The Real Deal About Oahu Vacation Rentals


Posted by Luke Korkowski on Oct 18, 2018 in News

One of the most frequent questions I get from prospective homebuyers on Oahu is, “Can I do short-term rentals in this property?” The short answer in almost every case is “No.”

Short-term rentals — meaning renting out your place for less than 30 days — are only allowed in three areas on island: Waikiki, Ko Olina, and Turtle Bay. That’s it.1,2 It doesn’t matter if we call them “vacation rentals,” “short-term occupancies,” “transient vacation unit use,” or some other term. If it looks and seems like a vacation use for less than 30 days, it’s not allowed on Oahu except in the three designated areas.

You’d think that with the answer being as clear as I’ve stated it here there wouldn’t be ongoing confusion about this, but there is. Here’s why. The Oahu zoning code (called the Land Use Ordinance) reads frustratingly vaguely. This has caused much hemming and hawing — including by yours truly — with all kinds of potential interpretations and workarounds being suggested and, in many cases, implemented.

Fortunately, three lawyer-authors tackled the issue comprehensively in the October 2018 issue of the Hawaii Bar Journal in an article entitled "O’ahu’s Short-Term Vacation Rentals: An Overview of the Law and the Tax that Applies."3 Citing a comprehensive slew of legal resources, the authors make a definitive and convincing case that vacation rentals are verboten.

Let’s tackle some additional questions that real estate brokers typically get on this matter about properties not in the three permitted areas:

 

So…can I rent out my place to one person for, say, two weeks in a 30-day period and then rent it to someone else for some part of the next 30-day period? I mean, it’s a rolling calendar, right?

No. Some vacation rental brokerages operate on precisely this interpretation of the zoning code. According to the Hawaii Bar Journal article, though, that won’t fly. If someone rents your property for less than 30 days, no matter how the lease or “use” or “occupancy” agreement reads, it’s a vacation rental.

 

Ah, ok, what if someone rents my place for 30 days and then just (ahem) ‘happens’ to terminate their lease early? That’s ok, right?

No. If your renter rents the place for less than 30 days, even if it wasn’t planned that way (whether with a nudge and a wink or not), it’s no bueno.

 

But, but, I really, really want to rent my place out to vacationers.

You’re not alone. Oahu is rife with illegal vacation rentals. And the situation on the ground is that, for the most part, landlords get in trouble more frequently for failing to pay the Transient Accommodations Tax on their illegal rentals than they do for the improper rental activity itself.

But now that you know the deal, you’ve got some clarity regarding whether you can legally rent out your property to vacationers. With very few exceptions, you can’t.

 

Footnotes:

1 Ok, there are some exceptions. For example, some folks have grandfathered status such that if they previously legally operated a bed and breakfast or similar operation, then they can continue to do so.

2 Also, not every part of these areas allows short term rentals. Specific zoning rules apply, as do common interest community documents.

3 Cal Chipchase, Ryan Wilson, and Gabriel Gorman, O’ahu’s Short-Term Vacation Rentals: An Overview of the Law and the Tax that Applies, Hawaii Bar Journal, October 2018.