The legislation is expected to have a significant effect on state laws by amending the Hawaii Revised Statutes regarding conveyance tax. By imposing a tax on vacant properties, the bill is intended to generate additional revenue for the state while simultaneously encouraging property owners to either occupy their properties or rent them out. This could lead to a decrease in the overall vacancy rates in the state, which are among the highest in the nation, particularly in areas like Honolulu, where the long-term vacancy rate stands at 5.3%.
Summary
House Bill 440 aims to address the issue of prolonged vacant properties in Hawaii, which have been negatively impacting the housing supply. The bill proposes a conveyance tax vacancy surcharge on properties that have been vacant for an extended period, specifically 180 days or more within a calendar year. The surcharge is set at 1% of the total consideration for the transfer of the property. This initiative seeks to reduce the number of empty properties that sit idle, discouraging out-of-state investors from speculating on real estate without contributing to local rentals.
Contention
Notably, there are potential points of contention surrounding the bill. Critics may argue that such a tax could disproportionately affect property owners who are unable to rent their homes due to various factors, including market conditions or personal circumstances. Additionally, the efficacy of the tax in actually encouraging the conversion of vacant properties into rental units is debated, as evidenced by similar measures taken in Vancouver, where some owners opted to pay the tax rather than lease their properties. This raises questions about whether the proposed surcharge will have the intended effect of increasing the local housing supply.