The Breakdown: Oahu’s Controversial Vacation Rental Ordinance

Hello from Bri Steel, Broker/Realtor® & Owner of Cocolani Realty!

Are you planning on buying an income property to rent out on the island of Oahu? If so, you should read up on the new vacation rental ordinance. The ordinance increases the minimum stay in a Short-Term Rental (STR) in non-resort areas from 30 days to 90 days. The bill got passed by the city council of Honolulu and mayor Rick Blangiardi. He stated the vacation rental ordinance was a move to protect ‘our place’.

Understanding Vacation Rentals

Vacation rentals, also known as Short-term Rentals (STRs), are lodgings that provide accommodations for less than 30 days. In Oahu, STRs are only allowed in special resort-zoned areas in order to prioritize long-term rental housing for residents.

In Oahu, there are two types of recognized Short-Rentals (STRs);

Bed and Breakfast Homes (B&Bs)

This is where a homeowner is present. It allows two rooms to be rented out with a maximum of two adults per room.

Transient Vacation Units (TVUs)

This is where a homeowner is not present and rents out their whole home. It allows a maximum of two adults per room.

How To Identify Legal Short-terms Rentals

There are two zones for vacation rentals, residential zone areas, and resort-zoned areas.

Oahu has vacation rental units located in residential zones. They are subject to the new vacation rental ordinance. It increases bookings from 30 consecutive days to at least 90 days.

A vacation rental operating in a resort zone is not subject to the new ordinance and is not subject to the minimum-day restrictions. The resort zones are situated away from residential neighborhoods and have the necessary infrastructure to support visitor influx.

Registration

Registration for STRs get done online through the city and county of Honolulu website on the Short-term Rentals page. It became ready for use on October 24th, 2022.

The owner of the less-than-30-day vacation rental unit must complete the registration. They must register each unit that’s up for rent for less than 30 days.

Registration is important for property owners and operators. Without an active non-conforming use certificate (NUC) they cannot rent out their units. They must get registered.

Property owners need to confirm if they can have a short-term rental. It can get done by submitting a zoning verification request. The process attracts a fee that ranges between $150 -$300 per tax map key.

Like any other business, short-term rentals need advisement to attract customers. Under the new vacation rental ordinance, the advertisements must include the operator’s STR registration number or the NUC number and the property’s tax map key. It’s deemed unlawful to advertise an unregistered dwelling for a rental period of below 30 days.

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Advertisements for rentals that are not registered or do not have a NUC must include a caution statement. It reads, ‘this property may not be rented for less than 30 consecutive days. Rental prices will not be reduced or adjusted based on the number of days the rental is actually used or occupies.”

Violation

In the event a person has complaints that require addressing, the city and county of Honolulu’s website provide a way to channel these complaints. One needs to access the website and open the ‘Request for Investigation’ tab and submit you are compliant. In your complaint make sure to include the address and details of the complaint.

Home Exchanges

The new vacation rental ordinance also affects the home exchange plan. The home exchange plan is where homeowners swap the occupancy of their homes with other homeowners located in other places globally. The swap does not involve any money and can range from a few days to some weeks. Although the home exchange plan does not have money involved like the STRs, the homeowners receive guest points or home/lodging. This brings the similarity between the home exchange and bed and breakfast and transient vacation units. The definition of the bed and breakfast and the transient vacation units includes the word compensation. The word compensation is not limited to monetary compensation alone. It may include services and labor from the transient occupant. The vacation rental ordinance was implemented to stop property owners from renting out a dwelling or lodging unit for less than 90 days. The mode of compensation was left in the hands of the property owner. The inclusion of the home exchange plan was to eliminate loopholes in the ordinance.

What’s happening currently…

An organization that represents property owners challenged the move through a federal lawsuit. The result was the issuance of an injunction by US District Court Judge Derrick Watson. The District Court for the District of Hawaii imposed an injunction stopping the Department of Planning and Permitting (DPP) from enforcing the part of the vacation rental ordinance 22-7 that addressed vacation rentals from 30-89 days. The injunction is still in effect and DPP will move forward with the ordinance as it applies to 30 days or less. On the flip side, there are many people on Oahu that would like the minimum to be 90 days. Save Oahu’s Neighborhoods, HI Good Neighbor, Keep It Kailua, and Save North Shore Neighborhoods filed a motion to intervene with the lawsuit challenging the new ordinance. They believe that short-term rentals have a huge negative impact on local residential neighborhoods.

At Cocolani Realty we bring a fresh and innovative “boutique” approach to real estate in the Hawaiian Islands. In the process, we make dreams come true.

Looking to sell? We will make your home SHINE. Listings like ours that are beautifully presented and professionally inspected sell faster and for more money.

Looking to buy? We help our clients write offers that WIN. We are competitors at heart and negotiators at work. We get results.

Call or email us to set up an appointment with our broker and owner, Bri Steel.

Bri Steel
Broker/Realtor® + Owner
Cocolani Realty
831.200.6338
bri@cocolanirealty.com

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