SB 2071: HHFDC; Housing; Rent-to-Own Program; Fee Simple; Leasehold; Option Period

A BILL FOR AN ACT

RELATING TO HOUSING.

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

     SECTION 1.  Section 201H-181, Hawaii Revised Statutes, is amended by amending its title and subsections (a) and (b) to read as follows:

     "[[]§201H-181[]]  Rent-to-own program.  (a)  The corporation may establish a rent-to-own program under which dwelling units that are for sale:

     (1)  In fee simple; or

     (2)  Leasehold on non-ceded state or county land under a lease having an initial term of not less than ninety-nine years,

may be rented to program participants.  Under this program, the corporation shall credit a portion of the rent received toward the purchase of the unit.

     (b)  The sales price shall be established at the beginning of the rental term and shall remain fixed [for the first five years after the rental agreement is executed.] during the option period established by the corporation.  During this period, the participant shall have the option of purchasing the unit at the designated sales price.  If the participant does not elect to purchase the unit within the [five-year] option period, the renter shall forfeit the right to continue living in the unit and the unit shall be made available to another purchaser or renter."

     SECTION 2.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2050.

Report Title:

HHFDC; Housing; Rent-to-Own Program; Fee Simple; Leasehold; Option Period

Description:

Clarifies that the dwelling units eligible for the Rent-to-Own Program shall be units that are for sale in fee simple or leasehold on non-ceded state or county land under a lease with an initial term of not less than 99 years.  Replaces the five-year period during which the sales price of a rent-to-own dwelling unit shall remain fixed with an option period established by the Hawaii Housing Finance and Development Corporation.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO HOUSING.

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

     SECTION 1.  Section 201H-181, Hawaii Revised Statutes, is amended by amending its title and by amending subsections (a) and (b) to read as follows:

     "[[]§201H-181[]]  Rent-to-own program.  (a)  The corporation may establish a rent-to-own program under which dwelling units that are for sale:

     (1)  In fee simple; or

     (2)  Leasehold on state or county land under a lease having an initial term of not less than ninety-nine years,

may be rented to program participants.  Under this program, the corporation shall credit a portion of the rent received toward the purchase of the unit.

     (b)  The sales price shall be established at the beginning of the rental term and shall remain fixed for the first [five] ten years after the rental agreement is executed.  During this period, the participant shall have the option of purchasing the unit at the designated sales price.  If the participant does not elect to purchase the unit within the [five-year] ten-year period, the renter shall forfeit the right to continue living in the unit and the unit shall be made available to another purchaser or renter."

     SECTION 2.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2050.

Report Title:

Housing; Rent-to-Own Program; Fee Simple; Leasehold

Description:

Clarifies that the dwelling units eligible for the Rent-to-Own Program shall be units that are for sale in fee simple or leasehold on state or county land under a lease with an initial term of not less than 99 years.  Increases the time period that the sales price of the dwelling units under the Rent-to Own Program shall remain fixed from 5 years to 10 years after the rental agreement is executed.  Effective 7/1/2050.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2282

Honolulu, Hawaii

RE:     S.B. No. 2071

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committees on Housing and Commerce and Consumer Protection, to which was referred S.B. No. 2071 entitled:

"A BILL FOR AN ACT RELATING TO HOUSING,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Clarify that the dwelling units eligible for the Rent‑to-Own Program shall be units that are for sale in fee simple or leasehold on state or county land under a lease with an initial term of not less than ninety-nine years; and

     (2)  Increase the time period that the sales price of the dwelling units under the Rent-to-Own Program shall remain fixed from five years to ten years after the rental agreement is executed.

     Your Committees received testimony in support of this measure from the Hawaii Housing Finance and Development Corporation and Hawaiʻi Association of REALTORS.

     Your Committees received testimony in opposition to this measure from the Sierra Club of Hawaiʻi and three individuals.

     Your Committees find that many residents of the State are unable to afford to own a home.  The Rent-to-Own Program facilitates homeownership for program participants by crediting a portion of the rent paid on a unit toward the sale price of the unit, which is fixed at the time the rental agreement is executed.  Currently, if a renter does not purchase the unit at the designated sale price within five years of the rental agreement, the unit is made available to another purchaser or renter.  This measure clarifies that dwelling units eligible for the program include units for sale in fee simple or leasehold on state or county lands and extends the rental period from five years to ten years to provide greater stability and time to financially prepare for homeownership.

     Your Committees further find, however, that this measure in its current form does not allow the Hawaii Housing Finance and Development Corporation sufficient flexibility in administering the Rent-to-Own Program and may delay the path to homeownership.  Therefore, amendments to this measure are necessary to clarify that only non-ceded state and county lands will be eligible for leasehold sale under the Rent-to-Own Program.

     Accordingly, your Committees have amended this measure by:

     (1)  Clarifying that only leasehold dwelling units on non‑ceded state or county lands are eligible under the Rent-to-Own Program;

     (2)  Deleting language that would have established a ten-year period during which the sales price of a rent-to-own dwelling unit shall remain fixed and inserting an option period to be established by the Hawaii Housing Finance and Development Corporation; and

     (3)  Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Housing and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2071, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2071, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Housing and Commerce and Consumer Protection,