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.
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223 thoughts on “Hawaii Clears Path! Counties Can Now Ban Vacation Rentals”
This bill does not ban short-term rentals. On Oahu, short-term rentals of less than 30 days are already banned except for limited exceptions in resort areas and a few hundred STRs permitted before 1989. What this bill does is allow the counties to take away the right that has existed since Hawaii has been a state–the right to rent your home for a min period of 30 days. Such a ban will make rentals harder to find in Hawaii for students, visiting nurses, people here on ST military postings, researchers, grandmas and grandpas visiting ohana, and others needing a rental for a month or two. The state and counties cannot evade their responsibility to develop affordable long-term housing by putting it on the backs of individual homeowners.
These comment sections on STR’s are full of mostly housing speculators stuck in an echo-chamber thinking these mini-hotels in residential neighborhoods are somehow good for Hawaii, but clearly they don’t live here and don’t see all of the many negative impacts of having housing hoarded by those wishing to profit, completely unaware of the huge out-migration of the labor force (at all levels) due to truly absurd housing prices (mortgages/rents).
There are many negative effects of having profiteers hoarding housing for personal gain. Your “investment” is not guaranteed a return. Most of these speculative investments have not gone through a true real estate downturn and recession with job loss.
You must be a lobbyist for the hotels. You’re probably the loan person here making comments in support of a ban on short term vacation rentals. They bring money to locally economies, they bring work, they bring visibility to areas of the island less known. I can drive through any neighborhood, I can’t tell you that this property or that property is owned by one person or more. You should drive through some of the properties that the local and look at what they have done to the property… Dumping cars, 40 chickens, unleashed feral dogs. So before you start complaining about how bad they are why don’t you come out and visit and see what is really going on?
Touche’ Andy! I’m sick of being judged by what our government is doing and blinded locals that are content to live off the system. Tourists being blamed is ludicrous. They did not abandon their car, appliances and rubbish all throughout the island. I 4 wheel and rental Jeeps could not make it to where we go and find rubbish. We carry trash bags to pick the areas. Eco conscious, and pointed fingers? Really. I can’t wait until they get a dose of reality. Unfortunately it will affect the responsible residents and visitors as well.
Since you stated that you are a realtor with a speculative investment, maybe if you reply to everyone in the comments (mostly other realtor/speculators), you’ll change the course of State and County laws so your speculative investments don’t flop.
Remember, all investments are no guaranteed a positive return, yours included.
Well said and I agree. So many mainlanders here who own STRs on Hawaii trying to justify why they should have the right to continue to do their part in adding to the local housing crisis while they profit from it.
From your comments Bill, you don’t sound like a homeowner, Hawaii business owner or resident. This article pertains to Hawaii not about all of the other areas you continue to bring up which do not compare to the Hawaii islands. Perhaps you are still a US citizen and can see this as against our constitutional rights. We appreciate different points of view and being part of the solution with relevant information. Mahalo!
Hawaii needs to dump All STVR’s across the entire State that are located in RESIDENTial or AG zoning.
KTLA in California. “The Santa Ana City Council has voted to ban short-term residential rentals within city limits. A recent spike in short-term rentals proliferated by sites like Airbnb and Vrbo has led to ‘a range of issues’ in Santa Ana, city officials said. ‘These rentals, typically lasting less than 30 days, have been linked to a range of issues including trash and litter, excessive noise, parking problems and neighborhood degradation,’ the city’s release stated.”
Why do they need to dump all of the vacation rentals that are located in residential or AG zoned areas? You realize that with the exception of downtown Kona and downtown Hilo, the rest of the island is zoned AG. How is that going to change anything?
Just a few cities and countries (most much larger populations than the entire State of Hawaii) where speculative short term rentals have been severely restricted ……or banned entirely:
– New York City
– Barcelona
– New Zealand
– Palm Beach
– Berlin
– Amsterdam
– Santa Monica
– San Francisco
– Canada
– Malaysia
– Irvine
– Japan
– Santa Ana
– Palm Springs
– Florence, Italy
– Munich
– Netherlands
– France
– Many, many more cities and countries….
Everyone knows speculators hoarding housing to try to make a profit with mini-hotels in areas zoned residential is terrible for society.
What’s your point? It sounds like what you’re really mad about is that there are people making money and you aren’t one of them.
