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Bill would make local bans on short-term rentals illegal in SC

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COLUMBIA, S.C. (WCSC) - A growing number of cities and counties around South Carolina are trying to set regulations around or even outright ban short-term rentals, and some have already passed local ordinances and laws to do that.

But a bill introduced this year at the State House would make imposing these bans illegal and places that do it anyways could be out millions of dollars.

“Short-term rentals allow people to visit and stay places they otherwise wouldn’t, bringing in new tourists with dollars to spend in South Carolina every day,” South Carolina REALTORS President-Elect Reah Smith said. “As a realtor, my job is to protect private property rights, and those include the right to generate income off of our property.”

The trade association urged the passage of H.3253 at a news conference at the State House on Thursday, when it also released the findings of a recent report from University of South Carolina Research Economist Joseph Von Nessen on short-term rentals.

Von Nessen’s study found these rentals, which include Airbnb and Vrbo, have a $4.2 billion impact on South Carolina’s economy each year, generating nearly $2 billion in revenue for property owners annually.

“The dollars that we’re talking about translate for a real opportunity for real people to help build their communities and their lives,” South Carolina REALTORS President Rob Woodul said.

The bill would prohibit local governments from enacting local laws that ban renting a residence, spanning from entire homes to individual beds, for fewer than 29 days.

The bipartisan legislation currently has a dozen sponsors, led by Rep. Lee Hewitt, a realtor and broker in Murrells Inlet.

“One percent of the properties are probably causing 95% of the issues that’s causing the cities and counties to act this way,” Hewitt, R – Georgetown and the bill’s primary sponsor said. “If we can clean that up, it would help them tremendously, and they can continue to reap the tax benefits that are coming from these.”

These restrictions vary, and they are in place across the state, though largely in coastal communities popular with tourists.

Sullivan’s Island has banned short-term rentals for about two decades.

In Greenville, homes in residential zoning districts can’t be leased for any fewer than 30 days, and in Myrtle Beach, it’s no fewer than 90 days.

Last week, Folly Beach residents voted to cap the number of short-term rentals allowed at 800, and in Charleston, owners must follow strict rules, including obtaining a business license and living at the residence for at least half the year, though many have been skirting the rules.

After considering and then deciding against enacting a ban on short-term rentals, Columbia is currently mulling a new ordinance that would put tighter regulations on them.

While this bill would not make those restrictions illegal, one city council member in the capital city called the legislation “an intrusion on home rule.”

“The cities are responsible for providing residential homes and residentially-zone properties with a peaceful enjoyment of their property, and if we cannot regulate short-term rentals, especially short-term rentals that are investor-owned in their community, you’re not going to have a peaceful enjoyment of your property,” Columbia City Councilmember Howard Duvall said.

Under the bill, cities and counties that impose short-term rental bans would face penalties, including not being able to collect a 6% commercial property tax currently levied on short-term rentals; instead, those property owners would be charged a lower 4% rate reserved for primary residences.

They would also be barred from receiving money from the state’s Local Government Fund, from which annual allocations can range from hundreds of dollars to millions, based on population.

“There are some concerns,” Rep. Russell Ott, D – Calhoun, said, adding he was undecided on the bill. “Number one, the penalties are pretty stiff. … It could be trash pickup. It could be police protection. You name it, it’s funding that particular local government, so when you take away that LGF funding or that tax assessment, then it’s going to impact services in that community.”

Ott said while he tends to favor respecting the authority of local governments to impose their own rules, he also acknowledges state interests can trump that, especially when it concerns an industry as critical to South Carolina’s economy as tourism.

“That is always a sticky issue, so it’ll be an interesting debate for sure,” he said.

This bill is currently awaiting a hearing in the House Medical, Military, Public and Municipal Affairs Committee. A similar bill was proposed at the State House last year but died before it got a debate.

Copyright 2023 WCSC. All rights reserved.

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