Hawaii ban on short-term vacation rentals moves forward in state legislature

Two bills moving through the Hawaii legislature could phase out short-term rentals that are not occupied by their owner, as the state tries to tackle rising housing costs and homelessness.

State House Bill 1838 and Senate Bill 2919 have prompted a fierce debate about the future of vacation rentals like Airbnb and Vrbo homes.

Residents have long complained about the impact of tourism and luxury home and resort development on housing accessibility, as well as the lack of affordable housing and rentals for residents.

The Maui wildfires in August 2023 exacerbated the crisis, burning thousands of structures, including many affordable housing units.

Hawaii residents have some of the highest housing costs in the nation -- more than 2.5 times higher than the national average -- according to the University of Hawaii Economic Research Organization.

According to the U.S. Department of Housing and Urban Development, more than 6,200 people in the state were homeless on a single night in January 2023.

Some local officials believe the commercial use of short-term rentals "strains Hawaiʻi's limited housing inventory" and is exacerbating the state's housing crisis.

"Short-term rentals in Hawai'i have proven to be more profitable than renting to local families, but this profit often comes at the cost of the communities where they're located," said Gary S. Suganuma, Director of Taxation, in support of the House bill in March testimony.

Across Hawaii, homes have been converted to short-term rentals, taking up large swaths of potential long-term rental units.

In Lahaina, 25% of the region's housing units are listed as short-term rentals, according to the University of Hawaii Economic Research Organization. To the south of Lahaina, that percentage jumps to 41.8%. To the north, it jumps to 87%.

The state's housing crisis is one of the reasons supporters say the Native Hawaiian population on Hawaii has declined: the 2020 U.S. Census found that more than half of all Hawaiians live outside of the state.

"Preserving long-term housing inventory for residents can prevent the out-migration of Hawaiians and other members of our communities, who are forced to leave due to the increase in lack of affordable housing options," said Suganuma.

The Maui Chamber of Commerce opposes the House bill, arguing it has the potential to "result in substantial legal issues" for the state and interfere with the rights of property owners.

"The proposed changes could conflict with constitutional rights as well as existing state statutes," their March letter to the House read. "Such changes could potentially cause numerous unintended consequences, ultimately leading to the deprivation of vested rights of existing residential homeowners, that then would likely result in substantial litigation."

Green issued more emergency declarations in late February and early March to address ongoing issues of homelessness and housing affordability.

The declarations ban increases on rent or the price of essential commodities, allows for the construction of new homeless dwelling units, and accelerates the permitting and construction process for new housing developments including affordable housing.