Is Folly Beach’s short-term rental cap still in effect?

A judge struck down the cap as adopted by referendum on August 14, 2026, and the city has appealed. Council has since moved to re-adopt the 800-license limit by ordinance without the registration fee, and most new licenses are frozen until February 19, 2027. In practice, most new investor licenses are on hold.

Can I get a new short-term rental license on Folly Beach?

Not during the moratorium, unless you fall into an exemption: a renewal of an existing license, an offer from the waitlist, an owner-occupied rental of up to 72 days a year, certain medical hardship or inherited-property cases, or an application filed before the freeze. The freeze runs until February 19, 2027, or until the city’s study is complete.

Does the Folly Beach rental registration fee still apply?

The judge found the revenue-based registration fee was an unlawful tax, and the rewritten ordinance council advanced in September drops it. Check current license requirements and fees with the City of Folly Beach before renting.

When will Folly Beach decide on the cap?

After the study. The city awarded it on October 13, 2026, and results are expected between December 2026 and February 2027, ahead of the next business license renewal period.

Does a Folly Beach rental license transfer when a home is sold?

Letting licenses transfer on a sale is one of the options the city’s study is weighing. Until council decides, ask the city about a specific property’s license before buying or selling.

Folly Beach Short-Term Rental Cap: Ruling and Freeze

In this story

The ruling The response The freeze The study For owners Next Sources

What the judge decided

On August 14, 2026, Charleston County Circuit Judge Thomas J. Rode ruled on a lawsuit against two parts of Folly Beach’s short-term rental rules. The first was the cap. Voters approved it in a February 2023 referendum, limiting investor short-term rental licenses to 800 while leaving owner-occupied rentals unlimited. The second was the registration fee, which was based on a rental’s gross revenue and paid into the city’s general fund.

The judge found both were illegally adopted. He called the fee an improper tax disguised as a fee, and found the referendum had been used to impose a tax, which South Carolina law does not allow by ballot measure.

How the city responded

Council moved within days to keep the cap in place while the case continues:

August 19: council voted to appeal. The city’s position is that the ruling turned on how the cap was adopted, not on the cap itself

August 26: council approved a moratorium on most new short-term rental licenses, until February 19, 2027 or until the city’s study is complete

September 8: council gave first reading, 6-0, to a rewritten ordinance that keeps the 800-license limit and drops the revenue-based registration fee. Live 5 reported on September 15 that it had passed second reading

October 13: council voted unanimously to award the study to Smart City Policy Group of Austin, Texas, one of four bidders

Who the freeze stops, and who it doesn’t

The moratorium pauses most new short-term rental licenses. It does not apply to:

Renewals for properties that are already legally licensed

People already offered a license from the city’s waitlist

Owner-occupied rentals, which are limited to 72 rental days a year

Certain medical hardship and inherited-property cases

Applications already filed between the ruling and the freeze

In practice the island’s supply of investor rentals is fixed until at least February. One of the options the city’s study will weigh is letting licenses transfer when a property is sold, so anyone buying on Folly Beach with rental income in mind should ask the city whether a license will carry over before closing.

What the study will look at

The $50,000 study was already planned before the ruling; the court case made its data more urgent. The city’s request for proposals sets out six scenarios to test:

Leaving the 800-license cap as it is

Allowing every property to rent for up to 72 days a year

Exempting multifamily properties and properties in commercial districts

Expanding the medical hardship exemptions

Allowing licenses to transfer between family members

Allowing licenses to transfer when a property is sold

Each is to be weighed for its effect on housing prices, property values and the island’s neighborhoods, and some council members have asked for removing the cap entirely to be considered too. Live 5 reported results are expected by the end of the year; the Post and Courier put the finish around February 2027, ahead of the next business license renewal period.

What it means for owners and managers

For now Folly Beach is a fixed market. The number of licensed investor rentals cannot grow, so the way to earn more from the island is to earn more from each licensed home: more booked nights, better reviews and fewer turnovers that go wrong.

If you hold a license, keep it current. Renewals are exempt from the freeze, and a new license cannot be issued until it ends

If you rent your own home under a 72-day owner-occupied license, the freeze does not apply to it. With so few days to rent, every turnover has to be ready on time

If you are buying, ask the city about the property’s license before you close, and do not count on a new one before February 19, 2027

If you manage homes on the island, watch the study: license transfers on a sale, if allowed, would change which homes can come to market as rentals

Turnovers on Folly Beach

Fluffy runs turnovers on Folly Beach to the same 75-point standard it uses across the Lowcountry, with same-day turns on as little as 3 hours’ notice and a free re-clean if a turn misses the standard. Folly Beach turnover cleaning.

What happens next

Four things to watch, in order:

The city’s appeal of the August ruling, which is pending

The study’s results, expected between December 2026 and February 2027

February 19, 2027, when the license freeze ends unless the study finishes first or council extends it

Council’s decision after the study on whether to keep, change or replace the cap

We will update this story as each of those happens. The Folly Beach rental news page keeps the full timeline.

Sources

Post and Courier: Judge rules Folly Beach’s short-term rental cap ordinance, permit fees violate SC law

Post and Courier: Folly Beach will appeal short-term rental ruling, passes moratorium on new permits

Live 5: Folly Beach council approves moratorium on issuing short-term rental licenses

Post and Courier: Folly Beach moves to roll back, then reinstate, short-term rental limits with key change

Live 5: Folly Beach council advances rewrite of short-term rental ordinance

Live 5: Folly Beach’s rental study aims for answers, but residents say key questions remain

Post and Courier: Folly Beach chooses a Texas-based policy group to take on short-term rental study

This summary reflects council decisions and local reporting as of October 26, 2026. Local rules change at council meetings, so confirm with the city before acting on a property.

Folly Beach’s Rental Cap: Struck Down, Appealed and Frozen Until February.