The Math Problem Behind Narragansett's Short-Term Rental Cap

"Anytime you put a delay on something that you're fighting against, it's a win," George Nonis, president of the landlord group Narragansett 2100, told a local TV reporter back in the summer of 2024. He was talking about a lawsuit his group had just filed to stop the town's new short-term rental ordinance. Two years later, that delay is still the entire story, and it's the part of Narragansett's rental market that most buyers never hear explained clearly.

If you're weighing a coastal purchase here with an eye toward renting it out by the week, you've probably already read that Narragansett caps short-term rental permits and requires a seven-night minimum stay. That's true, on paper. What's missing from most explanations is that the town cannot currently enforce either provision, and the reason why says more about the actual rental market here than the ordinance itself ever could.

A cap of 900, and roughly 1,200 rentals already running

The ordinance the town council passed in May 2024 phases down the number of short-term rental permits it will issue each year: 1,100 for the cycle beginning in September 2024, dropping to 900 for the cycle that started this month, September 2026. Beyond that, the town council decides.

Here's the number that makes the cap hard to take at face value. As of mid-September 2024, the landlord group's own attorney told reporters the town had roughly 1,200 active short-term rental registrations, more than the 900-permit ceiling the ordinance is supposed to enforce starting now. A town cannot cap a market at 900 slots when close to 1,200 properties are already operating in it without someone losing their spot. That mismatch, not the headline permit number, is the reason this fight has stayed in court for two years. It also means that if the ordinance is ever allowed to take effect as written, the properties most likely to keep operating are the ones that got in early, not the one you might be closing on this fall.

Why a judge hit pause, and why the pause is still holding

A group of roughly 370 property owners, organized as Narragansett 2100, sued the town in the summer of 2024, arguing the ordinance amounted to a licensing scheme the town had no authority to create under Rhode Island's home rule amendment. In October 2024, Superior Court Judge Sarah Taft-Carter agreed the plaintiffs had shown a reasonable likelihood of success and granted a preliminary injunction blocking enforcement of the ordinance's permit cap and its seven-night minimum stay requirement while the case continues.

That injunction has not been lifted. Reporting on the town's current rental rules as of this year confirms the ordinance still exists on the books and the injunction blocking its two most consequential provisions still stands. For a buyer, that means the 900-permit ceiling and the seven-night floor are not something you need to plan around today. They're something you need to watch, because the litigation could resolve in either direction, and the properties already operating would have a two-year head start on any newcomer if the cap ever becomes real.

The paperwork that doesn't care about the lawsuit

Here's where a lot of secondhand summaries get sloppy. The injunction froze the ordinance's licensing scheme. It did not freeze the town's older, separate rental registration requirement, which applies to any rental unit in Narragansett, not just short-term ones, and which keeps running on its own calendar regardless of how the lawsuit turns out.

The town's rental registration page states that owners must file or renew a completed registration on or before August 31 each year, with the registration valid from September 1 through August 31 of the following year. That deadline just passed. If you're closing on a Narragansett property this month, the registration cycle you're stepping into already started, and if the home you're buying was already operating as a rental, you'll want to confirm with the town whether that registration transfers with the deed or needs to be refiled under your name before you list it anywhere.

Separately, the town's own rental ordinance Q&A lays out the fee structure that would apply to short-term rentals specifically once the ordinance is enforceable: a $50 registration fee for Narragansett residents versus $100 for non-residents, and an annual permit fee of $375 for residents versus $750 for non-residents, with a $375 re-inspection fee if a property fails its first look. Those numbers matter for underwriting a future purchase even though they aren't being collected under the frozen ordinance right now.

The layer above the town: what Rhode Island itself now requires

Even with the town's cap on hold, the state has not stood still. Every short-term rental listed on a hosting platform in Rhode Island needs its own registration with the Department of Business Regulation under state law, a requirement that exists independent of whatever Narragansett does with its own ordinance. The DBR's short-term rental page and its accompanying FAQ spell out that any unit rented for 30 nights or fewer through a platform like Airbnb or Vrbo needs this filing before it can legally list.

The bigger shift for anyone underwriting a rental purchase this year is on the tax side. Starting January 1, 2026, Rhode Island added a new 5 percent tax on whole-home short-term rentals and raised the local hotel tax that applies to these stays from 1 percent to 2 percent. That's a real change to the return math on a coastal rental, and it applies whether or not the town ever gets to enforce its own permit cap. A buyer modeling rental income off 2024 numbers without accounting for this stacked tax is working from a stale spreadsheet.

How the neighbors are handling the same fight

Narragansett isn't unique in wrestling with short-term rentals, but its neighbors have landed in different places, and the contrast is useful if you're comparing towns.

A judge upholding a comparable ordinance in Exeter just a few months after enjoining Narragansett's is a reminder that the legal questions here are genuinely unsettled, not a foregone conclusion in either direction.

What this means if you're closing this fall

A few things to have your attorney or closing team confirm before you write an offer on a Narragansett property you intend to rent short-term:

• Whether the property currently carries an active town rental registration, and whether that registration transfers to a new owner or needs to be refiled
• Whether the seller has an active state DBR registration number you'd be taking over or need to apply for fresh
• How the new 5 percent state tax and 2 percent local hotel tax change your projected net rental income compared to any older pro forma you've been handed
• Whether your timeline for closing and listing falls before or after the current September 1 to August 31 registration cycle

None of this requires you to guess at how the Narragansett 2100 litigation resolves. It just requires separating what's actually being enforced today from what's written down but paused, which is a distinction a lot of online rental compliance guides still blur together.

A few common questions

Does the 900-permit cap affect me if I buy in Narragansett this year? Not right now. That number comes from the 2024 ordinance's phased permit schedule, and the permit cap along with the seven-night minimum has been blocked by a preliminary injunction since October 2024 that remains in place.

If the injunction is lifted, what happens to properties already operating? The ordinance as written doesn't grandfather every existing operator automatically, and with roughly 1,200 rentals already registered against a future cap of 900, any waitlist process would favor properties that got in early over new buyers.

Do I still need to register my rental even though the ordinance is frozen? Yes. The town's basic annual rental registration, due each August 31, is separate from the frozen ordinance and continues to apply regardless of the lawsuit's outcome, alongside the state's own DBR registration requirement.

Rental regulation in a beach town like Narragansett rarely stays still for long, and the gap between what's written and what's enforced is exactly where a buyer can get caught off guard. If you're weighing a purchase here against another South County town, or want help reading a rental pro forma against the current rules rather than last year's, Christina Phipps can walk through the numbers with you town by town. Schedule a consultation before you write your offer.