The state of Hawaii may ban all STR's

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The state of Hawaii may ban all STR's

John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

This could be ugly for people who own STR's in Hawaii.

https://www.sfgate.com/hawaii/article/hawaii-short-term-rental-vacation-bill-19382321.php

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James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
2y

Haha. That's a hell of a click-bait headline. 

I read the article. The bill (or bills) doesn't eliminate STRs by itself. It would give the local governments power to ban STRs. My first question was, Do local municipalities not already have that power?

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  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y

    Haha. That's a hell of a click-bait headline. 

    I read the article. The bill (or bills) doesn't eliminate STRs by itself. It would give the local governments power to ban STRs. My first question was, Do local municipalities not already have that power?

    4Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2y

    There are a few folks on here that are very bullish on Hawaii so I hope they chime in.

    1Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    2y

    They've already basically banned them years ago, except for special "resort zones".  I read the articcle and am puzzled. Senator Jarrett Ke okole' claims the town of Kailua is pushing everyone out because of vacation rentals. If you go to Airbnb and try to book a vacationan rental in Kailua, there are none. There hasn't been any for years. What's this okole' talking abbout? Are people booking thru some other platforms other than airbnb and vrbo? I don't know about anyone else but yeah, it makes me want to coimmit suicide at least "ten times". I dont get it. Whoever has the money, is what will happen in Hawaii. Always.
     

    4Reply
  • Bryan Vukelich
    Real Estate Broker · Kaneohe, HI · Member since 2020 · 193 posts · 163 votes
    2y

    Hi all,

    That is definitely a misleading headline and to be clear I just scanned the article but the past few weeks I've been reading numerous other articles about the proposed bills as well as the proposed bills themselves.

    The main goals of the proposed legislation is to give counties the ability to disallow 30 day rentals.   I am a member of O'ahu Short Term Rental Alliance (OSTRA). Here is their summary of the bills:  would allow counties to phase out transient accommodation rentals as a type of residential use and asserts that any future "residential" use shall not include transient accommodations.

    They add:  Creates many definitions including classes of dwellings, but specifically excludes all hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses and university and school dormitories. Also excludes all short term rentals that were regulated by any county before the effective date of this bill, and all timeshares.

    Honolulu county tried to eliminate 30 days rentals a couple years ago with Bill 41.  Honolulu City council passed the bill but a federal judge quickly issued a temporary injunction and later a permanent injunction stating that the bill was unconstitutional.  At the time the judge issued the injunction, the mayor of Honolulu was furious and had a press conference where he stated he would try to change the law at the state level to allow the county to outlaw 30 day rentals.  So that is big reason why we dealing with this now.  

    From what I am reading and being told, there is no threat to any existing legal vacation rental units located in the resort areas of O'ahu.  And based on my business, and from what I am seeing with market activity, it is still very much a sellers market for those type of properties so many investors don't seem concerned about these proposed regulations.  

    Happy to answer any questions  

    3Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Always brings up the age old question: Are STRs really contributing to any element of a further housing crisis, or is this hotel lobbyists just pushing their own agenda to get more money in their pockets?

    0Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Zach Edelman:

    Always brings up the age old question: Are STRs really contributing to any element of a further housing crisis, or is this hotel lobbyists just pushing their own agenda to get more money in their pockets?


    Good question. I can see the plausibility of STRs contributing to a housing shortage in a remote place such as Hawaii, but to your point, I am certain that the hotel lobby is looking out for their own interests. 

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  • Loren Clive
    Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes
    2y

    As an 18 year Hawaii resident, the article misses a lot of the subtleties of vacation rental ownership. Many local people own vacation rentals and make their living renting to tourists, as I do. In Hawaii, the tourists are always a scapegoat when the real problem is government overregulation and incompetence.

    Why do we not have enough houses? Here in Maui County, it's because the County Council shoots down almost every affordable housing proposal. It can take 20 years to develop with all the red tape. If you do not build homes to keep up with population growth, it makes the existing houses unaffordable by restricting supply and stoking demand. Basic economics, folks.

    Tourism is the lifeblood of our economy, and our supposed leaders never recognize this and continually bite the hand that feeds us. 

    In this morning's paper, a private contractor offered to donate 20 acres to Maui County for a landfill for a percentage of tipping fees. Nope. The County is proceeding with eminent domain, which will doubtless cost taxpayers more, so they can fail to operate the landfill efficiently. These are the kinds of idiots running the show. So frustrating!

    But yeah, it's the tourists and malahini that are the problem [eye roll]

    2Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @John Underwood:

    This could be ugly for people who own STR's in Hawaii.

    https://www.sfgate.com/hawaii/article/hawaii-short-term-rental-vacation-bill-19382321.php


    chicken and egg problem.
    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    2y

    Not saying one way or the other is that they pose a problem for the local community so there is political battle in the long term viability of these. No one wants a bunch of random people coming in their area with vagrant tenants. In Europe as cities enact bylaws for regulation and taxation, or in some cases, ban them entirely. Toronto is the latest to join this trend, driven by a scarcity of affordable housing. It has specifically banned STRs of secondary suites, though renting out primary residences or rooms within them is still allowed, subject to licensing fees and a nightly tax. 

