Hawaii counties to regulate or ban vacation rentals via this landmark bill. This move intended to help fix the housing crisis, also underscores a major shift in Hawaii’s travel paradigm.
Hawaii counties to regulate or ban vacation rentals via this landmark bill. This move intended to help fix the housing crisis, also underscores a major shift in Hawaii’s travel paradigm.
We are in the process of paying in advance, in installments, for a condo stay in Kihei this winter. It’s a well-known established condo complex we’ve been coming to for years. Technically, it’s a “vacation rental” — or is it? I guess I don’t understand the actual definition, in Hawaii, of “vacation rental.” Is a regular established condo a vacation rental? Or does this mean one of those pop-up VRBOs? Please advise. If a regular condo is not one of these, the lack of definition adds even more negativity and fear from visitors.
This is great thinking. Steal the vacation rental value from the owners who invested based on that, in the hope that it will lower rents for residents, who will probably end up on welfare because tourism jobs will collapse because the preferred accommodations are outlawed. No worries though, the rest of us can pay more taxes to pay for this. Way to build back better.
Aloha-
Does the legislation address existing reservations at STRs? Is my less than 30 day reservation in jeopardy of being cancelled?
thanks
The funny thing is that I’m sure it wasn’t even addressed. It wasn’t part of the bill. The bill basically gave the counties the right to enact ways to eliminate short term. Vacation rentals. I mean, Oahu and Maui already have more restrictions and look how expensive it is there. It’s not gonna get any cheaper. I see what sells over there and I see who’s buying it, it’s not locals. It’ll be a mainlander and maybe they’ll put a long-term tenant in. They’re going to charge them a lot. For short term, vacation rentals already booked, I really wouldn’t worry about it. The wheels of government don’t work that fast.
Boondoggle for the Hotel Industry!
I have friends who are having trouble finding reasonably priced long term rentals. It’s truly a problem.
When I purchased my STVR 10 years ago, it was priced, and is now taxed as a vacation rental. I could never afford to convert the house into a long term rental. I would either have to sell my property or move in. Neither scenario will solve the housing issue. The county and state would lose the extra taxes, and the people who help with the upkeep of this property will lose their income from it.
I would assume that most people who buy properties to rent out to vacationers do so with the idea that they will use their own properties as a vacation destination a couple of weeks a year (or more) and rent the rest of the time to make it a profitable venture. If they are forced to rent their properties long-term, their own vacation home/condo becomes unavailable to them for as long as the property is leased. I’ve not seen that aspect discussed much on this forum, but I can’t see why people would want to continue owning a property if they were no longer able to use it as their own vacation home/condo.
STVRs are already regulated by Hawaii County independent of the State. I don’t understand what this bill does that changes anything for Hawaii County.
That’s part of the point of the legislation. They’re hoping to shift vacation housing into local housing, via long-term rental and from off-island owners selling their island houses. A further hope is that cost of housing will decrease as a result of the above. However, because it’s like an extreme version of rent control, I suspect that in the longer term it may backfire like rent control does.
Le Anne,
You are correct. Our house on Kauai is a vacation rental when we are off island, be we are here 4-5 months a years a year. If the county terminates our license, all that happens is the house sits empty, unless we (or our friends/family) are here. Plus, some people lose work, and local businesses lose customers. And, it will cost the county a lot in lost tax money. According to the RE Broker who manages our rental operation, every one of her owners says the same thing. None of these homes will become “affordable” long term housing.
Exactly! How can this even be legal for an already existing home owner?
This is what they are hoping will happen. If enough people can’t rent short term, they will just sell. If enough people sell, prices will go down making housing more affordable. However, most people I know who own these are wealthy enough to just let them sit vacant and use them a few times a year themselves, or let family and friends use them.
The people who need to rent units out in order to keep them are the minority.
You make an excellent point. The Kaanapali condo we stay at is owned by a couple who live there 5 months out of the year and rent the rest of the time. If the STR are banned will they be forced to sell?
There are soooo many homes that sit empty all but 2 weeks a year here in Kihei while locals can’t find suitable or any housing. Something has to change.
Ane T (clever!)
If these homes are already sitting empty most of the year, why would this law change anything?
