Bill 89 goes into effect Aug. 1, North Shore vacation rentals now on the market

Local News

Honolulu’s controversial vacation rental bill, Bill 89, goes into effect in less than two weeks.

Starting Aug. 1, those who advertise a short-term rental without a legal permit could get a hefty fine.

For years vacation rentals have flooded areas like the North Shore and Kailua.

“I’d say there is about 750,” said North Shore realtor Richard Sterman. “Of those the statistic is that about less than 50 are legal.”

With home prices averaging above $1 million and on top of having the highest increase of property values, North Shore short-term vacation rental owners are feeling the pressure.

“Owners that are dependent on shorter-term rentals like this, don’t feel that they can make it,” Sterman said.

Short term rentals could make anywhere from $1000 to $5000 a week.

But it’s not easy switching to long-term either. As Sterman explains, people have spent thousands of dollars on decorating their short-term rental and want to keep the furniture in the house.

“Being fully furnished, in nicer homes wouldn’t rent for the affordable price like $2000 a month, it would be renting for $6000 to $10,000 a month,” he said.

Sterman said he knew a short-term crackdown could happen years ago. Which is why he started a website that lets vacation rental owners rent their home for 30 days or more.

“Vacation rentals are actually legal as long as they are 30 days to 180 days, fully furnished and they pay their TAT tax. That’s what we’ve been doing for years,” he said.

He says it’s these kinds of rentals that surf leagues and sponsors book up every winter when the waves hit the North Shore.

“They actually come in for about 45 days to 60 days at a time,” he said.

But with the possibility of more homes entering the market will it bring prices down?

“In real estate, it’s always a product of supply and demand if you have 700 new long-term rentals, the supply is up,” he said. “Coming into August and September, which is the slowest time of the year, the demand is going to be very low therefore expect rent prices to drop dramatically.”

And while less traffic is always a positive to North Shore residents, there could be an impact on the economy long-term.

“The North Shore could go into a mini-recession, some of the restaurants are already feeling the effects, especially the trucks,” he said.

“Again, 1,400 new tourists a week live on the North Shore and then the next week a brand new 1,400 people show up wanting to do and buy these things like snorkel gear, tours, and food,” he said.

Part of Bill 89 allows for 1,700 new permits to be issued in October 2020 for owner-occupied units. However, due to the North Shore Sustainable Communities Plan, no new short-term rentals are allowed in the North Shore area unless in the Turtle Bay area.

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