The concept of short-term rentals has taken South Carolina by storm. Whether it’s a quaint beachside cottage or a historic downtown apartment, platforms like Airbnb and VRBO have made it easier than ever for property owners to connect with vacationers seeking unique lodging experiences.
Not only do short-term rentals provide a unique and personal touch to a vacation, but they also offer homeowners an excellent opportunity to generate extra income. However, with this burgeoning popularity comes many vacation rental legal issues and regulatory hurdles that property owners must face.
Our short-term rental lawyers understand the allure of this lucrative opportunity and the potential headaches that come with it. So, if you’re looking for legal advice on short-term rentals, contact our experienced Camden real estate lawyers today at 803-432-4391.
Popularity of Short-Term Rentals in South Carolina
South Carolina has seen a significant surge in the popularity of short-term rentals, driven by the scenic beauty of its coastal towns, historic cities, and vibrant tourist activities. It draws millions of visitors annually as a vacation destination, creating a robust market for short-term lodging options. Property owners leverage platforms like Airbnb and VRBO to convert residences into profitable ventures.
The allure of flexible accommodation options and the personal touch of these rentals often make them more attractive than traditional hotels. The trend is fueled by tourists, business travelers, and locals seeking staycations, driving demand year-round.
However, this boom has not come without its challenges. As the number of short-term rentals increases, so do concerns about housing availability, neighborhood dynamics, and regulatory compliance. These issues prompt local governments to consider and implement regulations that balance the interests of all parties involved. This evolving landscape makes it essential for property owners to stay informed and adaptable, ensuring their investment remains profitable and compliant with local laws.
Understanding South Carolina’s Regulations on Short-Term Rentals
South Carolina does not have a unified state law regulating short-term rentals, so the responsibility is left to local governments. This means regulations can vary significantly from one local government to another.
Several local governments have implemented their regulations regarding short-term rentals. Here are a few examples.
Charleston, SC: In 2018, Charleston lifted its ban on vacation rentals and implemented strict regulations for short-term rentals. One key regulation specifies which types of buildings can be used for short-term rentals to preserve historic structures and prevent new construction solely for rental purposes. Owners must also obtain a permit before commencing operations.
Greenville, SC: In Greenville, property owners must first verify if their property is zoned for short-term rentals. For properties zoned for rentals for fewer than 30 days, owners must obtain a business license and a short-term rental permit. Properties zoned for rentals between 30 and 90 days only require a business license.
Columbia, SC: In Columbia, rental owners must obtain a business license and an STR (short-term rental) permit for all owner-occupied and non-owner-occupied rentals available for fewer than 30 consecutive days.
Zoning and Permitting Challenges for Short-Term Rentals
Our primary hurdle for rental owners is complying with local zoning laws. Many areas are zoned exclusively for residential use and do not automatically permit short-term rentals. These regulations are established to maintain the character of communities, ensure safety, and manage the impacts such rentals can have on neighborhoods. Violations can result in hefty fines or even the closure of the rental property.
Permitting Process
In addition to zoning restrictions, short-term rental operators often must obtain a permit or a license to operate legally. The permitting process typically involves the following:
- Application Submission: Homeowners must submit an application that includes details about the property and its intended use.
- Safety Inspection: Properties may need to pass various safety inspections to meet health and fire codes.
- Neighborhood Notifications: Some localities require that neighbors be notified of your intent to operate an STR, offering them an opportunity to voice any concerns.
- Fee Payment: There are usually fees associated with the permitting process, which can vary significantly from one locale to another.
Challenges and Legal Considerations
One of the major challenges is the evolving nature of these regulations. As the popularity of STRs increases, many cities and countries are revisiting and revising their laws, which can introduce new compliance requirements or adjust existing ones. This fluid regulatory environment makes it essential for property owners to stay informed and adaptable.
Additionally, property owners may face opposition from neighborhood associations or community groups, which can influence local governments to impose stricter regulations.
