County of Hawaii Vacation Rental Laws

By July 11, 2023Uncategorized

For the larger part of the last decade vacation rental legislation has been discussed and various laws have been put in place.  While many homeowners have disagreed with some of the legislation we wanted to offer what it seems the County of Hawaii is trying to do.  Until these are accomplished for the most part we expect legislation to continue to get brought forth.

When vacation rentals first came on the scene on the Big Island of Hawaii they naturally were in the resort areas.  The homes and condos outside of the resort areas were naturally used as long term rentals or primary residences.  As the popularity of vacation rentals grew and they became a descent revenue source some people outside of the resorts decided to rent their properties as vacation rentals.  This as well as off island owners attempting to self rent has posed several issues for each of the Hawaiian Islands.

Here are a look at some of the key issues.

Right to Quiet Enjoyment for Residential Areas
While you can also get a resident that disrupts the peace of a neighbor, it has been more frequent with vacationers.  When vacationers check into a property in residential areas they are more likely to stay up later, spend more time outside, etc than your normal resident thus causing disruption for the neighbors.

Resolution:  The County of Hawaii is trying to limit vacation rentals primarily to the resort areas so if you choose to purchase a place in the resorts and live there you are under the understanding that you will have people on vacation living next to you.  If you choose to purchase in a residential area you can assume you will not have vacationers coming and going as neighbors.  They are also trying to limit the number of bedrooms you can rent out to make sure that even in the resort areas someone does not fill a rental with more people than what is practical.

The county of Hawaii did offer non conforming use permits to people that owned vacation rentals outside of the resorts prior to the laws going into effect.

Consumer Protection
While it is exactly not the county’s job to make sure guests have a good stay at a vacation rental, it is their job to make sure Hawaii continues to be one of the top vacation destinations in the world and if there is a reoccurring issue to address it.  This has been a reoccurring issue with off island homeowners.  While it can be an issue with management companies as well, it has been more prevalent with off island homeowners.  This has come in many ways and here is just a small list of them:
1- Getting locked out of the property and not being able to reach someone.
2- Experiencing an issue such as an air conditioner going down and not having someone to address the issue.
3- Being scammed out of money have having no recourse since they are not licensed in the State of Hawaii.
4- Having the standard accommodation issues such as poor housekeeping and not having someone to address the problem to.

For most off island homeowners trying to rent their property on their own they look at their vacation rental as a business more than a service.  While property management companies are a business, they should be focused on providing services to guests.  This may mean moving guests to another property if there are issues.  Over and over again we have seen off island homeowners just try to keep the guests in the property so they can continue to get revenue, which leaves the guests with a subpar vacation.

Resolution:  This one is more complicated than the first one.  Ultimately the only way to truly address this is to have someone on island that is licensed in some fashion in Hawaii to care for the property.  This gives consumer recourse.  They could turn the person in to the DCCA or file complaints.  After reoccurring complaints the state of Hawaii could pull their licensing.

Anytime you are dealing with states or counties money always comes into the equation.  By allowing off island owners to rent their properties, tax money is being lost.  Some people have speculated up to $30M annually across the state of Hawaii.  Transient taxes in Hawaii are very complex and almost change every year.  Some homeowners do not charge the taxes and do not pay the taxes, some homeowners charge the taxes and do not pay the taxes, and some homeowners do not keep up with the tax law changes in order to pay the correct amount of taxes.  All three of these situations lead to a decrease in tax revenue for both the state of Hawaii and the county of Hawaii.  Along with that, by the homeowners bypassing the licensed property management companies, income tax is being missed out on.

Resolution:  This resolution seems fairly simple, but they have not figured out a way to implement it yet.  If you are licensed in Hawaii to rent vacation rentals there are very strict rules and policies about how the money is handled.  One aspect is that it is kept in a bank account in the state of Hawaii so that the state would have access to the transactions almost anytime they wanted.  It seems logical that if that is effective for the businesses to implement those upon off island homeowners.

There are several other issues, but these seem to be the main issues and seem to be what the county of Hawaii is trying to address.