New law cracks down on Airbnbs on Oahu and illegal short-term rentals

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The law is another step in the decades-long battle between Oahu residents regarding the rising prevalence of short-term rentals, like those on VRBO and Airbnb. Many people who live in residential areas have expressed concerns over the disruption in their quiet neighborhoods and want to return the inventory back to locals. Some homeowners say the strict regulations impede on their rights, and hosting short-term rentals have helped them make ends meet. 

For added pressure, the islands are concurrently facing overtourism and a housing crisis that has displaced many locals, especially Native Hawaiians. Hawaii has a notoriously high cost of living and a shortage of affordable rental homes, according to the National Low Income Housing Coalition.

In Aug., Oahu had about 9,151 active online listings for vacation rentals, making up about 2.6% of all of the island’s housing stock, according to Justin Tyndall, assistant professor of economics at the University of Hawaii Economic Research Organization. The number of listings and demand for these units have gone up since 2021 but is less than what they were in 2019, according to the Sept. 2022 Hawaii Vacation Rental Performance Report.

In 2019, 3 million people stayed in illegal vacation rentals, according to Blangiardi. He said the high number of rental units stresses the island’s limited natural resources, such as water, amid a water crisis. 

Per the new law, owners face an initial $10,000 fine if caught renting their unit illegally, and then $10,000 each day in violation thereafter. To register as a legal short-term rental, requirements include not renting out your unit for less than 30 days, a million-dollar insurance policy and a detailed parking plan.  

Exceptions to this are about 30 buildings in resort zones, such as Waikiki, Ko Olina and Turtle Bay, but the units must be registered with the city. A new website and hotline were also set up to help people report illegal short-term rentals. 

A spokesperson for the mayor’s office told USA TODAY that Blangiardi is “disappointed” with the judge’s ruling but “remains focused on aggressively enforcing the restriction on rentals of less than 30 days.” While the city and County of Honolulu will not appeal the ruling, it will defend the proposed ordinance to persuade the court as the case continues. 

‘Checks and balances’

Pahinui compares these short-term rental units to setting up “a hotel next to me.” She said the influx of short-term rentals “essentially commercialized the community.” 

Her organization and the four others involved in filing the motion against the court said in a recent joint statement: 

We believe these lodging businesses when located in residential zoning reduce residential housing supply, drive-up property values and long-term rental rates; promote tourism sprawl and resident discontent; alter the residential character and ambiance of neighborhoods and communities; compromise neighbors’ safety and security; and contradict Oahu’s General Plan.

Pahinui admits the issue is complex and you can’t generalize all Airbnb hosts. She is not necessarily against local families renting out a room in their house to help pay the bills but rather offshore owners who buy up multiple properties in residentially zoned neighborhoods to rent out to visitors without paying appropriate taxes. 

Blangiardi said these “absentee owners don’t care about what happens in the neighborhoods,” and that COVID offered a break from tourism, showing how detrimental overtourism can be to the islands. 

About a quarter of homes in Hawaii are purchased by out-of-state buyers,  according to the Department of Business, Economic Development and Tourism in 2020. Hawaii is also the state with the lowest property taxes in the country. 

“What I see are people are so blinded, ‘oh yeah, we can make all this money off of tourists,'” she said. “The rush for money, they’re putting the dollar above the quality of life of residents.”

In just the first three months of 2022, Airbnb hosts in Hawaii earned over $3 million.

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She has lived next to two short-term rentals owned by people who don’t live in Hawaii. “People are on vacation who want to have a good time, I get that, but when you have people on all sides of you who have to get up and go to work, we don’t want to listen to your partying.” She said she struggled to ever get in contact with one of the short-term rental owners when issues came up. 

She said she supports the mayor’s actions and her organization wants to “give the ordinance a chance” before revisiting it to make amendments to help those “mom and pop” hosts. After it has been in effect for a while, she said, “I’m all for putting together a group of people from both sides of the aisle.”

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‘It’s not fair to us’

The law has many short-term rental owners and those who had booked short stays up in arms over what to do next.

Kathy Daley was planning to visit Oahu’s North Shore with her family of six in early January when her Airbnb host called her to say they could no longer host her.

“We had the perfect place booked months ago,” she shared on Facebook. She said she is “scrambling” to find affordable replacement accommodations. “I know our host (who is local) were counting on this income,” she told USA TODAY. 

Longtime Honolulu residents, Karlette and Ronald Tario are also Airbnb hosts who count on the income from the hosting platform. For decades, they dreamed about opening a small business by renting out their property. They said they’re passionate about showing visitors a true look at Hawaii away from the hotels and enjoy educating people about how to take care of the environment and support local businesses. 

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About two years ago, the empty nesters renovated their home to create a unit downstairs and a studio off the main house to rent out. Wanting to do things “the legal way,” the couple “got all the permits and asked questions” before listing their rentals.

“I spent all this money and to find out they’re shutting us down,” Ronald said. The couple had to take out a second mortgage on their home for the renovations and Ronald’s work hours as a wharf clerk with Honolulu Terminals were drastically cut due to the pandemic. 

They said they’ve yet to have any serious problems with their Airbnb guests. They give a list of rules to their guests and always recommend local businesses for them to support.

The couple said the new ordinance threw them for a loop and “it’s not fair to us.” All their upcoming bookings on Airbnb have been canceled. 

They’ve also tried renting out long-term too and felt like it was too much of a “headache.” They said they had more issues with long-term tenants than Airbnb guests, such as not paying rent on time or noise complaints from loud dogs. When it comes to Airbnb, “you can control taking care of the property,” Karlette said. 

Karlette feels like new ordinance shows that the city doesn’t “care about small business owners. I’m a little upset about that. I get emotional because this is something I’ve wanted to do for the longest time … we’re supporting our kids through private school and college.”

“The state and the city should have worked together to create more housing and no, they didn’t,” she added

For now, the couple is tossing ideas around for what to do next, like renting to military families. Ronald said he’s worried they will have to sell the house and move to the mainland as they struggle to pay bills.

“Don’t be blaming us as a homeowner,” Ronald said.