As expected with the new regulations and passing of the short term rental ordinance, there is a lot of confusion. The rules are here to stay and have become officially adopted. The city council approved Bill 89 CD2 on June 17th and signed by the mayor on June 25th. The main point to remember is that short term rentals — Airbnb, VRBO and similar — have for the most part always been ILLEGAL in the city and county of Honolulu. I want to repeat that, the short term rentals, for the most part, have always been illegal on Oahu. It has been happening for decades and promoted on many sites and platforms to attract renters, but it was always done illegally. The enforcement of these violations was spotty and irregular at best. There are some buildings and some properties that have nonconforming use certificates commonly refereed to as NUCs, but those are few and far between. So, in short, yes it was happening (for years), but there was very little oversite or enforcement until now. Some entire buildings, HOAs, and neighborhoods allowed short term rentals to occur and turned a blind eye to the situation, but they violated city and county regulations.
What Constitutes a Short Term Rental?
As of now, the confusion has set in and to make matters worse the city sent out over 5000 courtesy notices to suspected short term rental homeowners putting them on notice. Many of the homes these were mailed to did not have short term renters. So, in turn, the incorrect letters prompted calls from homeowners spilling their guts about illegal rentals and addresses that they thought were breaking the rules. Many homeowners think if they pay taxes and file all the correct paperwork, it is ok to have short term rentals under 30 days, but that is not correct. To do this properly after August 1st, the dwelling must have a NUC or be located in a resort area.
To add to the confusion, homeowners are uncertain of what constitutes a short term rental. Simply stated, this is a rental under 30 days. As long as it is approved by the HOA, building, or governing authority, you CAN rent for 30-day increments or longer just not shorter than 30 days. As long as you are not advertising a rental for less than 30 days and the HOA approves it, you can still offer rental periods for 30 days or more. Just do not include any rental rates of less than a monthly basis. If you are advertising on a short term rental site, it can not have any daily, weekly, or individual dates listed under the 30-day minimum, or you will be in violation. You also must pay the correct taxes, withholdings, and file the proper paperwork with the state.
Bed and Breakfast Regulations
The new laws and rules are targeted more towards operating a bed and breakfast in your hosted home. This means you live in the home, are operating as bed and breakfast, have the proper approvals, and are only renting out a few rooms at a time. A bed and breakfast still requires registration if it is for rentals less then 30 days. As of now, new B&B registrations are going to be considered as of October 1st, 2020, but they are considering a pre-registration process that has not been approved just yet. So all of the rules and regulations only center around the hosted bed and breakfast homes and have nothing to do with rentals less than 30 days. Again, rentals under 30 days have always been and continue to be illegal, with very few exceptions.
What are the New Registration Requirements?
There are more than a dozen requirements. Most notable are as follows:
- Applicants must be “natural persons,” and not an organization or company
- Applicants must have a home exemption granted under real property tax law
- There must be insurance coverage for bed and breakfast use
- The initial registration fee is $1,000. For annual renewals, the fee is $2,000
- No more than two bedrooms can be used for visitor accommodations
- Quiet hours must be observed between 10 p.m. and 8 a.m.
- If part of a homeowners’ or apartment owners association, approval by that association must be obtained
- Neighbors within 250 feet must be given a phone number to contact to make complaints, 24 hours a day
For the complete list of requirements, refer to Ord. 19-18: https://bit.ly/2IS637x
If you have questions, concerns, or hardships, please contact the appropriate city council members and departments.
Call Your City Council Member
Council District 1: Kymberly Marcos Pine, 768-5001 Council District 2: Heidi Tsuneyoshi, 768-5002 Council District 3: Ikaika Anderson, 768-5003 Council District 4: Tommy Waters, 768-5004 Council District 5: Ann Kobayashi, 768-5005 Council District 6: Carol Fukunaga, 768-5006 Council District 7: Joey Manahan, 768-5007 Council District 8: Brandon Elefante, 768-5008 Council District 9: Ron Menor, 768-5009
- Refer to the Department’s website: honoluludpp.org
- Follow the Department’s Twitter account: @hnl_dpp
- Email the Department: firstname.lastname@example.org
- General Zoning Information: 768-8252
- Advertising Restrictions 768-8127
- Registration Process 768-8127
- Make a complaint 768-8127
- There is also a site coming soon to make complaints online.
I am not at all taking any sides of right and wrong on this topic, but I am simply trying to help clarify what is happening. There are certainly healthy debates to be had on both sides of the coin, and I am not taking a side pro or con. This is certainly a confusing time for Hawaii real estate, and the more everyone understands, the better.
I can tell you that if you bought a property with the expressed intent of using short term rentals to pay the bills and mortgage, it might be time to think of selling. The rules do not appear to be changing, and the fines look to be swift and severe starting on August 1st, 2019. Obviously, as a real estate broker in Hawaii, I am watching this topic closely and the effects it might have on the market. If you want to get more information on pricing, selling, or using this opportunity to buy, please do not hesitate to call, text, or email anytime.