So, do you suggest forcing those who own homes but only visit 2 weeks a year to sell their property? Unless I misunderstand your statement, property owners can occupy their property as they see fit.
That just shows what we already know to be reality: a lot of owners of properties that are currently used as a second home or short term vacation rental don’t need to sell them. Maui already has a lot of restrictions and even before the fires, the lack of affordable housing was an issue just like it has been in any other desirable part of the country.
From recent article:
“In Palm Springs, a cap on short-term rentals in specific high-demand neighborhoods has all but frozen the market in those communities.
Sales are down. Homes languish on the market for months. And investors who bought up Palm Springs properties during the COVID-19 pandemic are facing hundreds of thousands of dollars in losses.”
Cite your source, or this is made up.
Does this tourism change with potential ban on rentals includes all the islands, condos as well as private properties?
The hotels must be looking forward to getting to test their pricing power.
Yes, the one thing we know for sure is that the hotels will jack up their prices for everything. They will be laughing all the way to the bank and none of that money is going to come back into the local economy.
The recurring comment on short term rentals belonging to nonislanders is just short sided as an excuse to eliminate them. Who do you think owns the hotel and resort properties? They are islanders.
I’m pretty sure most of the hotels are not owned by islanders but large corporations from all over the world
Don’t bite the hand that buys the booze.
My message to county lawmakers: be careful what you wish for. If you limit STRs and the ones remaining jack up rates, many visitors (like me) already being squeezed will be priced out, especially when hotels are out of the question (when a Courtyard by Marriott in Kahului charges $500 a night, or Wailea hotels start at over $1,000, you know something is wrong).
I can’t wait to get back to Maui this summer. I hope it won’t be the last time. I choose to go to Hawaii (I’ve been 10 times). I don’t need to go (coming from NY, it’s a process). Making Hawaii a playground for the rich spells doom. Limiting STRs won’t do much to fix the housing crisis. But it will kill the economy.
One can rent a 2 bedroom timeshare that sleeps 6 for about 2100 a week or $300 per night And have a kitchen + BBQs to prepare a few meals without some of the restaurant bills. (Perhaps not in HNL but the other islands) True, it may not be Wailea but is everyone after that? If so, pay the 500-1,000 per night.
Not for long. Timeshare share prices to buy and rent are going up, up, up since talk of this bill began. Savvy vacationers and existing Hawaii timeshare owners are buying it up to insure they will be able to get back to Hawaii without paying crazy hotel rates. If they don’t use their timeshares they will rent them out for what the market will bear which will be higher than 300 a night. Timeshares are selling like hotcakes here right now!
We rent a studio condo on Kaanapali Beach for 5 wks every year to escape some of harsh Midwest winter. In the past two yrs, the price has nearly doubled and is now over $700 a night range, plus resort fee of
$25 a day. We will have to shorten our stay. Car prices are ridiculous. I don’t believe residents of Maui can afford to buy or rent the strs. Tourism will be greatly impacted, jobs will be lost. Not a win for anyone. We’ve been visiting yearly since 1985. Probably not able to afford to come for much longer
Rates are where they are because visitors are booking at those rates. I happen to know many property management companies in Maui reduced rates drastically in Maui since the fire and continue to do so. We need visitors. It’s time to book Maui now before rates go back up as they obviously will. Safer to book in hotel zoned condos. We appreciate your support. Keep your hosts contact info🙏 The Airbnb and Vrbo fees add 100s & over $1000 to bookings.
Your comment shows that you don’t understand the local sentiment and economy. Limiting STRs or even getting rid of them entirely won’t kill the economy. There will always be hotels and resorts and there will always be visitors. It will however reduce the number of visitors which is exactly what the locals want. And it will open up housing availability for locals. Which is also what the locals want. They are tired of seeing their family members being driven out by mainlander STR owners.
Yes, Peter, there will always be visitors. But there will be many fewer visitors because not everyone can pay $1,000 a night plus tax plus resort fees for a room. Do locals really want fewer visitors if that reduces the tourist infrastructure that’s the lifeblood of an island like Maui? What then? Based on what I’ve read (in part, on this board and from friends in Maui, that’s Not what most locals want).