Andy,
He just likes to say “speculator.” A lot. Maybe it’s his go to scrabble word? If this comment thread was a drinking game, and we had to do shot every time Bill says “speculator” we’d all be dead. I speculate Bill spends a lot of time speculating about how speculators will be first against the wall when he is King and imposes despeculation.
Ughhh, no way I’d want to be a airbnb “superhost”, so many better and liquid ways to invest.
I am a New Zealander and are watching what happens in Maui, as we have used VRBO for accomodation there. However currently in NZ there are No restrictions on short term rentals of any nature anywhere.
There are tons of existing and upcoming restrictions all across New Zealand.
This law will not result in the conversion from short term rentals into long term rentals. What it will do is force Kapuna like my wife and I to sell and move to mainland. The new buyers won’t be locals because of the prices and many homes will sit vacant except for short periods of time when occupied by owners on vacation. The state and counties will lose millions in both Transient taxes and property taxes. Until tenant landlord laws are changed to create a balance between tenants rights and landlord rights there is no incentive to rent long term. Economically it makes no sense to have a high property tax rate and rent at half to a third of previous Transient rentals income. It’s a bad law!
It’s already that way anyway most of these places we have heard have remained vacant while they are not there. Meanwhile locals are in desperate need of housing. We can’t have more short term rentals over permanent housing. Most of the people who own places here don’t even live here. They just rent out to visitors all year. So how is that helping?
A short term rental provides accommodations on areas of the island where there are no hotels. A short term rental provides accommodations and a more reasonable price than a hotel. They provide better paying jobs because we know that the hotels are going to pay minimum wage. Owners of vacation rentals pay to their staff. It is county over regulation that is creating the problem of a lack of affordable housing. The keyword here is affordable. There would need to be a radical shift in basic housing economics, but that isn’t going to happen
Erika – You answered your own question. It does not help. Instead of renting to visitors, they will rent to no one, and just use the place themselves (and family and friends) from time to time. So, no added residential housing, but just decreased tourists (sounds good if you don’t rely on tourists for your job) and decreased taxes collected (‘doh!) Some will sell, but I speculate (I get to use that word, too) that the buys will mostly be buying second homes or maybe move here and work remote.
By providing jobs and thus food on your table. Get rid of illegal rentals and those in residential areas. Limit the people who move here like other countries do. They must be a benefit not a burden to Hawaii or come to retire. College age are taking up much of the housing, come to visit, take jobs and then stay. I only say this because we have limited resources but need tourism to survive. Wake up people. The enemy is disguised and it is not our visitors. Just getting rid of residential and illegal rentals be be huge!
You are right. People are going to continue to short-term rent. They’re going to do it underground. They’re not gonna pay taxes. The county is going to lose millions of dollars in revenue properties won’t magically get cheaper. The proponents of eliminating short term rentals have no idea what they’re talking about.
Except you’ll have to sell at a lower price because mainland buyers who need to offset expenses, will require a lower purchase price in place of that. The lower prices will make it more affordable to locals. Kind of like a Hawaiian Homelands where the selling price is capped.
Of course this only works on home that are below a certain dollar value. All the $6m – $14m beachfront homes will still not have enough price decrease to make them affordable. Maybe millionaires will be able to buy what billionaires were buying!
There needs to be a major shift in the economics for that to happen. There will always be a buyer for the property in Hawaii. It will always be somebody from the mainland. That’s not going to create more housing stock for locals. Locals don’t buy the same price point that mainlanders do. The product they are buying is completely different.
When, not if, Hawaii becomes even more exclusive, buyers with money will still pay the high prices and just use the homes for vacations and their friends and family. Same thinking as buying a Mercedes… There will always be someone that can afford to buy up Hawaii.
This situation is not just happening in Hawaii. It is happening all over the world, in popular tourist spots. Canary Islands residents were on hunger strike 3 weeks ago for the exact same reasons.
Exactly. and what do we see? Look at the cost o going to and staying at any of these locations, it’s horribly expensive. It’s for the one percent, it’s for the super rich. There have been hundreds, if not, thousands of posts and comments on all platforms about the cost of travel and lodging in Hawaii. The airfare is cheap for the most part, but hotels gouging the consumer. The county is saying that vacation rentals are damaging the environment, they’re not good for the communities. They have no idea what they’re talking about because I bet none of them have been out here to the big island and spoken to the locals.
From Joshua Montgomery, Director of Ohana Aina Association, an organization that represents STR owners in Hawaii:
“STRs employ 49,000 people in Hawaii and generate $4.8 billion in visitor spending a year, including more than $720 million dollars in tax revenue. ”
“You know, I keep seeing this number that 52% of them are owned off the island. [But] I want to flip that around and just remind people nearly 100% of the hotels are owned by institutions and organizations off the island…He said that means almost all hotel profits go back to the mainland, whereas “when they stay at a vacation rental, that’s not what happens. When they stay at a vacation rental, the money stays here.”
Source: grassrootinstitute.org/
Absolutely correct
Those numbers would also indicate 48% of the STVRs are owned by Hawaiian residents, not an insignificant number. Those locals are going to be hurt by this change too.
There was a ton of opposition, but they were ignored. The legislature was paid off. The hotels lobbied a lot. I bet they spend 10’s if not 100’s of millions of dollars to push the bill through
Well the Wall Street Journal or the New York Times just did an expose on Hawaii politics. There are these parties where donors bring wads of cash. Then at the end of the party, the piles of money are divided up to the politicians.
It’s disheartening that we can never know the truth. Everyone’s working an angle.
Absolutely obvious!
Mahalo Eric for providing facts!!!!!! All will suffer if they ban STRs.
I agree with all of the comments opposing this new law. Another potential negative effect – job loss. There will be no need for housekeepers on a regular basis if STRs are banned. And what happens to local brokerages of vacation rentals? Much of their business would be killed off, too. The ripple will be felt far and wide – and not in a good way.
Much more than hospitality! Stores, retailers, restaurants, activity businesses, crafters, artists, car rentals, airlines, loss of revenue and taxes. Can’t our greedy government see this? They did not extend unemployment on Maui for fire victims, how will residents survive! State welfare is not enough to support us.
As I’ve stated previously how many locals can either afford to rent or qualify for a mortgage at market rates? Many that were living in Lahaina before the fire were either paying below market rental fees or living at Aunties for no rent.
Also you will see an increase of black market cash only vacation renting going on. I know there was a recent law passed making this practice unlawful, but locals with rental properties will get away with it.
I have said the same thing. I have lived other places where a fire came through and wiped out a bunch of homes. You had people that were under insured, you had people that didn’t carry insurance, you had people that were renting. Now you have a lot of people that need homes and there’s not enough. That just drives the price up. Mortgage rates are outrageous and everybody says well. They used to be back much higher in the 1980s properties didn’t cost what they cost now. I know very few local families that can carry a mortgage right now. Most people coming into the market are using cash. Local families don’t have that kind of cash.
Perhaps the ruins of CoCo Palms on Kauai will be a fitting monument to where all this is headed?
It could be housing? But developers have paid too much money for it and have successively gone broke. The State needs to buy it and convert it into housing, if that’s what they want.
Yes, counties will limit STRs because the islands are suffering from overtourism and from a housing shortage. Local politicians know that they can’t be too drastic because many locals own STRs and STR serving businesses. Local voters will keep limitations in check.
20 years ago 7 Million visitors came to Hawaii, last year it was 9.6 Million, a 35% increase but the roads and other infrastructure is largely the same. Hawaii residents do not want another 35% increase over the next 20 years. The islands are not getting any bigger.
Your data is correct.
But I find it interesting that the Governor and several mayors are not trying to limit hotels. Even as downtown Honolulu has more brand new hotels – all voices say the problem(s) are:
a. vacation rentals and
b. lack of affordable housing.
So if 9.6 million tourists stay in hotels / timeshares, stress on our infrastructure is ok? But if any of them stay in vacation rentals, it is a problem?
I continue to find it interesting that non-Hawaii corporations (hotels & timeshares) who donate to local politicians are immune from criticism while (often locally owned) vacation rentals are presented as the cause of all the problems.
There are real problems – but scapegoating will not solve them.
Hotels are mostly owned by corporations that is true but they are not suitable for local residents to live in. That’s why STR condos and houses are the main problem.
I don’t know exactly how many new hotel developments are ready to go in Hawaii, it doesn’t look like that many and their numbers will always be limited by zoning restrictions. You can’t build a hotel in a residential area.
