Folly Beach Reviews STR Ordinance: Cap, Noise Rules, and Zoning in Play

955 Active STRs Against an 800-Unit Cap: Folly Beach Opens the Books on Its STR Ordinance

Folly Beach, South Carolina is operating with 955 active short-term rentals against a permitted cap of 800 units, and the city's own council is now debating whether that cap should exist at all. On May 27, 2026, Folly Beach City Council formally began a comprehensive review of Chapter 117 of its municipal code, the ordinance governing short-term rentals, reopening a debate that has divided the barrier island community. Proposed changes on the table include scrapping the rental cap entirely, enforcing stricter noise restrictions, and applying differentiated zoning regulations around rental properties. The outcome will directly affect hundreds of property owners and the island's estimated $245-per-license revenue stream.

The Numbers

Every operator and prospective investor in Folly Beach needs to understand the full scope of the current regulatory framework before the ordinance changes. Here is every material data point from the current rules:

Data Point	Current Value
Active STR count	955
Permit cap (ISTR)	800
Permit status	Waitlisted (new ISTR licenses frozen)
Base business license fee	$245
Additional rental registration permit fee	$17.50 per $1,000 of gross rental income
Combined lodging tax rate	13% (7% state + 6% local)
Tax filing frequency	Monthly
OSTR annual night cap	72 nights per year
ISTR minimum rental requirement	28 nights per business license year
Provisional STR (PSTR) validity	90 days maximum
Inherited property ISTR application window	90 days from ownership transfer
Minimum liability insurance required	$1,000,000 general liability
Minimum fine for non-compliance	$245
Maximum fine for non-compliance	$1,000
Parking requirement	1 off-street space per bedroom
Enforcement trend	Increasing
Ordinance	Chapter 117: Short Term Rentals
Pending changes since	April 10, 2026
Last market data verified	May 25, 2026

Both Airbnb and VRBO collect lodging tax on behalf of operators in Folly Beach, but manual tax submission is still required by the city. Operators cannot assume platform collection satisfies their local filing obligation.

Regulatory Context

Folly Beach runs one of the most restrictive short-term rental regimes on the South Carolina coast. The city issues four distinct license types under Chapter 117:

• Investor STR (ISTR): For non-owner-occupied properties. New licenses are effectively frozen. Only existing licensees may renew, with narrow exceptions for heirs of owners of record as of February 7, 2023, and medical hardship cases.
• Owner-Occupied STR (OSTR): Available to primary residents who can demonstrate a 4% property tax assessment. Capped at 72 rental nights per year.
• Medical Hardship ISTR (MISTR): Requires annual certification by a licensed medical professional. No owner may hold more than one MISTR.
• Provisional STR (PSTR): Issued only to buyers of existing licensed STRs under the South Carolina Vacation Rental Act. Valid for a maximum of 90 days.

Properties located in Marsh Island and Conservation zoning districts are ineligible for any STR license. All licensed properties must be rented a minimum of 28 nights per year to maintain license standing. Licenses expire ten business days after the final day of the previous business license year, meaning lapses can happen quickly without active renewal.

Safety inspections are mandatory. Requirements include a valid certificate of occupancy, building code compliance, fire suppression systems, egress windows, smoke detectors in all bedrooms and common areas, carbon monoxide detectors where gas appliances are present, and a fire extinguisher on premises. A Designated Local Agent must be named in every rental registration application and is personally responsible for compliance. Permits are non-transferable upon sale.

The combined lodging tax burden is 13%, split between a 7% state rate and a 6% local rate, filed monthly. The city's enforcement level is rated medium but the trend is increasing, a signal that the current review is likely to produce tighter, not looser, enforcement mechanisms even if the cap debate goes the other way.

What Changed and Why

The current review was triggered by a community divide that has been building since at least February 2024, when a second reading of the STR ordinance produced additional amendments. The pending changes flag on Folly Beach's regulatory record has been active since April 10, 2026, indicating the city has been in active deliberation for nearly two months before the May 27 council session.

Three specific proposals are driving the current debate. First, the potential removal of the 800-unit ISTR cap, a move that would open the market to new investor licenses for the first time since the freeze. Second, stricter enforcement of noise restrictions, which are already codified but apparently inconsistently applied. Third, the application of differentiated zoning regulations around rental properties, which could affect setbacks, density, or use classifications depending on the zone.

The fact that active STR counts (955) already exceed the official cap (800) by 155 units suggests the cap has not functioned as a hard ceiling, and that enforcement of the existing limit is itself part of the problem the council is trying to solve. The island's divided resident response reflects a tension common to coastal resort communities: property owners who depend on rental income versus full-time residents who bear the noise, parking, and neighborhood character costs.

What Operators Must Do Now

1. Verify your license type and renewal status immediately. Licenses expire ten business days after the close of the business license year. If you hold an ISTR, confirm your renewal is current at cityoffollybeach.com/short-term-rental. A lapsed license exposes you to fines of $245 to $1,000.
2. Confirm your Designated Local Agent is named and reachable. The local agent is legally responsible for compliance. An unlisted or unreachable agent is a direct compliance failure under Chapter 117.
3. Check your minimum rental night count. ISTR holders must log at least 28 rental nights per business license year to renew. If you are below that threshold, you risk losing your license at renewal.
4. File your monthly accommodations tax return. Even if Airbnb or VRBO collected the 13% lodging tax on your behalf, you must still submit a manual return to the city at cityoffollybeach.com/accommodations-tax-2022. Failure to file monthly is a separate compliance violation.
5. Audit your safety equipment before any inspection. Required items include fire suppression, egress windows, smoke detectors in every bedroom and common area, carbon monoxide detectors if gas appliances are present, and a fire extinguisher. Building code compliance details are at follybeach.com/building-permits.
6. Monitor the ordinance review closely. Pending changes have been flagged since April 10, 2026. If the cap is removed, new ISTR licenses may become available for the first time in years. If zoning changes pass, your property's eligibility could shift. Watch Chapter 117 and city council agendas for updates.

Bottom Line

The cost of full compliance in Folly Beach starts at $245 in base licensing fees, plus $17.50 per $1,000 of gross rental income in registration fees, plus a 13% monthly lodging tax obligation, plus the cost of required insurance at a minimum of $1,000,000 in general liability coverage. That is a real but manageable overhead for a property generating meaningful rental income on a sought-after barrier island. The cost of non-compliance is a fine of up to $1,000 per violation, potential license revocation, and exposure to back taxes and penalties in a market where enforcement is on an upward trend. With the city council actively debating whether to lift the cap that has frozen new investor licenses, operators who are already licensed have a significant competitive advantage that is worth protecting. Letting a renewal lapse or a tax filing slip during this review period is the worst possible time to fall out of good standing.

For the complete Folly Beach compliance guide including tax calculator, checklist, and daily monitoring, see Folly Beach, SC STR Regulations.