The Problems With Short-Term Rentals
It has come to light that thousands of illegal vacation rentals and short-term rentals are occurring throughout the islands. For Maui, it was reported that in 2014 there were 8,840 vacation rentals, which comprise 13.6% of the housing market, which is the highest rate of all the islands. It was estimated by the Maui Planning Department that only 2,000 were likely legal rentals. Last year, the Maui Planning Department sent out warning letters and notices of fines, which can be up to $1,000 for every day an owner continues to operate after the initial $1,000 fine.
From the government’s viewpoint, these illegal rentals contribute to a reduction of state and County tax revenues. In addition, the occupancy limits in dwellings are to ensure that the renting public remains safe. Too many people in a home can be a safety hazard, and a violation of fire safety standards.
From the neighborhood community standpoint, illegal short-term rentals harm property values and decrease overall rental values. Generally, short-term tenants do not have ties to the community, and often do not participate in community events or have the same values of preserving the property or abiding by the rules of the community. In addition, multiple short-term renters coming in and out of the neighborhood can reduce safety and increase traffic congestion. Furthermore, it is difficult to enforce regulations against short-term tenants who are less willing to pay fines if they break the rules. That means the Association must pursue the owner for fines, damages and any attorneys’ fees caused by tenant conduct, which disrupts the harmony of the community.
The Supreme Court of the United States long ago recognized the validity of zoning regulations as a proper exercise of police power. On a local government level, the County of Maui has issued several short-term rental restrictions.
If a community association is zoned “residential”, it means that “single-family dwellings” are permitted. This is defined as “a building consisting of only one dwelling unit designed for or occupied exclusively by one family”.
The Maui County Code was amended in 2012 to allow people to apply for a permit for a “short-term rental home” or “bed and breakfast home”. However, to obtain a permit, the “short-term rental home” is required to conform to the character of the existing neighborhood. If the property is subject to homeowner covenants and restrictions against short-term rental, then the short-term rental home will not be issued and is not allowed. If the association’s covenants require single-family residential use, short-term rentals and bed and breakfasts are prohibited.
In sum, to protect the value of properties, owners living in residential neighborhoods with restrictions against short-term rentals are limited to using their homes as single-family dwellings and cannot rent to people for a term less than six months.
 Individually Advertised Units in Hawaii, by Hawaii Tourism Authority (December 2014).
 Maui County Code Section 10.08.020.
 Maui County Code Section 19.04.040.
 Maui County Code Chapter 19.64 and 19.65.