And what about all the people displaced from Lahaina? Not all of them want to live where many STRs are (read Kihei). Nor are they all suited for families who can’t count on FEMA to pay their rent long-term. Or existing schools can’t handle the influx. People want, need and deserve Permanent housing. Many STRs won’t fit that bill.
You know I was originally for getting rid of STRs in local neighborhoods, I thought it would help.
But now, I discover that a lot of people that used to live in Lahaina aren’t willing to live in Kihei even though the government will pay the Entire Rent because it’s too far away!
Get a grip people, it’s a relatively small island. Yes, it might take an hour to get to the other side of the island, but the people on OAHU drive an hour a day to get to Honolulu and a lot of people that live near a large city have to drive an hour each way. I’ve kind of stopped feeling so bad for them.
Yes, they’ve been dealt a shitty hand, but people are willing to help if they would accept it.
I was affected by the Lahaina fire as were many friends. You are correct. Many of us couldn’t wait to go back to work instead of waiting for handouts. So glad we did because there will be a job shortage worse than it is now. Hubs are already closed or about to close, FEMA is denying assistance finally. You can’t count on FREE and be picky. Wow. We are blessed and there are many that feel entitled and will have a wake up call. We are not owed free help!
I own a STR on Maui, if the county converts my str to long term I won’t sell it, I will continue to use it when ì want to vist(about 12 week a year). A lot of the owners in my complex would do the same thing. I would never make it a long term rental. It was built as a STR in the 1970’s and has always been a STR (zoned hotel).
I don’t think properly zoned STR will be band on Maui.
Unfortunately this is why they want to re-zone residential, agriculture and hotel zones. You are right in not wanting to rent long term. I have friends that can’t evict non paying, harassing tenants that are causing damage. Even with a police report one friend lost a court battle. The tenant lied and had his own police report against her. If a woman landlord cannot evict a man renting a room in her own home that is deliberately damaging, running around naked, smoking and letting her pets out, we don’t have a chance. Judge said wait 3 months of non payment and go back to court. Even then no recourse.
You got it mostly right except for the fact about it opening up housing for locals. It’s not gonna do any of that.
Not sure how anyone can say that “[l]imiting STRs won’t do much to fix the housing crisis.” What are you basing that on? I’ve read elsewhere that thousands of housing units on Maui are used as STRs. If that utilization ends or is limited, those units will not just disappear. I’m guessing that they’ll either be sold or rented long-term.
Still, at this early point in the process, I think it’s anyone’s guess what the effect will be.
Who’s gonna make up the financial shortfall? We know it won’t fix the housing crisis because these same types of restrictions have been put in place in other parts of the country and it hasn’t done that. Why would Hawaii be different?
“….converting vacation rentals into local housing.” I’m confused about this. Aren’t most vacation rentals owned by owners? (vs corporations) How exactly would they be ‘converted’ if they are privately held? Not agreeing or disagreeing but is there something I’m missing? Mahalo!
As with many popular tourist destinations, the homes are bought up by individuals or investors from outside the area specifically to use as a STR, so that’s one less house used for islanders to live, squeezing an already tight and very expensive housing market.
They want them rented out long term instead as normal rentals.
Does “long term” mean a month or more? 3 months? yearly? Most LTRs have a minimum of 1 month (not sure about the islands definition). But if I could only rent for one month or longer I seriously doubt it would affect most owners so really wouldn’t add to the housing for locals.
Anything less than 180 days is considered short term.
That is incorrect. Short term is defined as 30days or less in Hawaii.
“Short-term rentals (STRs) are also known as vacation rentals, and are lodgings that provide guest accommodation for less than 30 consecutive days. In order to preserve housing for long-term residents, STRs are only permitted in resort-zoned areas and a couple of specific apartment-zoned areas.”
honolulu.gov/dpp/permitting/short-term-rentals.html
This is the third time I have written this response to this BOH story.
If I can’t find a STVR, I will not be coming back to Hawaii. Maybe that is what the Governor wants, so, Governor, mission accomplished.
It also appears to be what a lot of islanders want too. The local housing market in Hawaii is extremely small and expensive and STR’s just make this worse, removing more and more homes from the local market. Not to mention, who wants their neighborhood to suddenly become another tourist hub, where no one knows their neighbors and the renters are carrying on like it’s Friday night, every night?
There are a number of short term vacation rentals in my neighborhood. They are not loud. I have more problems with the owner occupants of homes than I do with people that are here for vacation. Think a lot of people just assume that everybody’s gonna come out here and party when in reality we have eco-tourists, we have people that want to get closer to some of the things to see on the island instead of being jammed in no hotel. We get people that want to experience the local culture and not just some luau on the hotel grounds. People come here and spend their time and money at local businesses, we see that money come back into the economy.
There won’t be “more and more” short-term rentals created, because STRs have been capped on all of the islands. That makes the rest of your comment moot.
Those of you who “liked” this comment…you know the scenarios mentioned in this comment can no longer happen, right?
There will never be “more and more” STRs created in Hawaii. Your neighborhoods will never suddenly become full of STRs. Saying otherwise is just spreading unnecessary fear.
Ditto. It is exactly what he has in mind. He expects only the rich. If you cannot afford an expensive hotel and eat out at restaurants, he does not want you. He wants first class citizens in Paradise. He did not really mean it when he said he wanted people to come and respect the culture.
The governor needs to stop speaking out of both sides of his mouth!
Can BOH explain how this is going to work? Banning short term rentals….. Does that mean only long term rentals? Most rental houses in Kauai currently cost at least $1000/night. Will the owners of those houses, mostly mainlanders, agree to charge substantially less, when their mortgages and property taxes are already sky high? Gov Green is upset that STR’s are owned by mainlanders and wants to turn them over to locals. How many locals can afford $1-5 million homes? What am I missing here?
Hi Rob.
This is going to unfold over time, and it isn’t clear how it will work in any of the counties of Hawaii yet.
Aloha.
I foresee a long and protracted, divisive and expensive battle should this stand. There will be turmoil that will finally kill tourism in Hawaii. Even BOH’s humble editors will be gnashing their teeth. Good luck surviving this self-inflicted wound. Auwe!
Yes Tom! Maui`s economy has been circling the drain since the tragic fire. This could very well be the kill shot. Most businesses here depend on tourism on one level or another. Will the counties be setting the long term rental rates or the property owners? There is no affordable property ownership on this island. They will have to charge enough rent to cover those expenses. What a mess…
They can’t dictate rates but it will be whatever the market will bear. Rents are already crazy high. Take a look at Zillow listings. Many rentals are poised for long term but at monthly rates that locals cannot afford.
I am assuming that the supporters of this legislation are expecting that without the lucrative short term rental income that the properties will become less valuable and of less interest to out of state owners. Resulting in more properties going onto the market for purchase as long term residences and thus flooding the market and reducing housing prices.
Interesting theory. Who knows if that is how it will really go. My guess is that all this will end up in lengthy court battles.
Yes, I think that there is going to be some lengthy court battles. The proponents think that all of a sudden we’re gonna have a bunch of affordable properties. That’s like saying that the plastic bag ban at the grocery stores magically cleaned up the ocean. It didn’t, the bigger issue was commercial fishing and the nets. The lobbyist had more money so they made the issue all about the end consumer when it really wasn’t.
Normal rentals by most codes are 30 days or more. So, you could likely rent your home out for 11 or 12 times a year and it would still be considered a “single family dwelling”. his in fact is the loophole the STR’s use, most national safety codes require enhanced safety in “transient lodging”, or those rentals of less than 30 days, but not many places are holding people to the Codes, which then allows the “owner” to place guests at additional risk, where hotels, motels, inns and B7B’s must have much more robust safety systems. Basically the national codes didn’t address this issue as it was “not a thing”, now it’s a political hot potato they seem to be trying to steer clear of.
How long is a long-term rental on Maui?
MCC 3.48. 466 states that for twelve (12) months, the dwelling must be: occupied as a long-term rental, and. under a signed contract to lease. Hawaii County deems any rental longer than 180 days to be long-term.
The STVR’s pay a much higher property tax rate, so I suppose the category and rate will change if the house is no longer a vacation rental.
