January 17, 2020
Updated April 30, 2022
On December 22nd, 2019, a huge fine increase for illegal short-term rentals in Maui County went into effect. Thinking about putting your property on Airbnb just to see what happens? Have you been renting out your ohana to vacation guests and somehow managed to fly under the radar to this point? My advice: Stop! It’s not worth it.
Here is a link to the full code amendment. Instead of the previous fine structure, which some property owners viewed as “the cost of doing business,” new fines are $20,000 for the first offense and $10,000 per day afterward. That is not a typo. Let me repeat that so it sinks in…
$20,000 for the First Offense and $10,000 Per Day Afterward.
For years the county has been cracking down on illegal short-term rentals and refining its operations. Now they’ve got the fine structure to really back it up. And guess what… if you get caught, you’re guilty until proven innocent. No exceptions for, “I didn’t know the law.”
So what is the law? In Maui County, a short-term rental is defined as anything less than 6 months.
If you own a condo, the underlying zoning will allow for short-term rentals (i.e., hotel zoning) OR your condo building will be listed here as one of the county-approved properties. Is there a discrepancy between your condo association rules and the county regulations? Check with your AOAO Board of Directors as well as your own independent real estate attorney to verify.
If you own a house, it’s a little more complicated. If the underlying zoning does not allow for short-term rentals, then you’ll have to go through an extensive permitting process with no guarantee of approval.
There Are 3 Different Types of Permits:
The two most common types are Short-Term Rental Home and Bed & Breakfast. For both types of permits, there are caps on the number of properties with that use allowed in each geographical district in Maui County. The major difference between Short-Term Rental Home and Bed & Breakfast is that a B&B permit requires that the owner-proprietor reside full-time onsite. In 2018 a new code amendment passed that in order to be eligible to apply for a STRH permit, the property has to be owned by the permit applicant for a minimum of five years. This five-year ownership requirement also now applies to B&B's.
At the start of 2022 a new law went into effect halting the development of new vacation rental accommodations, such as hotels, timeshares, short-term rental homes and transient vacation rental units in all zoning districts on Maui. No permit applications or permits for new transient accommodations may be accepted or granted by any board, commission, or agency. This moratorium is in effect for the sooner of two years, or untiI such time as tourism management measures are implemented.
If you’re interested in legally pursuing short-term rentals, there are some exceptional property managers here in Maui to professionally care for your asset, as well as real estate attorneys and specialized permitting consultants to get you there. If the process seems daunting or your property doesn’t fit the permitting parameters, here’s an idea… why not consider a long-term rental of six months or more? It’s a different investment approach, but in some cases can be equally as lucrative. One of the greatest needs in Maui County right now is not just affordable housing for purchase, but affordable rental housing. There’s a strong demand for quality long-term rentals. And in 2021 Maui enacted a new property tax exemption to incentivize property owners to rent their vacant properties to long term tenants. It’s definitely worth considering instead the risk of getting hit with these major fines for operating an illegal short-term rental.
Questions?
I’m happy to direct you to the proper source for more detailed information. I look forward to hearing from you! Aloha from Maui!
