SB2539

SECTION 1. The legislature finds that Hawaii continues to face a severe housing shortage, and that rapidly rising rents have outpaced wage growth for residents. Rent stabilization is a recognized tool for reducing involuntary displacement and allowing moderate- and low-income households to remain in their communities without discouraging responsible property ownership or maintenance.

The legislature further finds that residential rental housing constitutes a significant portion of the State's housing stock. Rental households include a substantial number of families with children, kupuna, persons with disabilities, and essential workers. According to the department of business, economic development, and tourism, median rents in Hawaii increased by over forty per cent between 2019 and 2024, while median household incomes rose by less than twenty per cent during the same period.

The United States Census Bureau (American Community Survey 2024) reports that over forty per cent of Native Hawaiian households rent their homes and that more than half of these households spend thirty per cent or more of their income on rent, meeting the federal definition of cost burdened. Rent increases that significantly exceed wage growth contribute to housing insecurity, migration of working families to the continental United States, and increased homelessness.

Reasonable limitations on annual rent increases are consistent with the State's housing policy objectives under chapter 201H, Hawaii Revised Statutes, which seek to ensure affordable and stable housing for all residents while maintaining a healthy rental market. Other jurisdictions have successfully implemented rent stabilization frameworks, including California (Assembly Bill 1482 (2019) and Senate Bill 567 (2023)), Oregon (Senate Bills 608 (2019) and 611 (2023)), and Washington (House Bill 1217 (2025)), which cap annual rent increases at between five and ten per cent. These laws demonstrate that such policies can coexist with continued investment in new housing supply.

Given Hawaii's limited land availability, high construction costs, and geographic constraints, a more conservative three per cent annual cap is warranted to stabilize the rental market while allowing landlords to recoup reasonable costs. Establishing a statewide standard for rent stabilization within the landlord-tenant framework of chapter 521, Hawaii Revised Statutes, will provide clarity for both tenants and landlords and can be implemented without undue administrative burden.

Accordingly, the purpose of this Act is to amend the landlord-tenant code to establish a reasonable statewide limit on annual rent increases to promote housing stability and prevent price shocks that contribute to displacement and homelessness.

SECTION 2. Chapter 521, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§521- Annual limitation on rent increases. (a) No landlord shall increase the rent for any dwelling unit by more than three per cent in any twelve-month period.

(b) A landlord shall not impose any rent increase during the first twelve months immediately following the commencement of a tenancy.

(c) Any rent increase in violation of this section shall be void and unenforceable. A tenant may assert a violation of this section as a defense in any action for summary possession or other proceeding under this chapter.

(d) This section shall not apply to:

(1) The initial rental rate of a new tenancy; provided that the tenant was not a tenant in the same dwelling unit within the preceding twelve months;

(2) Dwelling units that are subject to rent restrictions pursuant to federal, state, or county affordable housing or subsidy programs; provided that the restrictions are equal to or more protective of the tenant;

(3) A dwelling unit located on the same parcel as an owner-occupied principal residence, where the owner is a natural person and rents no more than two dwelling units or bedrooms on that parcel; or

(4) Rental units located on a kuleana parcel, as evidenced by record title, when the parcel includes the owner's principal residence.

(e) Any landlord claiming an exemption under subsection (d) shall provide written notice of the exemption to both the tenant and the department of commerce and consumer affairs office of consumer protection, on a form prescribed by the department. The notice shall identify the specific exemption claimed and include documentation supporting eligibility. Failure to provide this notice shall render the exemption void and subject the landlord to this section.

(f) Any landlord who knowingly demands or retains rent in excess of the amount permitted under this section or falsely claims an exemption under subsection (d) shall be deemed to have committed an unfair or deceptive act or practice under
section 480-2.

(g) Any notice of rent increase issued pursuant to this section shall be in writing and shall state the amount of the existing rent, the amount of the proposed rent, the percentage increase, and the effective date of the increase."

SECTION 3. New statutory material is underscored.

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

INTRODUCED BY:	_____________________________
	By Request

THE SENATE	S.B. NO.	2539
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII