Throughout our Hawaii and world travels, we continue to experience vacation rentals in many ways. From approved rentals in vacation zones we always choose to stay in to times in the past in private neighborhoods where the host asked us to keep a low profile. The latter type of rental now gives legal ones a bad rap.
Now Hawaii has given counties (islands) the chance to regulate or eliminate their short-term rentals. Governor Green has made that official by signing Senate Bill 2919 into law this week. Our readers have already voiced their concerns about the potential economic fallout it could bring:
“Think about these numbers (they are conservative). 7,000 units x 40 weeks= 280k visitors. If they each spend 5k on their vacation=$140M into the economy. How will they make up that loss? Tax us local people even more.”
Comment from Maui resident.
“On our recent two-week vacation, our party of ten spent more than $30,000. If we had to stay in a hotel, the total would be $0. We wouldn’t come.”
Hawaii visitor.
“I own an STR (short-term rental). Last year I paid the State of Hawaii approx. $15,000 in TA & GE taxes. I also spent approx. $15,000 in housekeeping and maintenance. Multiply either of these amounts by the 7,000 units… and you get some really big numbers. This impact does not include the reduction in real estate taxes, as properties are no longer taxed at the Vacation Rental rate. Someone hasn’t done the math.”
Short term rental owner.
Governor cautions on legal complexities of new vacation rental law.
As we pointed out yesterday, Governor Green particularly stressed the importance of meticulous legislative drafting to sidestep possible legal challenges and constitutional conflicts. In doing so, he highlighted the intricate legal environment that encompasses vacation rental regulations in Hawaii and beyond.
In that regard, ubiquitous commenter Ernie postured this:
“The Attorneys are sharpening their talons, awaiting the first of many tasty tidbits and lawsuits. Green is assuming that nothing can touch him, but can’t it! Legislating Illegal procedures is interesting, it’s a trail of Evidence leading back to Green. Can we get this fortunate?”
Hawaii vacation rentals in a global context.
Cities and regions everywhere are grappling with the rise of short-term rentals, which, while boosting tourism economies and options, can also put a big strain on local housing markets. In Europe, cities like Barcelona, Amsterdam, and Paris have already implemented strict regulations that include caps on the number of nights a home can be rented out and more. These measures aim to preserve residential housing availability and community integrity. Other communities are poised to join in these efforts.
Widespread U.S. vacation rentals contraction amid legal and constitutionality issues.
As the challenges of regulating short-term rentals become more pronounced in big cities, including New York, as well as smaller travel destinations across the U.S. and elsewhere, there is a grappling with the legendary “Airbnb Effect.” This struggle highlights the economic and social consequences of unchecked short-term rentals, leading to significant regulatory pushback.
Last year New York City introduced robust measures to regulate Airbnb and similar platforms. With more than 25k listings at the time, the city faced increasing pressure from those who argued that vacation rentals were exacerbating high rents and eroding neighborhoods.
New regulations there required vacation rental operators to be primary homeowners, present during the rental period, and more. These rules aimed to eliminate about 90% of active listings, in a decisive stance to preserve residential spaces for locals rather than tourists.
The new regulations in New York mirror actions in smaller communities like Durango and Bozeman, both of which have adopted approaches to control their markets. In Lake Tahoe, the rising popularity of vacation rentals prompted local governments to act.
Last year, the California Court of Appeal upheld South Lake Tahoe’s Measure T, which restricts vacation rentals in residential areas, which was passed by a narrow margin in 2018. While the court’s decision confirmed the city’s authority, it noted potential constitutional concerns regarding the treatment of out-of-state property owners, pinpointing both legal issues and ongoing tensions about property rights and community welfare in tourist-heavy destinations.
The international vacation rental scene.
From Barcelona to Florence, European cities have also experienced significant housing cost increases attributed to the proliferation of vacation rentals, similarly prompting strict regulatory responses. Florence recently implemented a complete ban on new vacation rentals in its historic center, for example.
Economic and social ramifications in Hawaii and beyond.
The growth of vacation rentals has led to what critics and commenters here describe as economic exploitation, where speculators buy properties for vacation rentals, squeezing out residents. This has led to increased housing costs and a decrease in available housing for residents, which is particularly acute in vacation hotspots like Hawaii as well as other popular destinations.
The regulation of vacation rentals has and will continue to result in legal battles. Issues include the clash between homeowners’ rights to rent out their properties and community efforts to regulate or eliminate such rentals to maintain neighborhoods and housing stock.
The future of vacation rental regulation.
It seems likely that the future will involve a nuanced balance in tourism economies like Hawaii. As seen in the US and around the world, successful regulation requires careful legal and constitutionality considerations. Hopefully Hawaii will be helped by other areas that have enacted or are contemplating similar regulations with sage guidance on avoiding legal pitfalls while effectively managing the impacts of short-term rentals.
Please let us know where you see the future of Hawaii vacation rentals heading.
Very good point Mike that this is not addressing the problem that they’ve claimed is the problem, illegal STRs that they somehow are aware exist in neighborhoods, thousands according to the governor – but then the County can’t find and shut down and return housing for residential purposes??
It is definitely a value extraction scheme – force a reduction in the value and the income for landlords to make them sell at a greatly reduced price.
Who are the intended beneficiaries of this scheme? So many options… could be the locals but probably not. Locals were likely not at the real closed door planning sessions.
There were 1000s of illegal STRs shut down. They recently made it where they can be reported anonymously. It was hard for some neighbors to report this with their name attached. However I don’t believe they’ve let everyone know they report these illegals anonymously. Wish there was a way to spread the word. Neighborhoods are where these families need to live.