Here is what you need to know about the Big Island Vacation Rental Bill. Vacation rentals have become popular on the Big Island. They are often less expensive than hotels or resorts, and they come fully equipped with everything you need to enjoy your stay. The big websites to book vacation rentals are VRBO.com/Homeaway.com and airbnb.com.
Hawaii Appleseed Center for Law and Economic Justice reports that one out of every twenty-four homes in Hawaii is a vacation rental, a number that has been increasing over the past few years. The report also says the amount of vacation rentals is leading to less affordable housing in Hawaii.
This bill proposed is not taking aim at homes in resort zoned neighborhoods. Instead, it is taking aim at homes in residential or agricultural zoned neighborhoods. Many homeowners in these residential and agricultural neighborhoods either visit the island part time and vacation rental it when they are off island to supplement their income or bought the home as an investment and vacation rental it to cover their costs associated with ownership.
Many local residents take issue with the vast amount of vacation rentals due to the lack of affordable housing. They feel the vacation rentals take even more rentals off the market, which makes it harder for locals to afford to live here. In addition, some of these vacation rentals are not claiming they are vacation rentals and thus are not paying the required taxes associated with renting one’s property. These are some of the reasons the Big Island has proposed restrictions for vacation rentals.
So what exactly will these restrictions be? These restrictions are for vacation rentals outside of resort zoned areas. They will not apply to owner-occupied units that rent out a portion of the property. In approved zones, owners will simply have to register as a vacation rental. In non-approved zones, existing vacation rentals who have been diligently paying their taxes may be grandfathered in by applying for a non-conforming use certificate and for some a special permit from the state. If you have not been paying taxes, you likely will be unable to have a vacation rental in non-approved zones, if this bill should pass.
The bottom line? If you want to short term vacation rental, you should start now, before the bill passes, and pay your GET and transient taxes. This is your best chance at being grandfathered in. Even if this bill doesn’t pass, restrictions on vacation rentals will likely increase in the future, so be sure you are following local laws and paying the required taxes. Always pay attention to the zoning laws and any CC&Rs in your neighborhood to be sure you are complying with any restrictions or requirements.
If you are looking for a property manager to treat your home as their own and to maximize rentals, please reach out to us at Lokahi Properties and see how we can make your investment truly pay off for you.
Dana Kern is the Principal Broker at Lokahi Properties