2025 Update: Big Island Hosted Transient Vacation Rentals

A new approach to developing rules for registration and regulation of hosted vacation rentals on Hawaii Island was unveiled to the public last week. This has been a years-long process, which now looks like it will be studied for months with new proposals later in the year.

Here is an update on what we know and what you can expect if you currently operate a short term rental unit in your home, or are contemplating buying a home and renting a portion of it short term.

NEXT STEP:  Study the issues

First letʻs recap the history of registration and regulation of Big Island vacation rentals.

• The ordinance regulating unhosted vacation rentals has been in the County Code since 2018.
• In November 2022, two members of the Hawaii Island County Council began working with the public, County Planning Department, and lawyers, to draft rules for registration and regulation of hosted vacation rentals, similar to those adopted for the regulation of unhosted rentals (where the owner does not live on site).
• After five drafts, a year ago in April 2024 a package of three bills finally went to the Planning Commissions.
• In October 2024, just the bill relating to ADUs (accessory dwelling units) was passed separately. That was to comply with a state directive requiring the Counties to ease permitting for ADUs in order to ease the long term rental housing crisis.
• The other two bills which were specific to short term (vacation) rentals were allowed to die, having become so overcomplicated that everyone agreed it was better to start fresh once the new council members were seated.

 Now for the actual 2025 news:

• Bowing to pressure from short term vacation rental owners and the industry, the County hired a contractor to study the issues. Key questions are (1) the economic benefit of short term vacation rentals/possible impact if there are fewer due to regulation; (2) the extent to which short term rentals impact the supply of long term rentals; (3) whether having fewer “AirBnBs” will mean fewer visitors; (4) the quality of life impacts of short term rentals on our island neighborhoods and communities.

If you are a member of the general public residing on Hawaiʻi Island, you can participate in the survey here.

If you own a transient vacation rental on Hawaiʻi Island, the link to your survey is here.

Separating Registration from Rules and Regulations for Short Term (Transient) Vacation Rentals

The next decision made by the Council members was to focus just on creating a registration process. That is fairly straightforward, since the County already has the mechanism in place to register unhosted vacation rentals. However, rather than have registration be a function of the County Planning Department (which mainly deals with matters having to do with zoning, as set forth in Chapter 25 of the Hawaii County Code), registration will be handled by the County Finance Department.

Most of the testimony and contentious issues of the previous bills had to do with substantive matters of where transient rentals will be allowed – which locations and property zonings. Note: short term or transient rentals are defined as rentals under 180 days in duration. Those require payment of State Transient Accommodation Tax, so this definition is not up for discussion. Rentals exempt from paying TAT are likewise exempt from registration. Hence it should be easy for government authorities to cross-reference whether property owners operating  short term vacation rentals are paying the taxes already required…which will be a problem for folks who were flying under the radar and have not paid General Excise and Transient Accommodation Tax on their rental income.

Similarly, the registration process will not affect the property tax regime. Many owners who were getting a homeowner rate will be hit with higher property taxes as they will no longer qualify because they are using their residence to generate business income.

So while the studies gather and analyze data to shed light on the issues, the County will move forward with the registration process for existing rental owners. Then the Council and Planning Department will come back to the regulation regime and changes to the Zoning Code. Here is the tentative timeline.

Look for another post with updates around June, when the results of the study are complete. Again, here are the links if you are a Hawaii Island resident and/or hosted vacation rental owner and would like to participate in the survey.

If you are a member of the general public residing on Hawaiʻi Island, you can participate in the survey here.

If you own a transient vacation rental on Hawaiʻi Island, the link to your survey is here.