Frequently Asked Questions
Why an Empty Homes Tax?
More than 58,000 homes — nearly 1 in 7 — are vacant in San Francisco, a city with a long-standing housing affordability crisis, where 8,000 people are living on the streets. Between 2015 and 2019, the rate of vacant residential housing has increased by 20%, according to a Budget and Legislative Analyst report.
The fastest growing category of vacant units is units purchased but never occupied, including investor-owned properties.
The Empty Homes Tax will tax owners of buildings of three units or more, where a residential unit has been vacant for more than six months in a given year. The tax rate is higher for larger units, and it increases the longer a home is kept vacant.
The Empty Homes Tax is modeled after a residential vacancy tax passed in Vancouver in 2016, which is credited with bringing more than 18,000 units online since it went into effect. If San Francisco were to adopt a tax based on the Vancouver model, the city is estimated to see an activation of around 4,500 units within two years. In addition, the tax is projected to raise $38 million annually.
Where will the funds from the tax go?
Prop M is expected to raise an estimated $38 million by the San Francisco Budget and Legislative Analyst. Revenue from the measure is dedicated to homelessness prevention and the acquisition of vacant units.
Half of the funds will be allocated to rental subsidies for seniors and low-income families, a key strategy in preventing homelessness. Right now, over 5000 seniors pay 70% or more of their income towards rent and seniors are the fastest growing homeless group in the city.
The other half will be dedicated to a new program for the city to acquire and rehabilitate vacant buildings, and convert them into permanently affordable housing.
Since Prop M was put on the ballot by signatures, all the money will go towards their intended purpose.
Why does the proposed measure carve out single family homes and duplexes?
The primary purpose of the Empty Homes Tax is to address the practice of speculators and institutional investors using housing in San Francisco as mere vehicles for maximizing profits, rather than places where people can live. They do this by buying properties, holding them vacant, and eventually re-selling.
In many cities in California, we have seen institutional investors target and buy up large numbers of single family homes — but that really hasn’t been the case here.
In San Francisco, the phenomenon of investors/speculators buying and holding units off the market has almost exclusively occurred in larger, multi-unit properties.
This measure seeks to incentivize those investors to get their units online, or pay their fair share, and not to create an overly-broad measure — hence the limit that the tax only applies to buildings of three-units or more.
How will the measure be enforced?
Under the proposal, owners of property in San Francisco would be required to file annually regarding residential vacancies, and declare that their units were either occupied for more than six months in a given year, or that they qualify for one of the exemptions.
The Treasurer and Tax Collector will be in charge of auditing and enforcing the measure, and ensuring that bad actors are held to account.
The Rental Registry, which is being phased in over the next two years, will assist the city in tracking vacant rental units.