1 in 3 Hilton Head short-term rentals behind on permit fees. What’s being done about it
Thousands of Hilton Head short-term rentals are operating without permits as town staff work through an enormous backlog of applications.
Nearly one-third of short-term rentals on Hilton Head Island have yet to apply for a permit, according to comments from Finance Director Dave Byrd at a Monday meeting of the town’s Finance and Administrative Committee. Those who have applied may have to wait until September for their application to be approved.
There are an estimated 7,400 short-term rentals on Hilton Head Island. As of June 30, the town has received 4,919 short-term rental permit applications. Only 1,630 have been approved so far, Byrd said. About a thousand are still in process, and 2,273 applications have yet to be reviewed.
“It’ll probably take through September to sort through everything,” Byrd said.
The short-term rental permitting system
The town introduced the short-term rental permitting system in 2023. When the new fees were introduced, rental owners had to pay a $250 flat fee, and permits were good from January 1 to December 31 each year. Earlier this year, the council gave a final OK to a new sliding-scale, $150 per bedroom fee system, intended to account for the higher costs incurred by managing larger rentals. Permit applications were due on May 15 this year, and once approved, are good for 12 months.
April Atkins, Revenue Services Manager for Town of Hilton Head Island, said new requirements for short-term rentals have led a delay in processing the applications. Rentals are required to list their permit number on any advertisements, get a letter of approval from their HOA, obtain a business license, submit a site plan that shows where cars will park, and comply with new fire safety requirements.
Meanwhile, an estimated 2,400 short-term rentals are operating on Hilton Head Island that have not paid their annual fee, according to Byrd.
That leaves an estimated $600,000 shortfall in the town’s budget for the 2027 fiscal year, Byrd said. Money collected through short-term-rental permit fees are used to purchase equipment and pay people to process permits, manage communications, operate a 24/7 short-term rental nuisance hotline and patrol areas to look for short-term rental related code violations.
Delinquent applications lead to late fees
The town has started the process of reaching out to the 2,400 delinquent properties to remind them to submit their applications, Byrd said. It could take until Dec. 31 to contact them all, he added.
It’s not atypical for a number of properties to miss the deadline each year, Byrd said, but this year is the first year that the town is imposing a $250 penalty on late applications.
According to Atkins, town staff must get through all the permits before moving towards any necessary enforcement actions, such as issuing fines or summoning property owners to court.
Council members responded with understanding that it would take time for town staff and property owners to adjust to the new requirements.
“We’ll have to be a little patient right now,” Ward 2 Council Member Patsy Brison said.
More STRs, more rules
In recent years, the Town of Hilton Head Island has taken steps to increase regulation of short-term rentals.
As short-term rentals have increased in numbers in Hilton Head neighborhoods, residents have voiced concerns about parking, noise, trash and a loss of a neighborly feel in many single-family residential areas.
Stakeholders in the short-term rental industry, including rental owners, property managers and real estate agents, have stressed that overregulating short-term rentals could deter investors, lower property values and hurt local businesses that depend on tourists.
Hilton Head first introduced new short-term rental regulations in 2022, and they took effect Jan 1, 2023. That decision introduced the permitting system, and was a first step towards addressing parking, noise and trash issues.
New fire safety and parking regulations were approved by the town council last year, and took effect on May 1. The town has expanded the role of its community code enforcement division, which now has the authority to issue non-criminal citations for violating the town’s short-term rental ordinance.
