South Carolina Judge Voids Folly Beach's Rental Cap, Fees

A South Carolina circuit court judge has struck down Folly Beach's ordinance capping the number of short-term rental licenses the city issues and the permit fees owners had to pay to hold one, ruling that both provisions go beyond what state law lets a municipality regulate. The ruling voids the cap and fee structure for the barrier island town outside Charleston, though the city retains the option to appeal.

What the ordinance did and why it failed

Folly Beach had limited the total number of properties allowed to hold a short-term rental permit at any one time, then charged owners annual fees to obtain or renew that permit. Rental owners challenged both pieces, arguing the town had no statutory basis to ration licenses by quota or to layer fees on top of what state law already allows cities to charge for standard business licensing. The judge agreed, finding the ordinance reached into regulatory territory the state legislature reserved for itself rather than for local governments.

What changes for operators on the island

Anyone holding or seeking a short-term rental permit in Folly Beach no longer faces a numeric ceiling on how many the city will grant, and the fees charged specifically under that permit process are no longer enforceable as written. That doesn't mean the town has no oversight left. Zoning restrictions, life-safety inspections and the city's general business license requirement still apply. What's gone, at least for now, is the specific tool Folly Beach used to cap rental supply and fund enforcement of that cap - unless the city appeals successfully or rewrites the ordinance to fit within the authority state law actually grants municipalities.

A mixed record for beach-town rental caps

Coastal towns across the Carolinas have leaned on caps and above-cost permit fees to slow rental growth as short-term listings spread into owner-occupied streets. This ruling hands owners elsewhere in South Carolina a legal argument to challenge similar ordinances on the same grounds. Other jurisdictions have gone the other way: New Orleans kept its one-rental-per-block cap intact after losing an appeal, a reminder that outcomes turn heavily on the specific state and local law involved, not just the politics of rental density.

Folly Beach has not said publicly whether it will appeal or draft a replacement ordinance. Either path leaves current permit holders with an open question: whether fees already paid under the voided rule get refunded, or whether the city simply moves to reimpose something similar under different legal footing.