Charleston has 492 active permits for short-term rentals. On the flip side, the city has issued 717 court summons for non-permitted renting since 2018. Of those, 667 have been adjudicated through court, and the city has collected $547,847 in court fines. But it isn’t necessarily about the money, Riccio said, as the ordinance pursues unpermitted renting criminally, rather than simply levying a fine.
“Most cities, especially in the tri-county area, are really geared toward monetary penalties,” he said. “They’re not really enforcing it through the criminal ordinance. Some are starting to do that after seeing our success with the enforcement action on the non-permitted locations. The trend is changing from creating revenue to actually solving the problem.”
When these unpermitted short-term rental spaces are shut down, they are often returned to housing stock, either being sold to new owners or transitioned to long-term rental space. This gives the opportunity to other people for housing rather than short-term renters, as a result of the ordinance. Riccio estimated nearly 300 homes have been returned to housing stock over the last two years.
‘Politicized’ battle looms
On June 1, Airbnb sued New York City over an ordinance that the company said imposed arbitrary restrictions that greatly reduced the local supply of short-term rentals. The ordinance, passed in 2022, requires owners to register with the mayor’s office, disclose all people who live on the property, and comply with zoning, construction and maintenance ordinances.
This isn’t the first time the short-term rental company has been at odds with New York. Airbnb sued the state of New York in 2016 over a ban on advertising short-term rentals, but it dropped the lawsuit when New York City promised not to enforce it. And in 2020, Airbnb settled a lawsuit against the city over monthly reporting requirements for its listing.
“It’s swung from one side of the pendulum super far to the other side,” Abney said. “I would call it a sort of politicized battle between local jurisdictions, property owners and of course, Airbnb. It’s a long, drawn-out battle, and that’s the tough part of what we see in this industry.
“Most professional operators, we’re okay with policy and we’re okay with rules,” he added. “Nobody is arguing against having to register, pay taxes, maintain the space, but it has to be reasonable in nature. It has to accommodate a reasonable number of properties in a given area. What I see [in New York] right now … makes it so hard to acquire a permit, it almost negates the fact that you can have one at all.”
Abney said he hopes similar tourist-heavy spots like Folly Beach continue to look to Charleston’s policies for example, rather than follow New York’s lead.
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