Honolulu’s crackdown on unpermitted vacation rentals across Oahu officially begins in a few days, dramatically changing the landscape and outlook of this thriving and largely unenforced industry.
The city’s new ban on advertising illegal short-term rentals goes into effect Thursday, leaving owners and potential renters of these units scrambling for options and answers.
Here are some frequently asked questions about the new law.
Q: What is an illegal vacation rental?
A: Illegal vacation rentals are dwellings rented or leased for less than 30 days without city permit. Exceptions are rentals that have a nonconforming use certificate (NUC) or are in a resort zone. The vast majority in Honolulu have been operating without a permit.
Q: Why did the city create this law?
A: The rise and popularity of online platforms like Airbnb and Vrbo provided access to different and cheaper housing alternatives, which helped spawn vacation rentals in residential areas and buildings and angered some residents who pushed for the ban. The new law was also supported by hoteliers and the hotel workers union, who argued that illegal vacation rentals raise the cost of housing for locals and intensifies the shortage of affordable housing and long-term rentals. Vacation rental operators and supporters, such as Airbnb, argued the rentals produce millions in property, transient and excise taxes and help the visitor industry by providing housing alternatives and experiences. Some also said the rentals help offset their housing costs and supplement their income in high-priced Honolulu.
Q: I rent my property for more than 30 days at a time, is my unit illegal?
A: No. However, some homeowner associations have even stricter rules on rentals than the city, including some buildings with six-month minimum rentals. So make sure to check with your HOA on its rules.
Q: I operate an unpermitted vacation rental for less than 30 days at a time, but I pay transient accommodations tax and general excise tax. May I continue operating?
A: No. The state Department of Taxation requires all accommodation operators to pay TAT and GET and include those registration ID numbers in ads. Those requirements are separate from city ordinances. Registering with the state does not mean you are compliant with city ordinances.
Q: What are the fines for advertising illegal vacation rentals?
A: They can range from $1,000 and $10,000 each day the ad remains on display. Owners of a property illegally advertised will be notified, and if the ad is taken down in seven days, no fine will be imposed for a first offense.
Q: If the rental management company places an illegal ad, will the company get cited, too?
A: The city says the company may also be cited, but the new law states, “The burden of proof is on the owner of the subject real property to establish that the property is not being used as a bed and breakfast home or transient vacation unit or that the advertisement was placed without the property owner’s knowledge or consent.”
Q: I operate an unpermitted vacation rental and have future bookings into next year. What should I do?
A: The city says, “If you are renting for less than 30 days, don’t have a NUC, aren’t in a resort area, the decision is yours as to whether to continue the illegal use. But beginning Aug. 1, we will vigorously enforce Ordinance 19-18.”
For more information go honolulu.gov/dppstr or email info@honolulupp.org.
Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com.
