Background
The minimum number of days for short-term rental properties on Oahu had been 30 days for a very long time. In 2022, the City of Honolulu passed Bill 41, a law that changed the minimum to 90 days. They were sued and recently lost. The outcome of the lawsuit means that the current minimum to back to 30 days. There are certain areas that allow for daily or weekly rentals. In our past blog here, you can find a list of which buildings in Waikiki are in which zones and whether short-term rentals will be allowed there.
In addition to the changes to the minimum number of days, other previous regulations on short-term rentals include: Raised real property tax, transient accommodation tax, Oahu transient accommodation tax, raised real property tax rate to business rate for anyone who did short term rentals, all on top of gross excise tax.
Watch past episodes of Ask Doug! for more information about Bill 41. Here is the original video explaining Bill 41. This video provides an update when the minimum stay was first changed. Here is a video explaining what Bill 41 means for Waikiki condotels.
Update
In May 2024, the government passed additional regulations of short-term rentals. The new law gives Hawaii counties authority to regulate housing in their jurisdiction and potentially phase out short-term rentals. The law allows counties to redefine their zoning ordinances. To qualify as a legal short-term rental, properties must be in a specific zone, such as Waikiki and resort-commercial zones. If rental properties are in residentially zoned neighborhoods, the minimum stay is 6 months. Under the new law, counties will have the power to compel short-term rentals to become long-term rental housing. Barring any future legislations, this bill will go into effect on January 1st. There will be fine of $10,000 per day for non-compliance.
The Purpose of the Law
There has been an ongoing shortage of affordable housing in Hawaii for local residents. This was exacerbated in Maui after the fires in Lahaina. These changes will certainly put rentals back on the market for long-term tenants. However, it is there is still the problem with the government not allowing more construction of high-rise buildings for people to rent.
The building permit process is incredibly slow. Watch our video in Caron discusses the permit timeline with an architect here. One client has been waiting over 5 years for a building permit. At our personal residence, we are on the third year of waiting for a permit for a plumbing valve. Ultimately, changes will have to be made regarding permits more housing will have to be constructed to accommodate the needs.
Contact us to learn more about how your rental portfolio may be affected by this change. We would also be happy to answer any other property management or real estate sales questions you have. You can reach Doug directly at (808) 596-4883 or email concierge@caronb.com
