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

Short-term rentals are explicitly prohibited in Highlands, North Carolina, with a complete ban scheduled to take effect on September 19, 2027. This represents one of the most restrictive regulatory environments for short-term rentals in the United States. The Town of Highlands Board of Commissioners voted 4-1 on September 19, 2024, to implement what is known as "amortization" – a legal mechanism that phases out existing short-term rental operations over a specified period.

Critical Timeline for STR Investors:

• September 15, 2022: New short-term rentals became prohibited in R-1 and R-2 residential zoning districts
• September 19, 2024: Board voted for complete amortization of existing STRs
• September 19, 2027: All existing short-term rentals must cease operations in R-1 and R-2 zones

This regulatory approach is unprecedented in North Carolina, making Highlands the first municipality in the state to eliminate short-term rentals through amortization. The decision affects the vast majority of residential properties in Highlands, as R-1 and R-2 districts comprise the majority of residential zoning in the town.

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. The regulatory environment is actively hostile to new STR operations, with severe restrictions and an impending total ban.

Current (Extremely Limited) Opportunities:

Tourist Homes in R-2 Zones Only:

• Only permitted in R-2 zoning districts with a Special Use Permit
• Maximum 4 bedrooms per property
• Must be rental of a portion of one's primary residence, inns, or bed & breakfasts
• Requires approval from the Town Board of Commissioners
• Subject to strict operational requirements

Investment Risk Assessment:

High-Risk Factors:

• No new STRs permitted in R-1 and R-2 zones since September 2022
• Existing grandfathered STRs face complete phase-out by September 2027
• Active legal challenges create regulatory uncertainty
• Political momentum strongly favors residential neighborhood preservation
• High probability of investment loss due to impending restrictions

Due Diligence Requirements:

• Comprehensive legal consultation with land use specialists
• Monitoring of ongoing litigation between Save Highlands and the Town
• Analysis of potential zoning changes and their impact
• Assessment of alternative investment markets with favorable STR regulations

Required Documents, Permits, Licenses, and Guidelines

For Tourist Homes (R-2 Zones Only):

Essential Documentation:

• Special Use Permit from the Town of Highlands Board of Commissioners
• Compliance certification with R-2 zoning regulations
• Property deed or lease agreement proving ownership/right to use
• Site plan showing property boundaries and improvements
• Building and safety code compliance certificates
• Insurance documentation
• Maximum occupancy verification (4 bedrooms limit)

Operational Requirements:

• Adherence to all local building and safety codes
• Compliance with Americans with Disabilities Act (ADA) if applicable
• Fire safety equipment installation and certification
• Health department approvals if required

For Existing STRs (Until 2027):

Regulatory Compliance:

• STR Contract Addendum (mandatory for all rental agreements as of 2022)
• Compliance with Unified Development Ordinance (UDO) Section 6.5.18
• Proof of continuous operation since September 15, 2022
• Registration with the Town (if applicable during transition period)

Operational Standards:

• Strict occupancy limits: 2 persons per bedroom plus 2 additional persons maximum
• Noise ordinance compliance (Chapter 8, Article II of Town Code)
• Parking regulation adherence
• Trash management protocol compliance
• No special events exceeding occupancy limits

Standard Business Requirements (All STR Types):

State and County Requirements:

• North Carolina business license
• Sales tax registration and collection
• Occupancy tax collection and remittance
• Workers' compensation insurance (if employees)
• Professional liability insurance

Local Requirements:

• Business privilege license from Macon County
• Fire department permits (if applicable)
• Health department permits (if applicable)

Specific Regulations for Short-Term Rentals

Town of Highlands Regulations:

Comprehensive Zoning Restrictions:

R-1 Residential Districts:

• Complete prohibition of short-term rentals (new since September 2022)
• Existing STRs must cease operations by September 19, 2027
• No exceptions for any type of accommodation

R-2 Residential Districts:

• New STRs prohibited since September 15, 2022
• Only "Tourist Homes" permitted with Special Use Permit approval
• Maximum 4 bedrooms per property
• Must be owner-occupied or part of primary residence
• Existing STRs grandfathered until September 19, 2027

Commercial Districts:

• Regulations vary by specific zoning classification
• Requires consultation with Town Planning Department
• Potential for continued operations depending on specific zone

Amortization Implementation:

The amortization process provides a transition period for existing operators while completely eliminating the use by a specified date. This approach:

• Allows existing operators to recover investments over time
• Eliminates the use permanently after the transition period
• Applies to all STRs in R-1 and R-2 zones regardless of current operations
• Does not require removal of structures, only cessation of the rental use

Operational Standards (UDO Section 6.5.18):

