While it may be a tropical and popular getaway, Hawaii’s short-term vacation rental regulations can make owning a vacation rental in the Aloha State seem like a headache, but with the right support and on-the-ground experts, owning a vacation rental in Hawaii is still a smart and lucrative option.
Hawaii’s counties each have different—and regularly evolving—rules for vacation rental properties. Regulations are designed to satisfy neighbors and the state’s 9 million annual visitors. Tourist hot spots like the Big Island and Oahu recently revised their short-term vacation rental (STR) regulations to limit the number of rental properties in residential areas. While these new rules drew initial concern—and a lot of paperwork—from Hawaii’s STR owners, local TurnKey representatives like Hawaii Sales Director, Rick Nagaoka, remain optimistic.
“The allure of Hawaii will always fill people’s imaginations. There are those that have experienced not just the destination, but the culture which brings people back year after year. Hawaii will always prove it’s a unique place for investment,” says Nagaoka.
The following guide to Hawaii’s STR regulations highlights what to know before buying a rental home in Hawaii, the different restrictions per county, and how to navigate Hawaii’s rental rules more easily.
Hawaii’s STR regulations vary by county
STR regulations look different across Hawaii’s counties, but, according to Nagaoka, there is one main consistency:
“All islands and counties allow short-term vacation rentals within the resort-coded zoned areas,” he said. It gets trickier—and in some counties, near impossible—to operate STR homes in residential areas.
Across the board, Hawaii’s STR regulators also require on-island contacts. This is one way a property management company like TurnKey can alleviate regulation headaches. TurnKey provides each homeowner with an on-the-ground, 24/7 representative to not only help guests but handle neighbor complaints. (Many counties make STR owners paste 24/7 contact details on the exterior of the house; homeowners don’t have to worry with TurnKey, as the local manager’s contact information is listed).
Additionally, some regulators also require owners to place registration numbers on the exterior and interior of the house as well, with good neighbor policies such as “quiet hours” displayed prominently inside.
Specifications on zoning, fees, parking, and more vary across Hawaii’s four countries. Here’s a quick breakdown of the highlights and recent changes:
Hawaii County STR Regulations
In November 2018, Hawaii County, also known as the Big Island, adopted the new Bill 108 that brought numerous changes to Hawaii County’s STR industry. Under this bill (now a law under Rule 23), all STR owners are required to register their property (which includes a nonrefundable one-time fee of $500) by September 28, 2019. According to Nagaoka, those who already have an STR in residential areas will be OK under a grandfathering clause.
“If your condo is near a hotel or resort you’ll more than likely be given a permit, you’ll just have to register,” he said. “We’re working through anything that’s in a residential area to get special-use permits so our homeowners can continue their businesses.”
Those homeowners, who established their STR before April 1, 2019, will still need to apply for a Nonconforming Use Certificate that requires annual renewal at $250, per the new rule.
Moving forward, Hawaii County STRs will only be allowed in the V (resort), CG (general commercial), and CV (village commercial) districts. The new ordinance 2018-114 has a number of additional STR stipulations to keep neighbors and the community happy, including:
- A good neighbor policy requires quiet hours from 9 p.m. to 8 a.m. These hours should be prominently displayed in the home, and they must be part of the rental agreement each tenant signs.
- All print and digital ads for the STR need to include the registration or nonconforming use certificate number.
- Guest vehicles must be parked in the designated onsite parking areas.
While the Big Island’s rules are getting stricter, Nagaoka still sees this county as the best spot for budget-conscious prospective homeowners.
Honolulu County STR Regulations
In Honolulu County, home of the most visited island, Oahu, it’s a different story.
“If [prospective buyers] are looking on Oahu, I’ll be clear there are only some areas you can have a vacation rental,” Nagaoka said. “For the most part, people don’t want to buy a vacation rental on Waikiki, so I make sure they understand the restrictions and new ordinances.”
