Folly Beach, SC, Fights to Keep STR Cap After Judge Strikes It Down

8/26/2026

Folly Beach, SC, is appealing a judge’s decision that struck down its voter-approved cap of 800 non-owner-occupied short-term rental licenses. The judge ruled that the referendum improperly involved business licensing and taxation, and separately invalidated the city’s STR registration fee as an unauthorized tax. While pursuing the appeal, the City Council approved the first reading of a temporary moratorium on most new STR licenses to limit legal exposure. Exceptions include renewals, certain hardship and inheritance cases, waitlisted applicants, qualifying pending applications, and some owner-occupied rentals. The dispute has reignited debate over whether a cap is necessary, with some residents supporting regulation but questioning the current limit. The city is also commissioning an STR study to assess future policies and hopes to complete it before next year’s rental season.

ABC News 4 (SC) (08/19/26) Jane Caroline Fusco

Why It Matters: The ruling could limit how local governments structure STR caps and fees, while Folly Beach’s appeal may shape the legal boundaries for similar regulations elsewhere.