Short Term Rentals in Charleston? Yes, but with some cavaets

Short Term Rentals in Charleston? Yes, but with some cavaets
Posted By Jesse Nelson @ Apr 13th 2018 3:01pm In: Tax News

Since short-term rentals started sprouting up throughout Charleston about four years ago, setting up of online sting operations has become one of Charleston’s only options to enforce its ban on them. To find out the lists of places where short-term rentals weren’t allowed, a handful of livability officers such as Airbnb and HomeAway would pose as visitors on booking platforms. However, just 77 cases have been successfully prosecuted to date since the industry has expanded to nearly 2,000 properties across the area of Charleston. This shows that they do not have the resources or the time to keep up with the rampant violations. The free-for-all is coming to a close after a year-long process to rethink the Charleston city’s strategy.

Moreover, on Tuesday, a new set of rules were made by the Charleston City Council that allows short-term rentals citywide. These new rules were only under strict circumstances and it is set to ban whole-home rentals. It also requires property owners to stay at home whenever they host guests. The new law was carefully designed by a resident-led task force.

Mayor John Tecklenburg once said that they had a system that is basically unenforceable and which is difficult to enforce. He also said that the system is set to deter people who are doing STRs illegally. However, Charleston city will continue making adjustments to it as needed. Some moments after the approval of the new ordinance, a new process was created by the planning staff to create a process for a special exception. This is for the case they considered ineligible for a permit under the new set of rules.

Keith Waring and Councilmen Dudley Gregorie said that they were concerned about a James Island woman who would not be able to operate a short-term rental on a 1-acre land property she inherited from her family. The list of exceptions will be released very soon.

Some of the new short-term rental rules that would apply in all cases include the following:

After the collection of a special license from the city's Department of Planning, Preservation, and Sustainability, all operators must list the registration number on all online advertisements. They will also have to present site plans to identify where guests would stay and also park their cars.
Operators must own and live on the property full time to be eligible. This will be determined by the 4% owner-occupied property tax assessment
Operators must pay accommodations taxes and business license fees.
The short-term rental cannot host more than four adults at a time.
It creates separate sets of rules for three different areas of Charleston:

Category 1 – this includes the Old & Historic Districts on the lower peninsula. Only properties listed on the National Register of Historic Places are qualified for a short-term rental permit.
Category 2 – this is for the rest of the peninsula, where properties have to be at least 50 years old. The Cannonborough-Elliottborough neighborhood is not included because it is already in the short-term rental rules.
Category 3 – this goes through the rest of the city beyond the peninsula; there will not be an age limit on the properties here.
Before the new rules will be enforced, the city staffs will be given a 90-day grace period to implement a new enforcement apparatus. To monitor the short-term rental compliance in the city, three new enforcement officers were hired in the livability department. These enforcement officers will make use of a data-scraping software to gather information from online listings made by the operators such as bedroom counts and addresses. This is because many platforms hide information that identifies the hosts and their properties. There is also a part-time lawyer to help with the caseload if the need is – said, Tecklenburg.

However, James Lewis and Councilmen Robert Mitchell are still against the new law. They argue that they are still yet to be convinced that the new law would be any better enforced than the existing ordinance. Though the neighborhood leaders and supporters of the Short-Term Rental Task Force commended the council to adopt the ordinance, yet rental operators felt it was unfair.

Ginger Blaas also said that there should be permit caps on neighborhoods so as to prevent infringing on the rights of the property owner. She also said that the people in this industry have so many questions to ask since this ordinance is too long and too confusing. Also, Phyllis Ewing of the Charlestowne Neighborhood Association (which is in Category 1) also disagreed. She also said this “Nobody is depriving you. You bought into a residential neighborhood.”

Above all, the case is still under review as the City Council will re-examine the process nine months after it's implemented in Charleston.

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