With the increasing numbers of visitors to the island and low vacancy rates in hotels, there is a healthy demand for short-term rentals on Oahu. A short-term rental is a property which is being rented for less than 30 days. Visitors who use vacation rental hosting platforms such as Airbnb, Homeaway, or VRBO are looking for cheaper rates or a more local experience when vacationing on the island.
Recently Bill 89 was passed unanimously (9-0) by the Honolulu City Council which will allow permitting for an approximately 1,715 additional owner-occupied bed-and-breakfast rentals on Oahu. This number adds to the current 816 legal short-term rentals on Oahu, but is a mere fraction of the 8,000 short-term rentals which are presumed to exist in the county at a given time. An additional measure, Bill 85, was also passed (7-2) imposing a fine of $1,000 for a first time offense and a $10,000 for a repeat offender for illegal short-term rental operators. Most of all legal short-term rentals exist within resort zoned areas such as Waikiki or Ko’Olina. The other transient vacation properties outside of resort zoned areas have non-confirming use certificates which owners will have to reapply for every two years.
Hosting platforms such as Airbnb, Homeaway, or VRBO are also required to register and report on a monthly basis the names of the responsible persons for each listing, the address of each listing, the transient vacation tax number of the owner or operator and the length of stay for each listing.
Prior to the passing of these Bills the City had been in discussions with online vacation rental platforms to come up with a solution that allows legal short-term rentals to operate. The problem is that most of the units being offered are illegal because they are operating in residential areas where short-term rentals are not permitted. Though a prior proposal was to have an online rental platform such as Airbnb be a tax collection agent for the State, these platforms were not willing to identify who their hosts are, citing issues with privacy.
Oahu has some of the most restrictive laws pertaining to short-term rentals, and permits issued for transient vacation and bed & breakfast units were stopped in 1989-1990. On this Honolulu City and County FAQ sheet on Transient Vacation Rentals and Bed & Breakfast Homes, there are answers to the most commonly asked questions that make it clear as far as what properties are permitted for short-term rental use. These properties have received what they call a Non Conforming Use certificate to be able to operate a short-term retnal. Here in this list of permitted Transient Vacation Rentals and Bed & Breakfast Homes on Oahu, you will find the limited number of properties that qualify for short-term use, many of them being in a resort zoned areas of the island such as Waikiki or Ko’Olina. The Office of Hawaiian Affairs has also created a map which locates these permitted short-term rental properties in Honolulu County on Oahu.
Similar to Oahu, Maui county has also created a list of condominiums which do not include resort zoned properties, who are already short-term in nature, and it provides information on those properties who can legally operate short-term rentals. This Maui County Short-Term Rental List can include those properties which may be grandfathered.
Though there is no easy solution to determine how to allow all owners of short-term rentals to operate, there is clearly a demand for vacation properties. As an investor of real estate, it would be wise to consider using a rental option that is legal, so that you can remain profitable regardless of which direction the lawmakers take. Should you require more information on how to invest in Oahu real estate please contact us.