    I saw many people 2019-2024 jump on the STR bandwagon because numbers for LTRs got worse and worse. Plus a lot of general public started doing that which is the signal for the end... kinda like a good night club going down hill.

    Moreover, the tax implications for vacation home rentals vary based on how often the property is rented out and used personally. Properties rented for less than 15 days a year enjoy simple tax rules, while those rented more frequently face a complex set of tax obligations. These include reporting rental income, allocating expenses between personal and rental use, and navigating new limits on mortgage interest and property tax deductions under the Tax Cuts and Jobs Act of 2017.

    In places like Hawaii, STRs are subject to additional taxes, emphasizing the importance of understanding the local tax landscape. Despite the allure of STRs, the market's complexities and regulatory environment suggest a cautious approach. Investors are advised to consider more traditional real estate investments and to educate themselves thoroughly before diving into the STR market.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Lane Kawaoka:

    Not saying one way or the other is that they pose a problem for the local community so there is political battle in the long term viability of these. No one wants a bunch of random people coming in their area with vagrant tenants. In Europe as cities enact bylaws for regulation and taxation, or in some cases, ban them entirely. Toronto is the latest to join this trend, driven by a scarcity of affordable housing. It has specifically banned STRs of secondary suites, though renting out primary residences or rooms within them is still allowed, subject to licensing fees and a nightly tax. 

    I saw many people 2019-2024 jump on the STR bandwagon because numbers for LTRs got worse and worse. Plus a lot of general public started doing that which is the signal for the end... kinda like a good night club going down hill.

    Moreover, the tax implications for vacation home rentals vary based on how often the property is rented out and used personally. Properties rented for less than 15 days a year enjoy simple tax rules, while those rented more frequently face a complex set of tax obligations. These include reporting rental income, allocating expenses between personal and rental use, and navigating new limits on mortgage interest and property tax deductions under the Tax Cuts and Jobs Act of 2017.

    In places like Hawaii, STRs are subject to additional taxes, emphasizing the importance of understanding the local tax landscape. Despite the allure of STRs, the market's complexities and regulatory environment suggest a cautious approach. Investors are advised to consider more traditional real estate investments and to educate themselves thoroughly before diving into the STR market.


    It is actually way way more complicated to have STR in Lake Tahoe rather than in Hawaii …. All these STr regulation is actually protecting the owners of STR because the supply is limited.

    Tax was also not that big deal.

    If we purchase STr in Tahoe , every county has very different rules and the permit has limit while in Hawaii as long as it is in resort zone, we will get the permit.

    Also another good thing if we buy at the correct spot the appreciation is so good this is actually the best performing market after CA.

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @John Underwood:

    This could be ugly for people who own STR's in Hawaii.

    https://www.sfgate.com/hawaii/article/hawaii-short-term-rental-vacation-bill-19382321.php


    Once we have our own property with maintenance paid by HOA and location is 4 meters from surfing spot and mortgage is paid by airbnb renter , all financial metrics no longer apply lol

    1Reply
  • Bryan Vukelich
    Real Estate Broker · Kaneohe, HI · Member since 2020 · 193 posts · 163 votes
    2y

    Haha @Carlos Ptriawan - true dat

    0Reply
  • Cliff H.Pro Member
    Rental Property Investor · Nashua, NH · Member since 2014 · 609 posts · 485 votes
    2y

    Short-term rentals ban is a dodge from real cause of housing shortage: https://www.hawaiireporter.com/short-term-rentals-ban-is-a-dodge-from-real-cause-of-housing-shortage/

    0Reply
  • Tim J.
    Investor · Vermont and New York · Member since 2023 · 308 posts · 309 votes
    2y

    Politicians seem to love fanning the flames of class warfare and blaming landlords and property owners for the ills of ****** zoning regulations.

    I read an article recently that some municipalities that banned STRs are reconsidering.  The ironic thing is that in some resort/highly desirable locations where the cost of housing is high, when STRs are banned, the houses in question typically get bought by people as a second/third/fourth vacation home and then let it sit vacant.  So that further drives up demand for scarce rental housing...  

    Politicians have been making idiotic housing policy - starting with rent control - for over a century.

    The idiots still don't understand that when you screw with a free market you get lots of unintended consequences - and many times you end up with the opposite effect of what you are trying to achieve - NYC is one shining example of this...

    Sigh

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y

    1. pass legislation limiting what the "free market" demands

    2. suffer the consequences of the elimination of the "supply" demanded by consumers in the free market

    3. suffer the consequences of the "law of unintended consequences"

    4. blame "capitalism" for failure to provide what was eliminated by previous regulatory action

    5. pass more legislation to counter balance effects of previous legislation 

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