Kelly Pinzak Chong
Coldwell Banker Realty

Short Term Rentals

Short term rental

Looking to purchase an investment property and rent it short-term for a higher rental income potential? 

Here are a few things to consider. Using a property for short-term accommodations will classify it either as a Bed and Breakfast (B&B) or Transient Vacation Unit (TVU), the main difference being the presence of the property owner.  Classification as a B&B requires that the owner reside on-site in the same dwelling as the guests, whereas a TVU operates without the owner on premises. 

 

A short-term rental (STR) is any rental term shorter than 30 consecutive days.

Short-term rental operations are permitted if the following apply:

  • The property resides in an area zoned as ‘resort’ or ‘resort mixed use’
  • HOA policies do not restrict short –term rentals
  • The property is located outside of the resort/resort mixed use zone, but has a valid Non-conforming Use Certificate (NUC)
  • A condo building with a hotel operation grandfathered as a non-conforming hotel which exempts owners from having to possess a NUC

 

Things to keep in mind with regard to legal short-term rentals:

  • The primary resort zoned areas on Oahu are Waikiki, Kuilima (Turtle Bay) and Ko’olina
  • Most B&Bs/TVUs outside of the resort or resort mixed use zone require NUCs
  • Issuance of NUCs ceased in September of 1990
  • NUCs are voided and lost for good if not renewed every even-numbered year
  • NUCs can be transferred with the sale of the property and remain valid if renewed
  • A list of valid NUCs can be found on the City and County of Honolulu’s Department of Planning and Permitting website at http://www.honolulu.gov/dppstr/approved-strs.html
  • Owners are required to pay General Excise Taxes (GET) and Transient Accommodation Taxes (TAT)

 

In recent years the advertising and use of short-term rentals has exploded across the island.  Though the laws have remained relatively the same, regulation and enforcement of the laws has been nearly non-existent resulting in a significant amount of illegal rental operations.

 

A new application/permitting process will commence in October of 2020 to regulate STR operations on Oahu

  • $1,000 initial application and $2,000 annual renewal fee
  • 1,700 permits will be issued for B&Bs (not TVUs) to operate outside of resort zoned areas under the new application and permitting process
  • B&Bs cannot be within 1,000 feet of each other (exempt for units in resort areas and properties with NUCs are not taken into account)
  • Number of units are limited per geographical district (STRs not allowed for North Shore district)
  • Up to 2 rooms (4 guests max) can be rented and the owner must residing in the same dwelling
  • Permits are not transferrable with the sale of the property
  • Properties with NUCs can continue to operate under NUC guidelines so long as the NUC remains current

 

Source and content from: http://www.honolulu.gov/