Lahaina Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Lahaina, Hawaii?

Short-term rentals, such as those listed on Airbnb and VRBO, have become a contentious issue in Lahaina, Hawaii, particularly in the wake of the devastating wildfires in August 2023. The debate centers around balancing the needs of local residents for affordable housing with the economic benefits that short-term rentals bring to the area. Here's an overview of the current regulations and ongoing discussions surrounding short-term rentals in Lahaina.

Starting a Short-Term Rental Business in Lahaina

Short-term rentals are allowed in certain areas of Lahaina but are subject to strict regulations. According to the Maui County Code, Chapter 19.65, short-term rental homes (STRHs) are permitted in specific zoning districts, such as the Hotel District and certain parts of the Apartment District, but they require a permit from the county.

To obtain a permit, property owners must meet several requirements, including:

• The property must be the owner's primary residence
• The owner must have a designated local contact person available 24/7
• The property must pass a safety inspection
• The owner must pay all applicable taxes and fees

However, the number of STRH permits is limited in each community plan region. For example, in the West Maui Community Plan region, which includes Lahaina, the cap is set at 88 permits.

Proposed Changes to Short-Term Rental Regulations

In the aftermath of the 2023 wildfires, which destroyed thousands of homes and displaced many residents, there has been a growing push to further restrict or even ban short-term rentals in Lahaina. Many local residents and housing advocates argue that the proliferation of vacation rentals has contributed to the housing crisis by reducing the supply of long-term rental units and driving up prices.

In response to these concerns, Maui County Mayor Richard Bissen announced in May 2024 that he plans to introduce legislation that would phase out all short-term rentals in apartment-zoned areas, including those on the "Minatoya List." The Minatoya List refers to a group of properties that were grandfathered in under a legal opinion issued by former Deputy Corporation Counsel Richard Minatoya in 2001.

Under Mayor Bissen's proposal, the approximately 2,200 short-term rentals in West Maui would have to cease operations by July 1, 2025, while the remaining 5,000 units on the Minatoya List would have until January 1, 2026. The goal is to return these properties to the long-term rental market and provide more housing options for local residents, particularly those displaced by the fires.

Debate Over the Impact of Short-Term Rental Regulations

The proposed changes to short-term rental regulations have sparked intense debate in the community. Supporters argue that reducing the number of vacation rentals is necessary to address the housing crisis and ensure that local residents have access to affordable homes.

However, opponents of the proposed restrictions, including many short-term rental owners and operators, argue that banning vacation rentals could have unintended consequences. They point out that short-term rentals make up a significant portion of the lodging inventory in Lahaina and contribute to the local economy by supporting jobs and businesses.

Some also question whether the properties currently used as short-term rentals would actually be converted to long-term housing if the proposed regulations are implemented. They argue that many of these units are luxury properties that may not be affordable or suitable for local residents.

Short-Term Rental Licensing Requirement in Lahaina

To legally launch and operate a short-term rental in Lahaina, property owners must obtain a Short-Term Rental Home permit from the Maui County Planning Department. The number of STRH permits is limited for each Community Plan Region, with the West Maui region, which includes Lahaina, capped at 88 permits.

To apply for an STRH permit, owners must meet several requirements, such as:

1. The property must be the owner's primary residence
2. The owner must have a designated local contact person available 24/7
3. The property must pass a safety inspection
4. The owner must pay all applicable taxes and fees

Additionally, Maui County recently introduced a new regulation that requires property owners to wait 5 years before applying for an STRH permit, unless the property is grandfathered in or located in a zoning area that allows short-term rentals without a permit.

It's important to note that operating an STR without the proper permit can result in fines and legal action. The Maui County Planning Department maintains a list of approved STRH permits available to the public.

Property owners should also be aware of the ongoing debate surrounding STRs in Lahaina. In the wake of the devastating 2023 wildfires, there has been a growing push to further restrict or even ban STRs to address the housing crisis and ensure that local residents have access to affordable homes.