I wonder when this will go into effect.
On Kauai, it would be very surprising if the county barred vacation renting in the condos. It’s impossible in Poipu, where we have only three (very expensive) hotels, but lots of condos. Maybe the county will stop vacation rentals in single-family homes. Problem is, even with a value reduction that would result, many Poipu homes will still be too expensive for local folks to buy or rent.
Seems like the county will have to be very careful that any vacation rental prohibition actually helps the local housing situation without squashing tourism.
So how will you know if your vacation rental will be available or not this could get interesting
Right now, since the bill just passed, it’s unlikely that there will be anything significant this year, maybe even next year. I suspect there’s going to be many lawsuits.
I may be naive, but the counties are not going to ban All the vacation rentals, as your title infers. They will go after VRs that are in non VDAs (visitor destination areas). Watch for lawsuits.
R M:
I agree most likely scenario, at least on Kauai island, is that they target NCU TVRs. Maybe not immediately, maybe try something like the permit cannot pass with the land in a sale. Get’s tricky if held by a corporation and becomes change in shareholders without any change in ownership. There are only a little over 400 NCU TVRs left on Kauai since the 2008 cut-off, so I expect this to have little to no impact on housing market. But, like you say, just need to wait and see. Who knows.
There is always going to be a workaround. On Maui, a bed-and-breakfast license won’t convey to a new owner. So what’s gonna happen is I could see the buyer and the seller forming a trust and transferring ownership that way. Keeping it all in the family. Skirting around the issue. The other issue will be it’ll all go underground.
Mark my words, because at least three things are going to happen;
1) Panicked STR owners will start selling soon, as they don’t want to get trapped into what is unforeseen and unstable now.
2) STR owners that will essentially be forced to become LTRs will undoubtedly increase rents to cover the loss of income from not being an STR.
3) Tax loss revenue from STR TAT will force local counties to increase owner occupied rates, as Maui County has already lowered Tier 3 and increased Tier 2. (Ironically subsidizing Tier 3 now over $3m)
This state couldn’t manage its way out of a paper bag.
There are residents of Hawaii that need to rent out rooms in their primary residence to help make their monthly house payment. Probably the only way they could afford to buy in the first place. What will happen to them if this policy goes through?
Maybe they haven’t been challenged but there are other counties in US states that ban AirBNB etc. I’m not sure a constitutional challenge will succeed unless there is something unique in Hawaii state constitution
They are getting banned or severely restricted globally. Just a few examples:
– New York City
– Barcelona
– New Zealand
– Palm Beach
– Berlin
– Amsterdam
– Santa Monica
– San Francisco
– Canada
– Malaysia
– Irvine
– Japan
– Santa Ana
– Palm Springs
– Florence, Italy
– Munich
– Netherlands
– France
Look at Lake Tahoe as an example of what can happen. They also banned STR as a means to ease the housing problem. Instead of owners of those unit’s selling them. They just didn’t rent them, and left them vacant. Most people who own STR are wealthy enough to just leave them vacant except when they are staying in them a couple times a year. There are exceptions. But the vast majority of them are owned by the wealthy.
Property values in Lake Tahoe actually went up after this law passing. In addition, Lake Tahoe is practically a ghost town now. With tourism in the toilet.
Yes, they put other policies in place to boost home prices and value. Like Santa Barbara having slow growth initiatives. The community is nice, I used to live there, prices have continued to escalate even with restrictions on short term vacation rentals.
Seems to me any laws that attempt to dictate what a citizen can do with their personal property, except, of course, if they’re doing something while committing any type of crime, is going to make a pretty far run through the justice system. I do empathize with the folks regarding the cost of housing (I’m in San Diego), but an outright ban seems untenable legally. But I’m no lawyer. Now, if the counties enact, say, a 1000% tax on any rental of any property, they might have more luck. That might drive businesses out of that market. But there are likely also plenty of people who can afford to leave their places vacant. Or homes that were sold would be sold to people who won’t rent them either. Then what?
If you think March tourist numbers were down, it will be interesting to see future numbers with the possibility of STR being phased out. How many vacationers are going to cancel already standing reservations since they could be cancelled down the road without warning and just travel where they will be welcomed.
Tourists are not Hawaiis personal ATMs
Careful what you wish for you just may get it!