HB2351

SECTION 1. The legislature finds that the State of Hawaii is experiencing an ongoing housing crisis characterized by rising home prices, limited inventory, and declining rates of home ownership among local residents. Single-family homes, which have historically served as the primary entry point to homeownership for Hawaii families, are increasingly being removed from the owner-occupant market and converted into long or short-term rental properties.

The legislature further finds that owner-occupied housing is a cornerstone of stable, healthy neighborhoods. When homes are owned and occupied by the people who live in them, communities benefit from greater residential stability, stronger social ties, increased civic engagement, and improved public safety. Owner-occupants are more likely to maintain their properties, invest in their neighborhoods, participate in schools and community organizations, and remain in their homes for longer periods of time.

The legislature recognizes that the concentration of single-family homes in the hands of large-scale owners, particularly corporate entities and high-volume investors, can undermine neighborhood stability. High levels of non-owner-occupied housing are associated with increased tenant turnover, reduced community cohesion, and diminished opportunities for local families to purchase homes and build generational wealth.

The legislature further finds that large-scale acquisition of single-family homes for rental purposes reduces the supply of homes available to owner-occupants, contributes to upward pressure on housing prices, and disadvantages local residents who seek to purchase homes for their own use. These impacts are particularly acute in Hawaii, where land is finite and housing scarcity is severe.

The legislature acknowledges that small-scale rental ownership can serve an important role in the housing market but finds that unchecked accumulation of single-family homes by large owners poses a significant threat to homeownership opportunities and neighborhood stability. Reasonable limits on the number of single-family homes that may be held as rental properties by large owners are necessary to protect the long-term health of Hawaii’s communities.

Accordingly, the purpose of this Act, known as the Hawaii Homes for Hawaii Families Act, is to preserve and expand opportunities for owner-occupancy, promote stable and resilient neighborhoods, prevent excessive consolidation of single-family homes into rental portfolios, and ensure that Hawaii’s limited housing stock serves the needs of residents who seek to live, work, and remain in their communities.

SECTION 2. Chapter 516, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§516- Single Family Home Rentals; Restrictions. (a) Beginning five years after the effective date of this Act, the corporate owner of a single family home is prohibited from renting the home out to a residential tenant when:

(1) The owner has a property interest in five or more single-family non-owner-occupied properties that have a current residential tenant, or are available for rent or have been rented within the last twelve months by a residential tenant; and

(2) The owner is not a named exception to this restriction under paragraph (c).

(b) The individual owner of a single-family home is prohibited from renting the home to a residential tenant when the owner has a property interest in seven or more single-family non-owner-occupied properties that have a current residential tenant, or are available for rent or have been rented within the last twelve months by a residential tenant and the owner is not a named exception to this restriction under paragraph (c).

(1) A local, state, or federal unit of government, including a state or federal agency;

(2) A land trust under section 558;

(3) A charitable, religious, or nonprofit organization;

(4) The owner of a home licensed or regulated under chapter 346;

(5) An employer and the home is a home rented by the employer to an employee;

(6) A corporation primarily engaged in housing development through the construction and rehabilitation of single-family residences; or

(7) A mortgage note holder that owns the single-family residences through foreclosure.

(d) An owner or a corporate owner may apply for an exemption from this section with the director of taxation. The director may issue an exemption if:

(1) The exemption to the corporate owner would not have an impact upon the availability of affordable housing; and

(2) The exemption does not limit the supply of affordable, safe single-family homes available to purchasers who plan to be owner-occupants.

The director shall have sixty days from the time an application for exemption is filed to determine if the exemption shall be granted. The corporate owner may make a request for reconsideration if the application has been denied and the director or their designee must meet with the corporate owner within ten days of the request for reconsideration and make a determination on that request within twenty days of the request. The department of taxation may charge a reasonable fee to process applications for exemptions and renewals of exemptions under this section. Each corporate owner that is issued an exemption under this section shall file an annual request to continue the exemption. The agency shall grant the request if the applicant continues to meet the criteria. If a corporate owner fails to meet the criteria, the director shall withdraw the exemption, and the corporate owner is subject to enforcement proceedings under this section. In making determinations, the director shall consider available records for licensure under chapter 237.

(e) The director shall submit a report with a list of each corporate owner that is issued an exemption under this section to the legislature no later than twenty days prior to the convening of each regular session.

(f) If the attorney general or a local government has reason to believe that a corporate owner has violated this section, or has taken substantial steps to purchase real property with the intent to rent that property in violation of this section, then the attorney general shall commence an action in the district court in which any real property related to the violation is situated.

(g) Beginning five years after the effective date of this Act, an owner or corporate owner that rents a single-family home in excess of the ownership limits established under this section shall be subject to a civil penalty to be assessed as follows:

(1) One per cent of the property's assessed value for the first year of noncompliance;

(2) Two per cent of the property's assessed value for the second year of noncompliance;

(3) Three per cent of the property's assessed value for the third year of noncompliance; and

(4) Each single-family home in excess of the ownership limits established under this section shall be considered a separate violation.

Provided that, no civil penalty shall be imposed unless the owner has received written notice of noncompliance and has been provided not less than twelve months to cure the violation.

(h) The civil penalty imposed under this section shall not be considered an operating expense and shall not be passed through to a tenant, whether directly or indirectly, including through rent increases, fees, or other charges.

(1) Any rent increase imposed within twelve months following the imposition off a surcharge under this subsection shall be presumed to be an unlawful pass-through unless the owner demonstrates by clear and convincing evidence that the increase was unrelated to the civil penalty.

(i) Nothing in this section shall be construed to require the sale of property at below-market value or to prohibit owner-occupancy of a single-family home.

(j) Revenues collected pursuant to this subsection shall be deposited into the affordable homeownership revolving fund.

(k) The attorney general, shall adopt rules pursuant to chapter 91 to administer and enforce this section.

For the purposes of this section:

"Charitable, religious, or nonprofit organization" means any organization which was organized and is operating in the State for charitable or religious purposes or to promote social welfare, which is exempt from income taxation under chapter 235.

"Corporate owner" means any person, partnership, company, corporation, or organization. Corporate owner does not include an individual who is a natural person, a married couple, or a trust for the benefit of a natural person, married couple, or a trust where the majority of the beneficiaries are related by law.

"Property interest" means any legal, equitable, or beneficial ownership interest, whether held directly or indirectly, including through partnership, limited liability company, trust, or other entity under common ownership or control.

"Residential tenant" means a person who is occupying a dwelling in a residential building under a lease or contract, whether oral or written, that requires the payment of money or exchange of services, or all other regular occupants of that dwelling unit.

"Single-family home" is a single home including a unit of a condominium as defined by section 514B-3."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2351
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII