As Count on 2 reported, longtime short-term rental owner Alan Campbell said in late August, days after a Charleston County judge sided with him and struck down Folly Beach's 800-license rental cap as improperly adopted: "If the cap stays in place, property values will continue to go down. Real estate will not sell except at a loss, which is where I am right now."
A few weeks later, the cap was back. City Council voted it back in on September 8, then locked it in with a second reading on September 15, dropping only the registration fee the judge had called an unauthorized tax. If you're weighing a Folly Beach purchase this fall with any hope of covering the mortgage through short-term rental income, you need to understand what actually changed in those five weeks, and what didn't.
What You'd Actually Be Buying Into
Here's the part that gets lost in the headlines about the ruling. The Post and Courier reported that the license does not transfer with the house. It never did, If you buy a Folly Beach property today and the seller has an active rental license, that license stays with the seller's name, not the deed. You'd start over, at the back of a line that hasn't moved much since it opened.
The city's own waitlist page spells out how that line works: Phase One licenses go out in order of how long an owner has held the property, Phase Two by order of application, and entry requires proof you already owned the home before the cap took effect in February 2023. If you're buying now, you don't qualify for either phase on ownership tenure. You're behind roughly 200 people who've been waiting since the referendum passed, a number that held steady through most of 2025 with almost no movement off the list.
Five Weeks, One Court Ruling, Two Votes to Restore the Cap, One Rule That Came Back Different
The timeline matters more than any single vote:
- August 14, 2026 – A Charleston County judge ruled the 800-license cap was improperly adopted through the 2023 referendum and that its registration fee amounted to an unlawful tax. The city appealed.
- Late August – Council approved the second reading of a temporary moratorium on new short-term rental licenses, voted 5 to 1, to hold the line while the appeal and an independent rental study worked through.
- August 26, 2026 – Councilman Blair Holladay argued publicly for waiting on that study before locking in any replacement rule, telling council, "We need STR reform, but we don't need a cap on this island."
- September 3, 2026 – Short-Term Rentals Daily Notes reported that owners who had paid the 1.75 percent rental-income fee since 2022 filed a class action seeking refunds.
- September 8, 2026 – The Post and Courier reported that Council gave first-round approval to repeal the cap language. Holladay was absent from this vote.
- September 15, 2026 – Live 5 News reported that Council passed the second reading, finalizing the fee's removal while keeping the moratorium-based cap in effect.
Read that sequence again and notice what's missing: a new citizen vote. The rule holding the line today didn't go back to Folly Beach residents. It went through a council vote, the same body that can revisit it again once the study comes back.
Why That Distinction Is the One That Matters
The original cap existed because 53 percent of voters approved it directly at the ballot box in February 2023. A rule created by referendum is hard to unmake.
The rule now on the books was created by ordinance. An independent study the city commissioned through the College of Charleston's Riley Center for Livable Communities is still working through public input and hasn't reported back.
The Price Already Told This Story
Here's the piece that should reframe how you read a Folly Beach listing price. The market didn't wait for the courts to sort this out. It already adjusted, months ago, and the numbers show exactly when.
| Period | Median Sale Price | Notable Detail |
|---|---|---|
| July 2025 | $897,000 | Only two single-family homes sold; price down 30% year over year |
| January 2026 | $1.25 million | Homes sat 168 days on market, up 110% year over year; sellers averaged 87% of original list price, down from 91% |
| July 2026 | $1,255,000 | Sales up 400% for the month; second straight month of double-digit closings |
That climb from $897,000 to over $1.25 million isn't a market that shrugged off the cap. It's a market that spent a year and a half absorbing it, watching listings sit for months, and then finding a floor once sellers stopped pricing homes as if the rental income they'd counted on was still guaranteed. A Carolina One Real Estate agent, Ulf Hartwig, described sellers eighteen months into the cap as learning to cope with a new reality, and the sales data backs that up. Buyers who had been sitting on the sidelines started closing once prices reflected what a Folly Beach home is actually worth without a certain rental license attached to it.
That's the number that should reset expectations. Whatever the court fight and council votes eventually settle, the price you'd pay for a Folly Beach home today already assumes the cap, the waitlist, and the non-transferable license are real constraints. If the study due back in February leads council to loosen the rule, that upside isn't priced in yet. If it leads them to tighten it, you're not taking on new risk. You're buying into a market that has already been pricing the downside for two years.
What This Means Next to Isle of Palms and Sullivan's Island
If you're cross-shopping barrier islands, the contrast is worth naming plainly. Isle of Palms has no cap at all, a policy voters there reaffirmed in November 2023 by rejecting a proposed 1,600-license limit. But that hands-off approach is drawing its own scrutiny. In August 2026, Isle of Palms City Council had staff correct an earlier short-term rental count and asked for regular reporting on license trends going forward, a sign the no-cap policy is getting a closer look even without a referendum behind it. Sullivan's Island takes a different approach.
None of these three approaches is more correct than the others. They're three different answers to the same question a council or a citizenry eventually has to decide, and each answer shows up in the price and the paperwork differently. Folly Beach is the one where that answer just went through two council votes in a single month, with another rewrite possible once the study lands.
What to Ask Before You Write an Offer
If a Folly Beach purchase is on your list this fall, a few questions belong in your due diligence alongside the usual inspection and survey items:
- Does the listing currently hold an active rental license, and if so, is it transferable to you at closing
- If you'd need a new license, where does that put you on the current waitlist, and what's the realistic timeline given how few slots have opened since 2023?
- Is your purchase financing dependent on projected rental income, or can the numbers work as a primary residence or long-term rental if the license never comes through?
A Fair Way to Think About the Timing
None of this means Folly Beach is a bad place to buy. It means the property you're evaluating and the rental income you might be hoping it produces are two separate questions right now, and the second one has an answer that's still being written. Our team works with buyers weighing exactly this kind of tradeoff across the barrier islands every week, and we'd rather walk you through what a specific address can and can't support before you fall in love with a number on a spreadsheet.
If you're comparing what a home on Folly Beach, Isle of Palms, or anywhere else in the Charleston area is actually worth given where the rules stand today, reach out to Weichert, Realtors® - Lifestyle and get my home valuation. We'll give you the straight answer, not the optimistic one.
A Few Direct Questions
Does the moratorium on new licenses still apply if I close this fall? Yes. The September 15 ordinance kept the moratorium in place as the mechanism holding the license count at 800 while dropping the fee the court struck down. New license approvals stay paused unless the count drops through non-renewals, and that can shift again once the independent study reports back in February.
Can I inherit a seller's rental license through a family trust or LLC purchase instead of a direct sale? Ask the city's licensing office about your planned ownership structure before making an offer.
Will the refund lawsuit affect my purchase? The class action filed on September 3 seeks refunds of past fees paid by existing rental operators. It's worth watching as one more sign the ordinance may see further changes before the study concludes.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
