Overview: Are Short-Term Rentals Allowed in Highlands, NC?

Short-term rentals are currently facing severe restrictions in Highlands, NC, with a complete ban scheduled to take effect in 2027. On September 19, 2024, the Town of Highlands Board of Commissioners voted 4-1 to amortize (phase out) short-term rentals in R-1 and R-2 residential zoning districts, which comprise the large majority of potential rental properties in Highlands. This ban will take effect on September 19, 2027, giving existing STR operators a three-year transition period.

New short-term rentals have been prohibited in R-1 and R-2 zones since September 15, 2022. Only existing STRs operating before that date can continue until the 2027 amortization takes effect. Highlands is the first municipality in North Carolina to attempt using amortization to eliminate short-term rentals in this manner.

How to Start a Short-Term Rental Business in Highlands, NC

Starting a new short-term rental business in Highlands is extremely limited and not recommended without extensive legal consultation. Given the current regulatory environment, potential investors should consider:

Current Opportunities (Extremely Limited):

• Tourist Homes: Only permitted in R-2 zones with a Special Use Permit
• Limited to maximum 4 bedrooms
• Must be rental of a portion of one's primary residence, inns, or B&Bs
• Requires approval from the Town Board

Investment Considerations:

• No new STRs permitted in R-1 and R-2 zones since September 2022
• Existing grandfathered STRs face complete phase-out by September 2027
• Legal challenges are ongoing, creating regulatory uncertainty
• High risk of investment loss due to impending restrictions

Required Documents, Permits, Licenses, and Guidelines

For Tourist Homes (R-2 zones only):

• Special Use Permit from the Town of Highlands
• Compliance with zoning regulations for R-2 districts
• Maximum occupancy: 4 bedrooms
• Must meet all local building and safety codes

For Existing STRs (until 2027):

• STR Contract Addendum (required for all rental agreements)
• Compliance with Unified Development Ordinance (UDO) Section 6.5.18
• Adherence to occupancy limits: 2 persons per bedroom plus 2 additional persons
• Compliance with noise ordinances and parking regulations

Operational Requirements:

• Overnight occupancy cannot exceed 2 persons per bedroom plus 2 additional persons
• No special events or gatherings exceeding overnight occupancy limits
• Vehicles must park in designated areas only
• Proper trash disposal in provided receptacles
• Compliance with Town's Noise Ordinance (Chapter 8, Article II)

Specific Regulations for Short-Term Rentals

Town of Highlands Regulations:

Zoning Restrictions:

• R-1 zones: Complete STR prohibition (new since 2022, existing until 2027)
• R-2 zones: STRs prohibited except Tourist Homes with Special Use Permits
• Commercial zones: Regulations may vary (consult planning department)

Amortization Timeline:

• September 15, 2022: New STRs prohibited in R-1 and R-2 zones
• September 19, 2024: Board voted for complete amortization
• September 19, 2027: All existing STRs must cease operations in R-1 and R-2 zones

Use and Operational Standards (UDO Section 6.5.18):

1. Occupancy limits strictly enforced
2. No special events exceeding occupancy limits
3. Designated parking requirements
4. Trash management protocols
5. Noise ordinance compliance mandatory

Macon County Regulations:

No specific county-level STR regulations identified beyond state requirements.

North Carolina State Regulations:

• Standard business licensing requirements
• Tax collection and remittance obligations
• Safety and building code compliance
• No state-level restrictions on local STR regulation

Contact Information for Local Authorities

Town of Highlands Planning Department

• Phone: (828) 526-2118
• Website: https://highlandsnc.org
• Address: P.O. Box 460, Highlands, NC 28741
• Services: Zoning inquiries, permit applications, regulatory compliance

For Legal Challenges and Updates:

Save Highlands Organization (Pro-STR advocacy group)

• Email: info@savehighlands.com
• Website: https://www.savehighlands.net
• Legal Fund: https://www.gofundme.com/f/save-highlands-shortterm-rentals

Highlands Neighborhood Coalition (Anti-STR advocacy group)

• Website: https://www.highlandsneighborhoodcoalition.com
• Email: Available through website contact form

Links to Source Pages

• Save Highlands: https://www.savehighlands.net/
• Highlands Neighborhood Coalition: https://www.highlandsneighborhoodcoalition.com/correspondence/
• Town of Highlands STR Form: https://highlandsnc.org/information/forms-and-applications/1026-addendum-to-str-contract-1/file
• STR Profit Map Analysis: https://www.strprofitmap.com/regulations/NC/highlands

Investment Recommendation

Investing in short-term rentals in Highlands, NC is extremely high-risk and not recommended. The regulatory environment is hostile to STRs, with a complete ban scheduled for 2027. While legal challenges are ongoing, the political momentum strongly favors residential neighborhood preservation over commercial STR operations. The town has demonstrated consistent commitment to eliminating STRs from residential areas, supported by multiple elected officials and community organizations.

Potential investors should:

• Consult with local legal professionals specializing in land use law
• Monitor ongoing litigation between Save Highlands and the Town
• Consider alternative markets with more favorable STR regulations
• Avoid any investment without comprehensive legal review of current restrictions and pending changes

The situation in Highlands represents a cautionary example of how quickly local regulations can change to restrict or eliminate short-term rental opportunities, making it unsuitable for STR investment at this time.