Required Documents for Lahaina Short-Term Rentals

To apply for a Short-Term Rental Home (STRH) permit in Lahaina, property owners must submit a comprehensive application package to the Maui County Planning Department. The following documents are required as part of the application process:

1. Completed STRH Permit Application Form: This form must be filled out in its entirety, providing detailed information about the property, owner, and proposed short-term rental operation.
2. Proof of Ownership: Applicants must provide a copy of the property deed or other legal document demonstrating ownership of the property. If the property is owned by a trust, LLC, LLP, or corporation, additional documentation may be required to prove that it is a family-owned entity.
3. Floor Plan and Site Plan: Detailed floor plans and a site plan of the property, showing the location and dimensions of all structures, parking areas, and other relevant features, must be submitted.
4. Tax Map Key (TMK): The TMK number for the property must be provided on the application form.
5. Transient Accommodations Tax (TAT) License: Applicants must obtain a TAT license from the Hawaii Department of Taxation and provide a copy with their application.
6. General Excise Tax (GET) License: A copy of the applicant's GET license, also obtained from the Hawaii Department of Taxation, is required.
7. Proof of Insurance: Applicants must submit evidence of a comprehensive liability insurance policy covering the short-term rental operation, with a minimum coverage of $1,000,000 per incident.
8. House Policies: A copy of the house policies that will be provided to guests, including rules regarding noise, parking, trash disposal, and other relevant issues, must be included in the application package.
9. Neighbor Notification: Proof that all owners and lessees of record within 500 feet of the property have been notified of the proposed short-term rental, along with a copy of the notification letter and a list of the notified parties, is required.
10. Manager Designation Form: If the permit holder will not be directly managing the short-term rental, a manager designation form must be submitted, identifying the individual responsible for managing the property.

Once all required documents have been compiled, the application package can be submitted to the Maui County Planning Department for review. The department will then schedule a public hearing, during which the application will be considered for approval.

It is important to note that meeting all application requirements does not guarantee approval of an STRH permit. Maui County has established caps on the number of short-term rentals allowed in each community plan area, and if the cap has been reached in Lahaina, no new permits will be issued until a permit becomes available

Maui County Mayor Richard Bissen recently announced plans to introduce legislation that would phase out all STRs in apartment-zoned areas by July 1, 2025, and the remaining units on the "Minatoya List" by January 1, 2026. If passed, this legislation could significantly impact the STR market in Lahaina.

Lahaina Short-Term Rental Taxes

Short-term rental operators in Lahaina are subject to several taxes at both the state and county levels. These taxes include:

1. General Excise Tax (GET): The GET is a statewide tax imposed on all business activities in Hawaii, including short-term rentals. The current GET rate is 4.0% for Maui County, which includes Lahaina.
2. Transient Accommodations Tax (TAT): The TAT is a state tax levied on the gross rental proceeds from short-term rentals (less than 180 consecutive days). As of 2023, the TAT rate is 10.25%.
3. Maui County TAT (MCTAT): In addition to the state TAT, Maui County imposes its own TAT at a rate of 3%. This tax went into effect on November 1, 2021, and applies to all gross rental proceeds and fair market rental value considered taxable under the state TAT.

Short-term rental operators in Lahaina must register with the State Department of Taxation to obtain a TAT license and with Maui County to pay the MCTAT. Failure to register, file returns, and pay these taxes can result in penalties, interest, and legal action.

It's important to note that these taxes apply to all short-term rentals, regardless of whether they are legal or permitted under local zoning regulations. Some short-term rentals in Lahaina may be exempt from TAT if they meet certain criteria, such as renting to low-income individuals receiving government assistance or to military personnel on permanent duty assignment.

In the wake of the 2023 Lahaina wildfires, Maui County has proposed tax incentives for short-term rental owners who convert their properties to long-term housing for displaced residents. Under this proposal, participating owners would receive a property tax exemption from February 20, 2024, to June 30, 2025. However, this proposal has not yet been approved by the Maui County Council.

As the debate over short-term rentals in Lahaina continues, it's crucial for operators to stay informed about their tax obligations and any changes to local regulations that may impact their businesses.

Hawaii Wide Short-Term Rental Rules

While each county in Hawaii has its own specific regulations for short-term rentals, some common rules and requirements apply across the state.

First and foremost, all short-term rental operators in Hawaii must obtain a Transient Accommodations Tax (TAT) license from the Hawaii Department of Taxation. The TAT is a 10.25% tax on the gross rental proceeds derived from furnishing transient accommodations. Operators must also pay the state's General Excise Tax (GET), which varies by county but is generally around 4%.

In addition to state taxes, short-term rental operators must comply with county zoning laws and permitting requirements. In most cases, this means obtaining a Non-Conforming Use Certificate (NUC) or a Short-Term Rental Home Permit from the county planning department. These permits are often limited in number and subject to strict eligibility criteria, such as requiring the property to be the owner's primary residence.

Another common requirement across Hawaii is the need for a local contact person who is available 24/7 to respond to any issues or complaints. This contact person must reside on the same island as the rental property, and their contact information must be provided to guests and neighbors.

