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As we settle into the first quarter of 2026, the “post-pandemic boom” is officially over. We have entered a new phase of the Hawaii housing market: The Era of Regulation.
While market rents have stabilized on Oahu and the Big Island, the real action is happening in the legislature. With the introduction of Senate Bill 2539 (the “3% Rent Cap”), landlords are facing the most significant regulatory threat in decades. Meanwhile, on Maui, the phase-out of short-term rentals is reshaping inventory in ways we are just beginning to see.
At HAPI, we monitor these trends daily so you don’t have to. Here is our forecast for what landlords and tenants need to know for the rest of 2026.
Trend #1: The “Rent Stabilization” Bill (SB2539)
The elephant in the room.
On January 23, 2026, the Hawaii State Legislature introduced SB 2539 (and its companion HB 2105). If passed, this bill would impose a statewide 3% annual cap on rent increases for most residential properties.
What This Means for Owners:
- The Risk: If you are currently renting your unit significantly below market rate, you could be “trapped” at that low rate forever. For example, if your unit rents for $1,500 but the market is $2,000, it would take you years of 3% increases to catch up.
- The Strategy: Owners must ensure their current rents are close to market value before any potential law takes effect later this year.
- The Exemption: Affordable Housing (LIHTC) and Section 8 properties are typically exempt because their rents are already regulated by federal formulas.
Trend #2: Military BAH Increases
A stable anchor in a shifting market.
The Department of Defense released the 2026 Basic Allowance for Housing (BAH) rates, which took effect January 1st. On Oahu, rates increased by approximately 4.4% across the board. This is excellent news for landlords who target military renters, as it provides a higher ceiling for guaranteed rent.
2026 BAH Rates (Honolulu County – With Dependents):
- E-5 (Sergeant): ~$3,663 / month
- E-6 (Staff Sergeant): ~$3,912 / month
- O-3 (Captain): ~$4,428 / month
Insight: If your 3-bedroom rental in Ewa Beach is priced just above these thresholds (e.g., $4,000), you are missing out on the massive E-6 market. Adjusting your rent down slightly to match the **$3,912 cap** can often reduce your vacancy time to zero.
Trend #3: The Maui “Short-Term” Reckoning
The Minatoya List fallout.
On Maui, the long-awaited phase-out of short-term rentals (STRs) in apartment districts (the so-called “Minatoya List”) is creating a complex market dynamic in 2026.
- The Shift: As thousands of units face the deadline to cease vacation operations, we are seeing a “fork in the road.” Some owners are panic-selling, while others are converting to long-term rentals.
- The Result: We are seeing a slight increase in long-term rental inventory in West Maui (Lahaina/Napili) and South Maui (Kihei). However, due to the Lahaina rebuilding delay, displacement remains high. Rents in West Maui remain 50-60% higher than pre-fire levels, creating an affordability crisis for service workers.
Trend #4: The “Turnkey” Tenant
Quality is the new currency.
In 2021, you could rent a unit with 1980s cabinets and torn screens for top dollar because desperate tenants had no choice. In 2026, that market has dried up. Tenants today—many of whom are remote workers or essential professionals—expect:
- High-Speed Internet: Fiber-ready (Hawaiian Telcom) is a must.
- Air Conditioning: With 2025 being one of the hottest years on record, “Split AC” is no longer a luxury; it is a requirement. Window units are often a dealbreaker.
- Pet-Friendly Policies: 70% of Hawaii renters have pets. A strict “No Pets” policy is the fastest way to increase your vacancy time.
2026 Legislative Bills to Track
Keep your eye on these active bills.
| Bill Number | Proposed Law | Impact on Landlords |
|---|---|---|
| SB 2539 | 3% Rent Cap | Would limit annual rent increases to 3% statewide. |
| HB 1800 | Eviction Cause | Would require “Good Cause” for lease non-renewals (effectively ending “no cause” lease terminations). |
| SB 3105 | GET Exemption | Proposals to exempt long-term rentals (12+ months) from GET to encourage housing supply. |
| Maui Bill 121 | STR Ban | Further restrictions on vacation rentals in residential zones. |
Frequently Asked Questions
Will rents go down in 2026?
Unlikely. While the rate of growth is slowing (we aren’t seeing the double-digit jumps of 2022), the high cost of insurance, property taxes, and maintenance prevents landlords from lowering rents significantly. Expect rents to remain flat or rise slightly (2-4%).
Is the 3% Rent Cap definitely happening?
Not yet. It is currently a bill, not a law. However, it has strong support from tenant advocacy groups and unions. HAPI is monitoring it closely. If it passes, it would likely take effect in late 2026 or early 2027.
How does the Maui STR ban affect Oahu?
It sets a precedent. Honolulu (Oahu) already has strict rules (Bill 41), but Maui’s aggressive moves are emboldening regulators on other islands to crack down on illegal Airbnbs. If you are running a vacation rental on Oahu without a Non-Conforming Use Certificate (NUC), the risk of enforcement fines ($10k/day) is higher than ever in 2026.
Why are maintenance costs so high right now?
Shipping costs. Matson and Young Brothers raised rates again in late 2025. This means every water heater, sheet of drywall, and appliance costs more to bring to the islands. Smart landlords are budgeting 10-15% of rental income for repairs this year.
Should I sell my rental property in 2026?
If you own an older condo with rising HOA fees and potential special assessments (common in aging Hawaii buildings), it might be time to evaluate your ROI. However, if you own a single-family home or a well-managed townhome, holding is usually the best long-term play in Hawaii’s land-constrained market.
What is the "Good Cause" eviction bill?
HB 1800 proposes that a landlord cannot simply choose not to renew a lease. You would need a specific legal reason (like non-payment, lease violation, or moving family in) to ask a tenant to leave. This would essentially make all leases “perpetual” unless the tenant messes up.
Navigating the “New Normal”
The days of “easy” landlording are gone. Between the 3% rent cap threat and complex military rules, you need a professional partner. Contact HAPI to ensure your property remains profitable and compliant in 2026.