1. Occupancy Limits: Strictly enforced maximum of 2 persons per bedroom plus 2 additional persons
2. Event Restrictions: No special events or gatherings exceeding overnight occupancy limits
3. Parking Requirements: All vehicles must park in designated areas only
4. Waste Management: Proper trash disposal in provided receptacles on designated pickup days
5. Noise Compliance: Adherence to Town's Noise Ordinance with quiet hours enforcement
6. Property Maintenance: Standards for property appearance and upkeep

Macon County Regulations:

No specific county-level short-term rental regulations were identified beyond standard state requirements. The county follows state guidelines for:

• Business licensing
• Tax collection
• Building code enforcement
• Health and safety standards

North Carolina State Regulations:

Current State Framework:

• No statewide prohibition on local STR regulation
• Municipalities retain authority to regulate STRs through zoning
• Standard business licensing requirements apply
• State sales tax and occupancy tax obligations
• No mandatory state registration system for STRs

Legislative Activity:

• Multiple bills introduced to limit local government STR regulation authority
• No comprehensive state-level STR legislation passed as of 2024
• Local governments actively lobbying to preserve zoning authority
• Legislative outcomes remain uncertain

Contact Information for Local Authorities

Town of Highlands Planning Department

Primary Contact for STR Regulations and Permits:

• Phone: (828) 526-2118
• Website: https://highlandsnc.org
• Address: P.O. Box 460, Highlands, NC 28741
• Services: Zoning inquiries, permit applications, regulatory compliance guidance, Special Use Permit applications
• Hours: Monday-Friday, 8:30 AM - 5:00 PM

Town of Highlands Town Hall

General Administrative Services:

• Phone: (828) 526-2118
• Address: P.O. Box 460, Highlands, NC 28741
• Website: https://highlandsnc.org

Macon County Government

County-Level Business Services:

• Phone: (828) 349-2000
• Website: https://maconnc.org
• Address: 5 W. Main Street, Franklin, NC 28734

Save Highlands Organization

Pro-STR Advocacy Group and Legal Challenge Updates:

• Email: info@savehighlands.com
• Website: https://www.savehighlands.net
• Legal Fund: https://www.gofundme.com/f/save-highlands-shortterm-rentals
• Services: Legal challenge updates, investor advocacy, regulatory monitoring

Highlands Neighborhood Coalition

Anti-STR Advocacy Group:

• Website: https://www.highlandsneighborhoodcoalition.com
• Email: Available through website contact form
• Services: Community organizing, regulatory advocacy, legal analysis

Links to Source Pages

Official Town Resources:

• Town of Highlands Official Website
• Town of Highlands STR Contract Addendum

Advocacy Group Websites:

• Save Highlands Organization
• Highlands Neighborhood Coalition

Third-Party Analysis:

• STR Profit Map - Highlands Market Analysis
• RedAwning Market Overview

News Coverage:

• The Highlander - Highlands Commissioners Approve Amortization

Investment Recommendation

Investing in short-term rentals in Highlands, NC is extremely high-risk and categorically not recommended for new investors. The regulatory environment represents a worst-case scenario for STR operators, characterized by:

Critical Risk Factors:

• Regulatory Hostility: Clear political mandate to eliminate all STRs in residential areas
• Phased Elimination: Grandfathered operations will be terminated by September 2027
• Legal Uncertainty: Ongoing litigation creates unpredictable investment climate
• Economic Impact: Restrictions expected to negatively affect local economy and property values
• Political Momentum: Strong community support for residential neighborhood preservation

Strategic Considerations:

1. Market Exit: Existing operators should develop exit strategies well before 2027
2. Alternative Markets: Consider more favorable STR jurisdictions with supportive regulatory environments
3. Property Conversion: Assess feasibility of converting STR properties to long-term rentals
4. Legal Consultation: Engage specialized land use attorneys for asset protection strategies

Due Diligence Requirements:

• Comprehensive legal analysis of current restrictions
• Assessment of litigation outcomes and their impact on investment
• Evaluation of alternative STR markets with favorable regulations
• Financial modeling of potential losses under current regulatory trajectory

The situation in Highlands serves as a cautionary case study demonstrating how rapidly local regulations can eliminate previously viable STR investments. The regulatory framework is fundamentally incompatible with sustainable short-term rental operations, making Highlands unsuitable for STR investment at any scale.

Investors should monitor ongoing litigation between Save Highlands and the Town of Highlands, as favorable court decisions could potentially modify or eliminate the amortization timeline. However, the current political and regulatory environment suggests that any modifications would likely be limited in scope and duration.

For current STR operators, the priority should be maximizing remaining revenue while developing transition strategies. For potential investors, the recommendation is unambiguous: avoid Highlands and seek opportunities in jurisdictions with supportive or stable STR regulatory frameworks.