Maui's mayor wrote a law banning 7,000 legal vacation rentals. What does it mean, and where will it end?

Maui's mayor wrote a law banning 7,000 legal vacation rentals. What does it mean, and where will it end?

Update on Maui’s Minatoya List 

Governor Josh Green recently signed legislation allowing individual counties to determine short-term (vacation rental) and long-term housing, and Maui Mayor Joe Bissen immediately responded by drafting a law that will prevent owners of most of Maui’s condo properties from renting them as vacation rentals, taking effect in 2025 (Lahaina side) and 2026 (Kihei-Wailea side). This could affect over 100 of the most popular vacation condo complexes on Maui,  starting in 2025, but this law has a long way to go before it becomes real. 

Here's where things stand now. The Maui Planning Commission will review the law in late June. Then public testimony will be heard, and the county council will review and vote on the law. If the law is passed it will be challenged before the Hawaii State Court of Appeals, where many feel it will be overturned. 

If passed, guests will have fewer condo options than in the past but will still have a lot of options. For example, Mana Kai, Royal Mauian, Makena Surf, and a few dozen other properties are not on the list. There is absolutely no impact on Maui’s visitors until the Summer of 2025. Nightly rates will not increase in the near future, and Maui’s businesses and locals are currently welcoming our guests with open arms. Occupancy is down slightly for the summer months, meaning there are deals to be had, and fewer crowds. 

Says the Hawaii Free Press: “Green and Bissen know this is a “taking” and therefore doomed in court. Their intent is to pander politically and to scare TVR owners out of business to the benefit of hotels and hotel unions.” Their take is an informed read: Maui County to (attempt to) Outlaw 'Minatoya List' Condotels 

Bissen and Green have not addressed recovering lost revenue: the impacted vacation rentals account for 42% of Maui’s property tax revenue. Reducing STR property taxes from the current 12% to 3% (long term rental rate) creates a $180 million shortfall. An additional $70 million will be lost in guest (TAT) taxes.

If the law passes and sticks, owners would not be allowed to rent short term, but could offer their units for long term rental. Over 7,000 long term (min. 6 months) rental condos will flood our housing market. If your condo is on the list, and you rent long term, your income will drop significantly, perhaps as much as 50%, and your use will be dictated by tenant use.

Kevin Spaise is a Maui Realtor specializing in Maui vacation rental investment real estate. Kevin is an expert in Kihei and Wailea real estate and has been a full time Realtor for 20 years, with more than $120M transacted. He owns Vacation Maui, a property management company with 70+ investment condos under management, and delights in providing real-time performance data to future investors. See KevinSpaise.com, or call him directly at (808) 344-0624.


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