Highlands, North Carolina

Highlands has one of the most restrictive STR regulatory environments in the Southeast. New STRs have been prohibited in R-1 (low-density residential) and R-2 (medium-density residential) zones since September 15, 2022. R-1 bans STRs entirely. R-2 permits only Tourist Homes, defined as bed-and-breakfast or inn operations with no more than four guest rooms, and only via Special Use Permit. STRs in B-4 commercial zones remain permitted. All operating STRs must hold a town permit. Grandfathered nonconforming units that were operating before September 15, 2022 must hold a Nonconforming Use Permit and may not expand beyond prior use. On September 19, 2024, the Highlands Board of Commissioners voted 4 to 1 to amortize all existing nonconforming STRs in R-1 and R-2 zones, requiring them to cease operations by September 19, 2027. The Macon County room occupancy tax is 3%, in addition to applicable state and local sales taxes. Properties on town sewer are capped at 12 guests. The Institute for Justice has publicly challenged the amortization ordinance as potentially unconstitutional under North Carolina law, citing a precedent from Wilmington. Investors should consult counsel before purchasing with STR intent, as residential-zone STR operations face a defined end date.