If you have been following the Hawaii County Bill 108 saga, you know many off island investors have been impacted by the new rules placed on short term vacation rentals on Hawaii Island. Property owners have been fuming for months over the loss of income and opportunity to rent out their homes if they are located outside of the approved resort zoned areas as soon as the law goes into effect in September 2019.
Recently, Oahu went even further to curb the rush to use hosted platforms such as AirBnB and VRBO when it passed an ordinance called Bill 89 on June 25, 2019. The bill was created to stem the negative effects to local neighborhoods where homes were being purchased by investors and turned into vacation homes. From the bill, it states that unless the County leaders passed the new law, “neighborhoods may be negatively impacted by the presence of short- term rentals, including escalating real property values, increased noise, illegal parking, and increased traffic.”
Neighborhood Impacts Due To Unhosted Vacation Units
Oahu is dealing with many of the same concerns that residents in West Hawaii have expressed to County leadership. Concern that homes are being purchased as income- producing investments rather than for domiciliary purposes. Bill 69 states that residents are generally comfortable with bed and breakfast homes because an on-site resident manager or owner is responsible for the bed and breakfast home, and can respond to any problems associated with short-term guests. In contrast, residents generally voice strong concerns about “unhosted” transient vacation units, particularly when a significant number of transient vacation units are located in the same neighborhood. The worry is that significant numbers of absentee owners and constant change in occupancy may change the social patterns of neighborhoods and reduce interactions among neighbors, resulting in a decline in the quality of life for residents. This is not just happening on Oahu, but Maui and in many neighborhoods on the Big Island.
So, will a more stringent approach to short term vacation rentals soon follow in West Hawai?
Regulations and Fines
Let’s look at the ramifications for defying the new ordinance:
For the initial violation:
(i) Pay a civil fine of $1,000, in the manner, at the place and before the date specified in the order; and (ii) Pay a civil fine of $5,000 per day for each day in which the violation persists beyond the date specified in subparagraph (i), in the manner and at the time and place specified in the order. For a recurring violation:
(i) Pay a civil fine of $10,000 in the manner, at the place, and before the date specified in the order; and (ii) Pay a civil fine of $10,000 for each day in which the violation persists beyond the date specified in subparagraph (i), in the manner and at the time and place specified in the order.
Homeowners Are Not The Only Ones Affected
It is not just homeowners and investors being affected by this new bill. Ancillary services to visitors are now also impacted by this clause in the new bill by offering services to illegal units on hosted platforms: Hosting platforms shall not collect or receive a fee, directly or indirectly through an agent or intermediary, for facilitating or providing services ancillary to a bed and breakfast home or transient vacation unit in the city that is not lawfully registered, permitted, or otherwise allowed pursuant to this chapter, including, but not limited to, insurance, concierge services, catering, restaurant bookings, tours, guide services, entertainment, cleaning, property management, or maintenance of the residential property or unit.
The Future
Our teams at LUVA Real Estate and LUVA Vacation Rentals do not know the future of the short term vacation rental market in West Hawaii, however, we wanted to alert you to the movement by other local governments to staunch the unregulated flow of vacation rentals to the islands to provide information for you to consider if purchasing a home with the intention to rent it out short term is in your real estate goals. At this point, Hawaii County DOES allow vacation rentals in specific zoned areas and we can discuss those opportunities further with you and provide listings in those areas. Please contact us today!