Short Term Rentals
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/