Tax Implications for Short-Term Rental Owners
Specific tax regulations govern short-term rentals in South Carolina. According to state law, short-term rentals are defined as rentals lasting fewer than 90 consecutive days. Owners of such rentals must account for state sales tax, state accommodations tax, and local taxes.
However, owners are exempt from collecting state accommodations tax under the following conditions:
- They rent out the property for fewer than 15 days in a taxable year or,
- They rent out a property they own and live in, with six bedrooms or fewer, provided they do not use a short-term rental platform for bookings.
To collect state taxes on short-term rentals in South Carolina, owners must obtain a retail license from the South Carolina Department of Revenue. Owners who rent accommodations for less than a week in any calendar quarter are exempt from this registration but must still collect and remit lodging taxes.
Owners exclusively using short-term rental platforms like Airbnb or VRBO do not need to register with the state or collect state short-term rental taxes. However, holders of an active retail license must still file state lodging tax returns, which may result in a zero return if all rentals were processed through a marketplace. Additionally, local governments may impose their specific tax laws on short-term rentals.
Liability and Insurance Considerations for Short-Term Rentals
Operating a short-term rental comes with inherent liability risks, including property damage and injuries to guests. Standard homeowners insurance policies may not cover incidents during a rental period, necessitating additional liability and property insurance.
Liability Risks
Here are some of the key liability risks to be aware of:
- Property Damage: Guests may accidentally or intentionally cause damage to the rental property. Without proper coverage, the cost of repairs could significantly impact the owner’s finances.
- Injuries to Guests: If a guest is injured on the property, the owner could be liable for medical expenses and other damages if they’re found negligent.
- Theft: There is also the risk of theft, either by guests or due to security breaches made possible by guest access.
Insurance Coverage
To mitigate the liability risks, property owners should consider the following types of insurance:
- Short-Term Rental Insurance: These are specialized policies designed to cover periods when your property is rented out. These policies often provide comprehensive coverage, including property damage caused by guests, theft, and liability if a guest is injured on your property.
- Liability Insurance: It is crucial to have liability coverage that protects against claims of bodily injury or property damage sustained by guests. This coverage can help cover legal fees, settlements, or medical bills resulting from injuries.
- Additional Coverage: Depending on the location and type of property, additional coverage for natural disasters, vandalism, or loss of income due to unforeseen property unavailability might be necessary.
Legal Advice: Short-Term Rentals in South Carolina
Here are several best practices that can help renters avoid short-term vacation rental legal issues.
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Obtain the Necessary Permits and Licenses
Ensure you have all required permits and licenses before listing your property. This might include business licenses, short-term rental permits, or special zoning permits. Consult with a short-term rental lawyer to understand what is needed for your specific location and property type.
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Draft Clear Rental Agreements
Use comprehensive rental agreements that clearly state the terms and conditions of the rental, including cancellation policies and rules about pets, smoking, and noise levels. Ensure your guests understand and agree to these terms before they book their stay.
If you need help drafting a short-term rental agreement, contact a South Carolina short-term rental lawyer. Contact us today at 803-618-3198.
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Conduct Regular Property Maintenance
Regularly inspect and maintain your property to ensure it meets safety standards and provides a pleasant experience for guests. Hire a property management service if you cannot maintain the property yourself, especially if you live far from the rental location.
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Implement a Thorough Screening Process
Conduct a screening process for potential guests. Use reservation systems that verify guest identities and establish clear communication with potential renters about the rules and expectations of their stay to avoid misunderstandings.
Contact Our Camden Real Estate Lawyers Today for Legal Advice on Short-Term Rentals
If you are considering renting out your property short-term or are already doing so and facing legal challenges, Savage, Royall & Sheheen LLP, can help. Our Camden real estate lawyers are well-versed in the complexities of short-term rental regulations in South Carolina.
As a firm with an over 97-year history, we have served individual clients, community businesses, and local governments. Several of our attorneys have held significant state government and judicial positions and are also committed Rotarians, demonstrating a profound dedication to service.
We are a small-town firm that has served its community for generations. We help clients with vacation rental legal issues. To request a consultation, contact our short-term rental lawyers at 803-432-4391.