Executive Summary

The City & County of Honolulu, covering the entire island of Oʻahu, is facing a severe housing crisis—one that has grown worse, in part, because wealthy investors purchase homes as investment properties. By doing this, these investors leave homes empty instead of renting them out for people to live in. 

Across Honolulu, an estimated 35,000 units are currently sitting empty. Many of them have been vacant for long periods of time, and this restriction of available units has driven up prices and made it harder for local residents to find affordable rentals.

Rental prices in Honolulu have long been inflated. The median rent for a one-bedroom apartment in Honolulu in 2024 is $2,100, compared to $1,600 on average in the  entire U.S. More than eight in 10 renters in Honolulu spend at least 30 percent of their income on housing costs. This makes them “severely housing cost-burdened,” meaning they have limited money to pay for their other needs, like food and transportation.

The Honolulu City Council is considering Bill 46 (2024), which would impose an Empty Homes Tax (EHT) of 3 percent on properties that are vacant for more than 6 months each year (both non-owner-occupied and non-renter-occupied). If homes are occupied for 6 months, they would also have to be occupied in periods of at least 3 consecutive months. 

Currently, investment-owners who choose to turn their properties into vacation rentals—or keep them vacant for most of the year—do not have to pay an extra tax, even though they are driving up the value of real estate and taking units off the rental market. 

Honolulu already uses part of its property tax revenues to support long-term affordable housing. An EHT could provide the county with additional funding for the development of more affordable housing for local residents while discouraging investors from using Oʻahu’s housing supply as an investment alone. 

This brief helps inform the discussion around Bill 46 by presenting EHT best practices based on case studies of other cities with high-cost housing markets that have implemented their own EHTs. Based on this analysis, Hawaiʻi Appleseed recommends a flat tax of 3–5 percent on empty homes. This tax could generate revenues of $183.40 million–$305.67 million annually.

A well-crafted policy would also: 

• Require homeowners to make an annual declaration of occupancy status;

• Target homes not occupied for at least 6 months out of the year by Oʻahu residents; 

• Exclude homes that are rented out on a month-to-month basis;

• Exempt specific cases, such as new housing units, homes affected by medical issues or disasters, and properties used as long-term rentals; 

• Apply strict penalties for non-compliance; and

• Assign the Honolulu Department of Budget & Fiscal Services to manage the tax and revenue distribution to affordable housing projects and social services.