A new proposal between the status quo and an outright Maui vacation rental ban. But what are the other implications of this latest proposal? One significant consequence is that it might lead to higher rates for vacation rentals.
A new proposal between the status quo and an outright Maui vacation rental ban. But what are the other implications of this latest proposal? One significant consequence is that it might lead to higher rates for vacation rentals.
One phrase not made here is the cutting of spending. Has the county looked at their budget and what is excessive spending? As to raising taxes. It’s not so much the tax rates are low, as suggested by the researchers. It’s that the valuations of the properties are high. Comparing tax rates to 13 other states is useless unless you’re comparing them to resort areas. Apples to apples. What are the tax rates for similar units in resort areas of other states? On our unit, our assessed value increased in five years to the point we went from paying $8000 per year to now paying over $13,000 per year. In five years. How will the county determine what is a vacation home or investment property versus a unit with a full time tenet? I could move to Maui and establish residency, but then still use the unit as a vacation home and not live there full time. How would the county know? Does the county have a tax rate for vacation homes? How many tax rates will the county create?
David H writes “How will the county determine what is a vacation home or investment property versus a unit with a full time tenet?”
On Kauai island, they know exactly which properties are STRs, because the county requires permits. They charge a hefty property tax premium on STRs (also trash pick up). They do give a property tax break incentive to LTR landlords willing to charge under market rates to tenants that cannot afford more (one of our neighbors has this arrangement).
I am unmoved by this suggestion. Regardless of what the tax rates look like compared to other places, they are still very high relative to other properties on Maui, and just got increased again while the hotels’ did not (or maybe it was minimal, I can’t recall the detail). Also, just because the stock of rental properties will be increased by 13%, it won’t lower rents. They never acknowledge the carrying costs (HOA, insurance, maintenance) in that calculation that are not subject to the supply/demand dynamics in the market. To get more housing, Maui should expedite their famously slow permitting and allow victims to rebuild their homes ASAP. The infrastructure already exists for it, just do it- plus it will happen a lot faster than the time it will take to return rentals to the long term market (which litigation will slow down further).
Well said Eric! Oh common sense where are you?
Thank you Kevin…it’s all so frustrating. This government appears to be acting at cross-purposes to a logical solution. I wish local media would hold their feet a little closer to the fire and ask why building in areas that already had access to water, etc. isn’t happening. Why are they pursuing a course that will ruin their economy? Etc.
As a STR owner on the islands I think there is a middle ground that can be reach. I think STR’s provide a service for both the visitors and locals and there needs to housing affordable for those living and working on island. This model of taxation seems to the best solutions I’ve heard so far, but a tax affordability balance is the key.
I’m not an expert to judge the prediction accuracy, but it seems to me that it’s a decent effort at doing the math for the proposals and issues. Someone has to do the math and until now it’s understandably been raw emotion because of the existential consequences for the Mau’i ohana. Trying to cultivate compassion for all the stakeholders and understanding the best known financial truth in the budget and economic outcomes will both be helpful. I hope this contributes to a healing conversation🙏🤙
Attention Hawaii residents: do you wonder why your economy and governance can sustain only one business, tourism? Look no further than this latest proposal from UHERO.
Because only tourists — blinded by a nostalgia for a Hawaii that no longer exists — will pay these extortionate fees, taxes, and prices.
As a frequent visitor to the island, I would have no problem paying a higher short-term rental fee if the funds raised by that higher tax went directly to pay for affordable housing or workforce housing for island residents.
Taxes on Vacation Rentals are already very high. Increasing 50% last year and another 30% this year. Enough is enough; a balanced approach would be to increase property taxes for residents which are currently the lowest in the US. Beware of unintended consequences… many vacation rental owners will decide not to rent their units due to low on non-existent profitability.
It’s quite obvious that they are forcing a market devaluation, even more people having to sell. The guest is already paying almost 20% in tax and owners are going to raise rates to cover higher property tax. STR owners again are the fix to the Mayors inability to provide housing. He kills the goose that feeds his coffers and then wants money without any action on his part. Maybe he can ask the hotels to give him money since this is all to pander to the hotel industry. How many homes are still needed? O how many people have left the island? Look past the Hype to see the truth…
I’m still having trouble with the math. The Lahaina fire destroyed 2200 “structures”–not all homes. 6000 were made homeless. My 35 years of visiting Maui, including 1 year living there, gave me a sense that Lahaina had a large number of small long term rental units , low-income housing, and small homes passed down within local families. Blaming STR in Kihei for underfunding and neglect by local government seems to be another ploy by politicians to blame visitors for lack of imagination, planning, and responsibility. Of course, the constant pandering by politicians to locals by increasing fees and taxes only on those who are not voters makes it seem like something is done without pain even if nothing is accomplished. How many of those 2200 “structures” were actual apts or homes? Maui and the State can’t afford to buy an apt building/hotel with kitchens or build enough units to replace those?
