Hilton Head’s Palmetto Dunes looking to rein in overcrowded rentals. Will the town do the same?

When the millions of tourists looking to visit Hilton Head every year scan the internet for short-term rentals for themselves, families and friends — even parties of up to 30 people — they’ll likely be directed to the tree-lined oasis of Palmetto Dunes.

That’s what Mark Carroll, the chair of a committee studying rentals in the neighborhood, discovered when he scoured the web for high-occupancy rentals on Hilton Head. Now, the neighborhood is considering regulations to reduce the number of overcrowded rental properties.

“The community that has the most big rentals? I thought it would be North Forest Beach or something like that. It’s us, which was alarming.” Carroll told the Palmetto Dunes POA board at its most recent meeting.

In July, Palmetto Dunes resident Scott McKenna raised concerns about a nearby rental property that advertises its occupancy limit as 30 renters, marketing itself as a perfect stay for wedding groups or family vacations. One of its bedrooms features triple-deck bunk beds and sleeps 11, according to the listing.

McKenna’s concerns ranged from quality-of-life to fire safety. Last September, a rental property in Palmetto Dunes caught fire, killing one occupant.

Carroll spoke to similar concerns at the Aug. 16 meeting. One new rental near where the fatal fire took place, he said, is considering an occupancy of more than 20 guests.

“It’s not too far of a leap to think about a bunkroom upstairs where you’re going to put what? Kids,” Carroll told the board. “They may or may not be able to get that window open … if it’s an older home, it’s probably been painted over and hasn’t been opened in ten years. Bad things could happen in a hurry.”

But how can the community regulate how many guests show up to Palmetto Dunes’ numerous rentals short of a head count? Caroll said security can’t be expected to go door-to-door “knocking on doors and counting noses,” so a potential first step could be outlining how renters can advertise their property.

One recommendation the committee made was an advertised occupancy limit of two guests per bedroom — plus four, assuming the home has a living room or similar space — or 20 guests, whichever number is lower. Under that recommendation, children under 12 who are related to the renter wouldn’t count toward the occupancy limit.

Changing how owners advertise their rentals, Carroll said, may do enough to balance full-time residents’ quality of life and rental owners’ right to profit from their properties.

Other recommendations included revisiting Palmetto Dunes’ existing parking limits and expanding its internal short-term rental registry to track if each property has the required Town of Hilton Head permits to operate.

The 30-guest rental McKenna raised concerns on was registered in Palmetto Dunes’ rental database, but didn’t have the business and short-term rental licenses required under the town ordinance that took effect Jan. 1, town officials told The Island Packet in July.

The Palmetto Dunes board took no action on the recommendations at August’s meeting, but will revisit the issue in September.

Further town regulations?

Municipalities across the nation continue to grapple with the short-term rental issue, navigating owners’ desire to make money versus the negative impact an increase of vacation rental conversions can have on the long-term rental market.

The town’s Jan. 1 ordinance requires renters on Hilton Head to buy a $250 short-term rental permit and acquire businesses licenses to operate. Owners must also conform to various requirements for noise abatement, trash storage and more.

Town staff members are still collecting data on the state of short-term rentals on the island, so further regulation like occupancy limits aren’t likely in the immediate future.

“When the ordinance was passed there was talk about the possibility of future regulations,” Deputy Town Manager Josh Gruber said, “but at this point in time there’s nothing that’s active or pending regarding further regulations.”

According to data from AirDNA, a business that tracks short-term rental listings across platforms like Airbnb and VRBO, there were 7,916 properties listed for rent in July. That’s an increase from 7,366 in July 2019 and 7,354 in July 2022, as travel bounced back from pandemic lows.

A vast majority of those properties, 7,851 in total, are “entire place” rentals allowing guests access to whole condos or homes, according to AirDNA’s data.