Short-term rental operators in Hawaii must also adhere to their county's occupancy limits, noise restrictions, and parking requirements. Failure to comply with these rules can result in fines, permit revocation, and even legal action.

It's important to note that the short-term rental landscape in Hawaii is constantly evolving, with new bills and ordinances being proposed and passed on a regular basis. For example, in 2023, the state legislature considered a bill that would have allowed counties to phase out short-term rentals in certain areas over a five-year period. While this bill did not pass, it reflects the ongoing debate over the impact of vacation rentals on Hawaii's housing market and local communities.

As a short-term rental operator in Hawaii, it's crucial to stay informed about the latest rules and regulations at both the state and county level. This may involve consulting with local officials, joining industry associations, and regularly reviewing government websites and resources. By staying compliant and being a responsible host, you can help ensure the long-term viability of your short-term rental business in the Aloha State.

Does Lahaina Strictly Enforce STR Rules?

Like many other popular tourist destinations in Hawaii, Lahaina has been grappling with the challenges posed by the proliferation of short-term rentals in recent years. While the county has established regulations and permitting requirements for STRs, enforcement has been inconsistent, leading to a significant number of illegal rentals operating in the area.

According to discussions on forums like BiggerPockets and Reddit, many hosts continue to operate STRs in Lahaina despite not having the proper permits or being located in areas where such rentals are prohibited. Some hosts have reported operating under the radar for years without facing any consequences from local authorities.

However, this does not mean that Lahaina is particularly Airbnb-friendly compared to other cities in Hawaii or the mainland US. The county has been under increasing pressure from residents and housing advocates to crack down on illegal STRs, which contribute to the housing crisis and erode the sense of community in residential neighborhoods.

In response to these concerns, Maui County has stepped up enforcement efforts in recent years, with the Planning Department issuing more notices of violation and fines to non-compliant STR operators. The county has also invested in new technology and staffing to better monitor and investigate illegal rentals.

Despite these efforts, many hosts continue to operate STRs in Lahaina without the proper permits, either out of ignorance of the rules or a willingness to take the risk for the potential profits. This has created an uneven playing field for those hosts who do follow the regulations and obtain the necessary permits, as they often face higher costs and more restrictions on their operations.

In conclusion, while Lahaina may have a reputation for being somewhat lax in enforcing STR rules compared to some other jurisdictions, it is not accurate to say that the town is particularly Airbnb-friendly. The county has been working to tighten regulations and increase enforcement in response to community concerns, and hosts who operate illegal STRs do so at their own risk. Those considering starting an STR business in Lahaina should carefully research the current rules and permitting requirements, and be prepared to comply with all applicable regulations.

How to Start a Short-Term Rental Business in Lahaina

Starting a short-term rental business in Lahaina can be a lucrative venture, but it requires careful planning and compliance with local regulations. Here are the steps to get started:

1. Research local zoning laws and regulations: Ensure that short-term rentals are allowed in the desired area before investing in a property. Lahaina has specific zoning requirements and permit caps for short-term rentals, so it's crucial to understand these rules.
2. Choose a suitable property: Look for a property that meets the requirements for short-term rentals in Lahaina, such as being built at least 5 years prior to the application and being at least 500 feet from other homes. Consider factors like location, amenities, and potential rental income.
3. Create a business plan: Develop a comprehensive business plan that outlines your target market, pricing strategy, marketing approach, and financial projections. This will help you stay organized and focused as you launch your business.
4. Register your business: Choose a business structure (e.g., sole proprietorship, LLC) and register your business with the state of Hawaii. Obtain a General Excise Tax (GET) license and a Transient Accommodations Tax (TAT) license.
5. Apply for a Short-Term Rental Home (STRH) permit: Submit an application to the Maui County Planning Department, along with the required documents and fees. This process may take several months and includes notifying neighbors and potentially attending a public hearing.
6. Prepare your property: Ensure your property is clean, well-maintained, and equipped with the necessary amenities to provide a comfortable stay for guests. Consider hiring a professional cleaning service and investing in high-quality furnishings and linens.
7. List your property on vacation rental platforms:Create attractive listings on popular platforms like Airbnb and VRBO. Use high-quality photos, detailed descriptions, and competitive pricing to stand out from other listings.
8. Manage your bookings and guests: Respond promptly to inquiries and booking requests and provide excellent customer service to your guests. Consider using property management software or hiring a professional property manager to streamline operations.
9. Comply with ongoing regulations and taxes: Stay up-to-date with any changes to local regulations and ensure that you are collecting and remitting the required taxes (GET and TAT) to the appropriate authorities.
10. Continuously improve your business: Monitor your performance, gather feedback from guests, and make necessary improvements to your property and services. Stay informed about industry trends and best practices to remain competitive in the Lahaina vacation rental market.