Again, studies like this that tout a 13% increase in housing supply fail to account for how most STRs are unsuitable And unaffordable for those who need it. The one-bedroom condo we stayed at in Kihei recently was in a complex where an identical unit was listed for sale at $900K. How many Mauians are willing or able to pay $3-4K a month such a unit would go for.
As for increasing taxes, shouldn’t we cry uncle at 18%? Even with higher levies, most STRs will still be far cheaper than hotels. Despite that, though, more people will see the price of entry as steep and conclude they can get better value elsewhere. And they’d be right.
There are now numerous STVR condos for sale which the mayor says will help house locals. Problem is locals are not buying them. No one is.
So banning 7,000 STVR units to tun into into “affordable” housing is not working. Surprise, surprise.
Fantasy Land is alive and thriving on Maui!
Agreed. As of today there are over a thousand homes for sale with little interest from locals. If 7,000 become available, only a small percentage will be under $800k. In Wailea, where a huge number of Minatoya properties are located, the Median price of a home is $3.2M.
Blissen says “We can’t build our way out of this.” But we have to. We need Gov’t subsidized Affordable housing. Despite a long history of failure in this area, we have to suceed at it. He doesn’t want to do that because his real goal is to get rid of tourists while helping his friends in the hotel industry make more.
Aloha,
It never stops…Margret Thatcher said “The problem with socialism is that you keep running out of other peoples money.”
Good Luck,
Mahalo
Love this newslatter – so informative! Just one question: where was the picture taken that appears at the top of this article??
These discussions regarding STR’s got me thinking about how how this is regulated where I live, what I found is that the HOA rules for rentals where I live is that the house has to be rented for a minimum of 30 days. I then went on Airbnb to find out how many homes in my area are available on a weekly basis, there are a handful of homes that people are renting on a weekle basis.
Well, the next step for me is that I am going to make sure the HOA is enforcing the 30 day rule that exists. I have to think that Lahaina Strong, local government in Maui, really anyone with a stake in having housing freed up for locals should do the same in Maui and ensure that STR’s do not exist in areas that are not currently designated for STR’s on the island, ensure sure existing laws are being enforced so housing can be freed up legally.
Raising taxes is better than changing property use, it would need to be conservative though. However, I suspect Maui plans to increase taxes regardless.
Hawaii goverenment reflex is always to increase taxes. Good luck with that has you tax your economy out of existence.
Good day~. If you are going to raise property taxes on STRs, hotel tax rates should also float up to the same rate! I notice in Kauai this is not the case. What is good for the goose is good for the gander. Mahalo!
Great idea!
How about increasing taxes / fees on timeshares? Oh, their corporate lawyers would fight it, and their $ would stop flowing to local politicians?
Well then … “let’s blame STR’s for everything!”
Local government appears to be managing by ‘magical thinking’. They assume that visitors will pay any price, no matter how high and uncompetitive. They assume that LTR rents will be ‘affordable’ to locals, irregardless of the underlying costs to property owners. They assume that affluent mainland retirees will not buy up discounted units being dumped on the market. They assume that small, purpose built units magically become bigger to accommodate families. All naive thinking. Unfortunately, this ‘we don’t want you’ bell cannot be un-rung now. We visitors are now ‘voting with our feet’, and choosing other destinations.
I’m sure HI will love this plan! More tax revenue to get their hands on but do nothing for those needing housing. The better fix is securing land and building housing that best meets the needs of those displaced- by now there should be many in completion state and ready to move in. Oh, Maui didn’t track providing for their citizens who lost homes. I know it can be done but perhaps it’s not what the Maui government really wants. These properties should only be available to those harmed by the fires and not for Investors to profit on.
Increase the taxes? Where does all the money go from the current taxes they collect? I suggest the residents take a close look at their politicians and they will find a lot of corruption. If you keep voting the same ones in you will get the same results, incompetence.
We’ve been to the Islands 12 times,they’ve priced themselves out of market now. Well spend our hard earned money elsewhere and where the people want us there as well
Sadly, we are hearing this more and more, those of you who do not want tourism please tell us a viable a viable income revenue source for Hawaii? I’ve looked into other traffic and sub traffic areas,revenue source for Hawaii? I’ve looked into other traffic and sub traffic areas, as well as island destinations. They are either doing tourism, or they are impoverished!
“They are either doing tourism, or they are impoverished!”
Hawaii = Haiti, give it a few more years.
Government 101:
Want more of something? Subsidize it.
Want less of something? Tax it.