Honolulu County recognizes 2 types of STRs: bed-and-breakfast homes and transient vacation units. In a B&B, the homeowner is present during the guest’s stay, with a maximum of 4 guests. With transient vacation units (TVUs), the host rents the entire home and is not living there during the stay; these have stricter zoning regulations.
Honolulu County’s new Bill 89, signed into law June 25, 2019, set the groundwork for tougher enforcement on STRs. TVUs are prohibited outside the resort districts unless they have a Nonconforming Use Certificate. The bill allows for a maximum of 1,699 owner-occupied, hosted B&Bs outside the resort zoned areas after October 1, 2020.
To launch with strong enforcement, Honolulu County’s Bill 89 makes even advertising an illegal STR a fineable offense of up to $10,000, according to Nagaoka.
Homeowners can apply for registration starting October 1, 2020. “Time is required for the department to develop more specific procedures for implementing Bill 89 CD2, including the adoption of rules, and creating the software to help with enforcement and the registration process,” according to the Honolulu Department of Planning and Permitting. The initial registration fee is $1,000; annual renewal is $2,000.
Prior to registering, here are a few new requirements STR owners should keep in mind:
- Applicants must be the actual person, not an organization or company
- Tenants must observe quiet hours between 10 p.m. to 8 a.m.
- Neighbors (within 250 feet) must have a 24-hour phone number to call with any complaints
Maui County STR Regulations
Like Honolulu County, Maui County recognizes two types of STRs: B&Bs and short-term rental homes. Rules and permits vary for each type of home.
B&Bs, which require an owner to be onsite, are permitted in a variety of locations, including residential, hotel, business, rural, and agricultural zones. In some cases, such as B&Bs in agricultural zones, permits come with additional requirements. The number of permits available for B&Bs is limited. For example, Hana will allow up to 48 permits and West Maui has 88; Molokai and Lanai currently have no established caps. Waitlists are available once caps are reached.
A short-term rental home (STRH) permit, which includes most rentals outside B&Bs, requires that the house must’ve been built 5 years prior to the application. The home needs to be 500 feet from neighboring homes, the homeowner is responsible for notifying neighbors about the STRH permit application, and the homeowner must also create an on-site parking plan. If a permit is granted, the homeowner is required to display a 24/7 phone number and the planning department’s phone number on the outside of the home. Initial permits last 3 years, with all permits after lasting for 5 years.
Kauai County STR Regulations
Kauai County follows suit with its own strict regulations. In fact, Kauai no longer allows new homeowners to start STRs outside the permitted visitor destination areas, according to Hawaii Business. Homeowners wishing to start an STR within the visitor destination area are required to register their property with the director of finance beforehand, according to Bill 2364, Ordinance 904.
Homeowners who do have Nonconforming Use Certificates (which require renewal processes), are required to display their registration number and the 24/7 contact’s phone number in a visible place on the front of the property and on the back of the front door. Advertisements must also include the registration number.
To curb illegal STRs, Kauai County maintains a regularly updated list of all approved homestays and nonconforming STRs, available online.
How to navigate Hawaii’s STR regulations
These ever-evolving and varying STR rules make owning a vacation rental in Hawaii cumbersome to say the least. That’s why Nagaoka sees a property management company like TurnKey as essential for any Hawaii rental home owner.
“Most owners are remote, so we have designated personnel to help owners understand the ordinances and file the paperwork on their behalf,” he said. “I always send prospective homeowners the latest draft of the ordinances as well, just so they know what’s ahead.”
Another perk of collaborating with a property management team? The local knowledge. Nagaoka, for example, was born and raised in Hawaii. He shares the inside scoop with prospective homeowners to help them select the best rental properties possible.
“If you get someone with local knowledge, that’s a big plus,” he said. “I tell homeowners about the neighborhood, where it’s headed, potential developments, and insider tips to help them make the best decision for business and personal use.”If you’re still overwhelmed by the rental regulations in Hawaii, you may be better off looking at destinations with lax policies. In this roundup, we’ve compiled the top destinations with homeowner-friendly policies to make running your vacation rental business a breeze.