Hawaii's Vacation Rental Ban: What This Means for You!

Short-term vacation rentals in Hawaii are moving closer to being phased out as the state grapples with a housing crisis exacerbated by last year’s wildfires on Maui.

A bill that could reshape vacation rental regulation across the state has passed both the Senate and the House and now awaits Hawaii Gov. Josh Green’s signature – he has already promised to sign it. If enacted, the new law, effective July 1, would grant each Hawaii county the authority to redefine zoning ordinances, including converting short-term rentals into long-term residential housing, to guide the overall future development of the county. Violators would face a fine of $10,000 per day.

This legislation marks a significant change, being the first major regulation of short-term vacation rentals statewide, according to Hawaii Sen. Jarrett Keohokalole, who introduced the bill.

The bill overturns a 1957 ordinance that displaced Native Hawaiian communities from their homes and converted their land into sugar plantations. Many other zoning ordinances are outdated, Keohokalole said, and don’t reflect the influx of foreign investors or overtourism.

“The majority of short-term rentals in Hawaii are illegal, owned by non-residents, and contribute to skyrocketing housing costs,” Gov. Green posted on social media, adding his support for Senate Bill 2919 to empower counties to regulate STRs and potentially phase them out.

Housing affordability in Hawaii has worsened over the past two decades. A single-family home cost four times as much in 2023 as in 2000, and less than one-third of households can afford the typical local home, according to the Hawaii Housing Factbook.

Rents also continue to rise, with Maui having the most expensive median rent in the state – a typical apartment is $2,500 a month.

Part of the problem is the high percentage of short-term rentals in Hawaii’s housing stock. About 30,000 of Hawaii’s 557,000 total housing units, or 5.5%, are short-term rentals, compared to cities like Las Vegas, where only 3% are short-term rentals. Maui is even worse, with vacation rentals accounting for 15% of the island’s total housing supply.

August’s wildfires, which destroyed the majority of Lahaina and displaced thousands of West Maui residents, only amplified the housing crisis on Maui. Around 3,000 displaced residents are still living in hotels, over eight months since the fires ravaged West Maui. Some are leaving Hawaii entirely due to the lack of stable long-term housing.

Maui County Mayor Bissen wants to increase the inventory of available long-term units for people of Maui and has even proposed tax incentives for owners to convert their units into long-term housing.

“It’s not an inventory problem, it’s the fact that the inventory is being used for something that’s not helping the community,” said a community leader.