THE SENATE

S.B. NO.

1113

THIRTY-SECOND LEGISLATURE, 2023

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to rent control.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that Hawaii's lack of rental unit supply leads to higher rents for households of all income levels, leaving tenants with less disposable income, increasing the personal stress of tenants, reducing tenant quality of life, and exacerbating the population overcrowding and homelessness problems. The need for affordable rental units is particularly acute for households with low incomes.

The legislature finds that there is an urgent need to stabilize rent prices and reduce the displacement of tenants to prevent the predatory business practice of requiring a tenant to "pay more or leave", particularly when there is a dire housing shortage in the State and the tenant may have nowhere else to go.

Accordingly, the purpose of this Act is to:

(1) Prohibit a landlord from increasing a tenant's rent more than five per cent, plus the percentage change in the cost of living during the previous twelve months;

(2) Prohibit a landlord from increasing a tenant's rent more than once over a twelve-month period;

(3) Require a landlord to provide a tenant with sixty days' notice before increasing the tenant's rent; and

(4) Require a landlord to provide a tenant with ninety days' notice before terminating the lease, for tenancies of month-to-month or longer.

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

"Part     . Rent control

521-A Rent increase; restrictions. (a) A landlord of a dwelling unit shall not, over the course of any twelve-month period, increase the gross rental rate for a dwelling unit more than five per cent plus the percentage change in the cost of living, of the lowest gross rental rate charged for that dwelling unit at any time during the twelve months prior to the effective date of the increase. In determining the lowest gross rental rate for purposes of this section, any rent discounts, incentives, concessions, or credits offered by the landlord of the dwelling unit and accepted by the tenant shall be excluded. The monthly gross rental rate and any landlord-offered discounts, incentives, concessions, or credits shall be separately listed and identified in the lease or rental agreement or any amendments to an existing lease or rental agreement.

(b) The gross rental rate for the dwelling unit shall not be increased more than once over any twelve-month period where the same tenant remains in occupancy of a dwelling unit subject to other restrictions of this section governing rental rate increases.

(c) Subsection (a) shall apply only to subsequent increases after the initial rental rate has been established. For a new tenancy in which no tenant from the prior tenancy remains in lawful possession of the dwelling unit, the landlord may establish the initial rental rate not subject to subsection (a).

(d) For purposes of this section, "percentage change in the cost of living" means the percentage change from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for all urban consumers of the region where the dwelling unit is located, as published by the United States Bureau of Labor Statistics.

521-B Exclusions from application of part. This part shall not apply to:

(1) Housing restricted by deed, regulator restriction contained in an agreement with a government agency, or other recorded document as affordable housing for an individual or family of very low, low, or moderate income or subject to an agreement that provides housing subsidies for affordable housing for an individual or family of very low, low, or moderate income;

(2) Housing subject to rent or price control through a public entity's valid exercise of its police power that restricts annual increases in the rental rate to an amount less than provided pursuant to section 521‑A;

(3) Housing that has been issued a certificate of occupancy within the previous fifteen years; and

(4) A dwelling unit that is alienable separate from the title to any other dwelling unit; provided that:

(A) The landlord is not:

(i) A real estate investment trust, as defined in section 856 of the Internal Revenue Code of 1986, as amended;

(ii) A corporation; or

(iii) A limited liability company in which at least one member is a corporation; and

(B) The tenants have been provided written notice that the dwelling unit is exempt from the provisions of this part and containing the following language: "This property is not subject to the rent limits imposed by section 521-A, Hawaii Revised Statutes. This property meets the requirements of section 521-B(4), Hawaii Revised Statutes, and the landlord is not any of the following: a real estate investment trust, as defined by section 856 of the Internal Revenue Code; a corporation; or a limited liability company in which at least one member is a corporation.". For a tenancy existing before July 1, 2023, the noticed required under this subparagraph may be provided in the rental agreement. For a tenancy commenced or renewed on or after July 1, 2023, the noticed required under this subparagraph shall be provided in the rental agreement.

521-C Application of part. (a) This part shall apply to all rent increases subject to section 521-A occurring on or after July 1, 2023. If a landlord has increased the rent by more than the amount permissible under section 521-A between July 1, 2022, and July 1, 2023, the following shall apply:

(1) The applicable rent on July 1, 2023, shall be the rent as of July 1, 2022, plus the maximum permissible increase under section 521-A; and

(2) A landlord shall not be liable to the tenant for any corresponding rent overpayment.

(b) A landlord of a dwelling unit subject to section 521-A who increased the rental rate on that dwelling unit on or after July 1, 2022, but prior to July 1, 2023, by an amount less than the rental rate increase permitted under section 521-A shall be allowed to increase the rental rate twice, notwithstanding section 521-A(b), within twelve months of July 1, 2023; provided that the rental rate increase shall not exceed the maximum gross rental rate increase allowed under section 521-A.

521-D Notice of increase. A landlord shall not increase a tenant's gross rental rate without written notice given sixty consecutive days prior to the effective date of the increase.

521-E Waiver of rights. Any waiver of the rights under this part shall be void as contrary to public policy.

521-F Miscellaneous provisions. (a) This part is not intended to expand or limit the authority of counties to establish ordinances regulating rents.

(b) Nothing in this part shall authorize a county to establish limitations on any rental rate increases not otherwise permissible by law or adopt or maintain rent controls or price controls not consistent with this part."

SECTION 3. Section 521-71, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) When the tenancy is month-to-month[,] or longer, the landlord may terminate the rental agreement by notifying the tenant, in writing, at least [forty-five] ninety days in advance of the anticipated termination. When the landlord provides notification of termination, the tenant may vacate at any time within the last [forty-five] ninety days of the period between the notification and the termination date, but the tenant shall notify the landlord of the date the tenant will vacate the dwelling unit and shall pay a prorated rent for that period of occupation."

SECTION 4. The office of consumer protection shall submit an interim report of the effectiveness of this Act to the legislature on or before January 1, 2026, and a final report no later than twenty days prior to the convening of the regular session of 2032. The report shall include but not be limited to the impact of the rental rate cap pursuant to section 521-A, Hawaii Revised Statutes, on the housing market within the State.

SECTION 5. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. This Act shall take effect on July 1, 2023.

 

INTRODUCED BY:

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Report Title:

Residential Landlord-Tenant Code; Rent Restrictions; Rent Control; Office of Consumer Protection

 

Description:

Prohibits a landlord from increasing a tenant's rent more than five per cent plus the percentage change in the cost of living during the previous twelve months. Prohibits a landlord from increasing a tenant's rent more than once over a twelve-month period. Requires a landlord to provide a tenant with sixty days' notice before increasing the tenant's rent. Requires a landlord to provide a tenant with ninety days' notice before terminating the lease, for tenancies of month-to-month or longer. Requires the Office of Consumer Protection to submit reports to the Legislature.

 

 

 

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