On Kauai, a grandfathered-in STVR is more expensive to purchase, usually in the $200K range depending on the property.
Would it be reasonably safe to assume the Big Island is least exposed to this ‘debatable action’?
Mahalo,
Dodge and Sharon
Hi DodgeandSharon.
It all remains to be revealed. There did appear to be more push back from the Big Island.
Aloha.
The Big Island already has laws that limit STVRs in non-resort areas, but many older STVRs in non-resort areas are grandfathered in. They have been continuously trying to make the rules stricter and stricter there, for example, they want to ban renting of rooms for any period of less than 6 months, even when the owner of the property lives in the house that they are trying to rent a room in.
Appreciate the Beat of Hawaii never sleeps (didn’t expect a response for at least 6 hours) reply.
Another question; in your opinion, is the Hawaii Governmental (mental?) Brain Trust equipped to defend itself (other than a plea of Nolo Contendere) against a probable Class Action law suit?
What is considered to be a short term vs. A long term rental?
service.
“Short-term rentals” means rentals involving payment for use, or swapping, bartering, or exchange, of residential dwellings, or portions thereof, for stays of less than one hundred eighty days, or any shorter maximum duration as determined by a county, by persons other than the owners of the residential dwelling. “Short-term rentals” include “transient vacation rentals” as defined in section 514E-1.
Typically by national Code standards, 30 days is the line. Less than 30 is considered “transient lodging” and must meet greater safety regulations.
It’s usually 30 days or less. They are currently trying to switch it to any stay of less than 180 days on Big Island.
We saw a lot of Palm Springs references by those who wanted this legislation. Now let’s see if there is a measurable, material comedown in home prices.
I’m highly skeptical. Instead I predict a disaster for county property tax rolls, truly exorbitant hotel room pricing, and continued, prolonged tourism weakness that will last a decade, and possibly much longer. The last of these is precisely what the governor and a significant minority of locals wanted. Don’t look for a federal government bailout when the next recession hits; you did this to yourselves.
I completely agree with this. Too many properties are owned by out of state investors and individuals. There is only so much land and having so many properties sitting idle much of the year makes no sense.
Oh yeah. What logic. Plenty of land. Just buy some and build a darn house like most people do. Oh yeah….or just take it from someone else.
Brett,
This will result in way more properties sitting idly by. They will just be second homes. Even if/when the current owners sell, the buyers will mostly be mainlanders buying second homes. Most people who live on the islands cannot compete with mainland money. Kauai county penalizes all non-primary residence homes with exceeding high property taxes. I suspect the other counties also do this. That may encourage some people to sell, but if someone buys it as a primary residence, the county loses a lot of property tax.
Obviously, you are probably in the minority given the feedback on all of these postings. So how many properties are too many? 10, 100, 1000 and what does it matter if they remain empty or not? Should the government force a property owner to put somebody into it?
I have a vacation rental. Even if I lose the right to rent it out as a vacation rental, I still would not rent it to permanent renters because then I wouldn’t be able to use it myself a few times a year. I would keep it empty and let family and friends use it.
Same. The eviction moratoriums etc make it way too risky to rent long term. This will just drive rentals underground and avoid all GET, TAT, and county taxes being paid.
I hope the counties act reasonably, but who knows what will happen.
Good luck and good bye.
You will drive away the returning and frequent visitor who knows hotel rooms are way too high. Without short term rental Hawaii is no longer an affordable concept when compared with other beach worldwide.
‘Cutting your nose off to spite your face’
Yep. I guess I should just go ahead and cancel my STR reservation for January 25. Oh well. I always liked visiting Hawaii, I guess those days are over. No way I am paying hotel rates.
Nothing will happen for years
So here’s what sad. We Volunteered our condo after the fire, but it was too small, it was in the wrong location, so why now with this STR become someone’s dream home? We know for a fact that the displaced survivors from the west end have been asking to remain in the west. Why the governor is taking this stance across the entire island of Maui seems so ridiculous. Short term rentals bring in the highest tax into the county (TAT) In the world. Such a good opportunity for that money to be converted into affordable housing in the west where they want to reside. Close to their Ohana, the keiki schools, church etc. One size does not fit all