If enacted, HB 1772 would result in the introduction of a surcharge on the conveyance tax for properties that remain vacant beyond a set period. This measure is intended to discourage owners from holding onto properties as merely investment assets rather than making them available for rental, thus increasing the local housing supply. The bill draws lessons from similar initiatives in other locations, such as Vancouver, where an empty homes tax has shown both revenue generation and a reduction in property vacancy rates.
House Bill 1772 aims to address the issue of vacant properties in Hawaii, which adversely affects the state's housing supply by removing units from the local market. The bill is a response to the rising trend of foreign investment in high-end properties, contributing to a significant number of homes that are purchased as investment properties but left unoccupied. The bill proposes the implementation of a conveyance tax surcharge on properties classified as ‘prolonged vacant’ to deter this practice, underlining the need for reforms in the housing market to better serve residents in Hawaii.
The bill faces potential contention primarily around its effectiveness and implications for property rights. Critics of similar proposals have raised concerns that property owners could opt to pay the tax rather than lease their units, leaving the overall availability of rental properties unchanged. The legislature anticipates that a steeper tax might be necessary to compel more owners to either rent their properties or remove them from speculation, raising questions about the extent to which taxation can reshape market behaviors without infringing on ownership rights. Overall, debates surrounding HB 1772 hinge on balancing the need for housing availability against property owners' economic interests and investment freedom.