Short-Term Rentals in Charleston: Everything You Need to Know

Charleston, South Carolina is a premier destination that marries the charm of historic architecture and vibrant culture with the allure of its beaches and culinary excellence.

A favorite destination for tourists, from the U.S. and across the globe, it offers significant potential for short-term rental operations.

Why Charleston? A Haven for Tourism

The warm and welcoming atmosphere of Charleston brings in 7.68 million visitors annually, creating an annual economic impact of $12.8 billion in 2022. It’s also got it voted #1 Best US City by Conde Nast Traveler Readers’ Choice Awards for 10 years in a row.

Charleston’s success lies in more than just volume. The city successfully attracts diverse international tourists, particularly from the U.K., Germany and neighboring Canada. It also attracts ‘high value’ visitors. In fact, 70% of visitors to Charleston have household incomes of over $75,000.

The hotel industry has felt the impact, selling 4.85 million nights in 2022.

Potential Earnings & Strategic Analysis: Charleston’s Short-Term Rental Market

According to AirDNA data for the city, Charleston has a:

• Market Score of 86 (Great)

• Annual Revenue of $32,100

• Average Daily Rate (ADR) of $225.1

• Revenue per Available Rental (RevPAR) of $134.4

• Most listings (80%) are entire homes and are available for 1-90 days (81%)

• Strict (40.6%) and Moderate (33.2%) cancellation policies are favored

• Minimum night policies of 30+ nights were the most popular (46.9%) followed by two-nights (29.6%)

Understanding Charleston’s Short-Term Rental Laws: Airbnb Rules in Charleston

Since 2018 the City Council of Charleston has permitted short-term vacation rentals under certain regulations.

Definition

According to Charleston’s Short-Term Rental Ordinance, a short-term vacation rental provides “sleeping accommodations” for a period of 1-29 consecutive days. The ordinance recognizes two types of short-term rentals:

• Residential short-term rental

The property owner, who resides on the property, rents out one or more rooms in the home to provide sleeping accommodations for a maximum of four people aged 18 or older for not more than 29 consecutive days.

• Commercial short-term rental

When a dwelling unit is converted into a fully functioning, private accommodation use which includes cooking, living, sanitary and sleeping facilities within one dwelling unit, and is rented to one family for not more than 29 consecutive days.

A commercial short-term rental can only be located in a commercially zoned property and have a limited number of short-term rental units if more than one is provided.

Zoning

Short-term vacation rentals are only permitted in specifically outlined zones. The type of permit to be applied for is dependent on the zone where the property is located.

• Category I - All properties located within the city’s Old and Historic District that are individually listed on the National Register of Historic Places

• Category II - All other properties located on the Charleston peninsula, as long as they are outside the Short Term Rental Overlay Zone

• Category III - All other properties in the city of Charleston including incorporated areas of West Ashley, James Island, Johns Island, Cainhoy and Daniel Island.

• The STR Overlay Zone - A pre-existing area in Cannonborough-Elliotborough. Commercially zoned properties within the existing Short-Term Rental Overlay District are eligible for the commercial short-term rental permit.

Permit application

All short-term vacation rentals must register with the city and obtain a permit for their operation. Applications for residential short-term rental permits require:

• Floor plans drawn to scale
• A site plan
• Photographs of the structure
• A signed statement from the owner

Once the application is received, the zoning administrator will post a notice on the property taking 15 consecutive calendar days to approve the application after which another 5 business days are allowed for appeals and issuance of the permit. Each permit permits only one short-term rental unit.

The application for commercial short-term vacation rentals can be found here.

Permit renewal

Permits must be renewed annually within the month of issuance. All documentation must be submitted anew:

• Residential short-term rental renewal application

• Commercial short-term rental renewal application

Business license

The city of Charleston requires all short-term rentals to obtain a business license. Business licenses expire each year on December 31 and must be renewed.

Fire inspection & life safety review

The city of Charleston inspects short-term vacation rentals for fire and life safety. Short-term vacation rentals are required to have:

• Working smoke alarms
• Carbon monoxide detectors
• An operable window or door from each bedroom
• Fire extinguishers
• Visible address numbers
• No visible electrical hazards

Penalties

Violations of any of the city’s short-term rental regulations can result in fines, revoking of the permit and even incarceration.

Taxes

Short-term residential rentals are liable for taxes on the state, county and city levels. These include:

● State sales tax of 5%

● State accommodations tax of 2%

● Local option sales tax of 1%

● County transportation tax of 1%

● School district/Education tax of 1%

● Charleston County Accommodation Tax (2%)

● City of Charleston accommodations tax of 2%

Other rules

• The property must be verified as being the host’s full-time primary residence by the receipt of the county’s 4% Legal Residence tax exemption. Investment properties are only eligible for commercially zoned rentals.

• A host does not have to be present for the complete duration of their guests’ stay but must be “generally available”.

• Residential short-term rentals cannot contain signs advertising their use as short-term rentals.

• Owners are only permitted to provide breakfast if they want to provide meals to paying guests.

• A general liability insurance policy with a company authorized to do business in the state of South Carolina insuring against personal injury including death and property damage with limits of no less than $1 million per occurrence must be obtained.

• The resident owner must maintain a guest register including names, addresses, telephone numbers and dates of occupancy of all guests.

Thriving in Charleston's Short-Term Rental Market

A magnet for tourists, Charleston is a hotbed for short-term vacation rental opportunities. By understanding and adhering to the city's detailed regulatory framework, hosts can tap into this growing market. Leveraging a short-term rental software like Hostaway with its full complement of property management, channel management, marketing and other modules will allow you to scale your short-term rental opportunities and thrive.