By following these steps and remaining compliant with local regulations, you can establish a successful short-term rental business in Lahaina. However, keep in mind that the market is highly competitive and subject to change, so it's essential to stay adaptable and responsive to ensure long-term success.

Who to Contact in Lahaina about Short-Term Rental Regulations and Zoning?

If you have questions or need assistance regarding short-term rental regulations and zoning in Lahaina, there are several key contacts and resources available:

Maui County Planning Department: The Planning Department is responsible for administering and enforcing land use laws, including those related to short-term rentals. You can contact them at:

Phone: (808) 270-7735
Email: planning@mauicounty.gov
Address: 2200 Main Street, One Main Plaza, Suite 315, Wailuku, HI 96793

Zoning Administration and Enforcement Division (ZAED): This division within the Planning Department handles the enforcement of zoning regulations and processes variance and appeal applications. Their contact information is:

Phone: (808) 270-7253
Email: planning@mauicounty.gov
Address: 2200 Main Street, One Main Plaza, Suite 335, Wailuku, HI 96793

Current Planning Division: For questions related to the permitting process for short-term rentals, including Bed & Breakfast (B&B) and Short-Term Rental Home (STRH) permits, contact the Current Planning Division at:

Phone: (808) 270-8205
Email: planning@mauicounty.gov
Address: 2200 Main Street, One Main Plaza, Suite 619, Wailuku, HI 96793

Maui County website: The County's official website provides a wealth of information on short-term rental regulations, permit applications, and frequently asked questions. Visit www.mauicounty.gov and navigate to the "Planning Department" section for more details.

Lahaina Community Plan Advisory Committee (CPAC): While not directly involved in enforcing regulations, the Lahaina CPAC can provide valuable insights into the community's perspective on short-term rentals and future planning efforts. Contact the Planning Department for information on upcoming meetings and how to get involved.

When contacting these contacts, be prepared to provide specific details about your property and short-term rental plans. They can guide you through the process, help you understand the current regulations, and answer any questions you may have.

Keep in mind that short-term rental regulations in Maui County are subject to change, particularly in light of the ongoing debate surrounding their impact on housing availability and affordability. Stay informed by regularly checking the County website and attending relevant public meetings to ensure you have the most up-to-date information.

What Do Airbnb Hosts in Lahaina on Reddit and Bigger Pockets Think about Local Regulations?

Discussions on forums like Reddit and BiggerPockets reveal a range of opinions among Airbnb hosts in Lahaina regarding local short-term rental regulations. Here are a few notable examples:

Some hosts on Reddit's r/Maui subreddit express frustration with the proliferation of short-term rentals in residential areas, arguing that they contribute to the housing crisis by reducing the supply of long-term rental units and driving up prices. These hosts support stricter regulations and enforcement to curb the growth of illegal vacation rentals.

Other hosts on r/Maui point out that not all short-term rentals should be banned, and that properties in areas specifically zoned for tourism should be allowed to operate as vacation rentals. They argue that a blanket ban would disproportionately benefit the hotel industry at the expense of local property owners.

On BiggerPockets, some hosts report operating short-term rentals in Lahaina without the proper permits for years without facing any consequences from local authorities. They suggest that enforcement of existing regulations has been inconsistent, allowing many illegal rentals to continue operating under the radar.

However, other hosts on BiggerPockets note that Maui County has stepped up enforcement efforts in recent years, issuing more notices of violation and fines to non-compliant operators. They advise potential hosts to carefully research the current rules and permitting requirements before investing in a short-term rental property in Lahaina.

In the wake of the devastating 2023 Lahaina wildfires, some hosts on both Reddit and BiggerPockets express support for proposed regulations that would phase out short-term rentals in certain areas to free up housing for displaced residents. They argue that the community's immediate need for long-term housing should take precedence over vacation rentals.

Conversely, other hosts worry that a blanket ban on short-term rentals could have unintended consequences, such as reducing the available lodging for tourists and negatively impacting local businesses that rely on visitor spending. They suggest that a more targeted approach, focusing on illegal rentals in residential areas, would be more effective.

Overall, the opinions of Airbnb hosts in Lahaina regarding local regulations are diverse and often divided. While there is a general acknowledgment that some level of regulation is necessary to balance the needs of residents and tourists, there is ongoing debate about the specific measures that should be implemented and how they should be enforced.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.