Short-term residential rental regulations in San Francisco are intended to protect the City’s housing supply for long-term residents and preserve neighborhood character by limiting the type of units and length of time a unit can be rented for short-term use by tourists.
Background
What are Short-Term Rental Regulations?
Under San Francisco Administrative Code Chapter 41A, a short-term residential rental is a rental of all or a portion of a home for periods of less than 30 nights. A permanent resident may offer their primary residence as a short-term residential rental if:
- The resident occupies the eligible residential unit for no less than 275 days out of the calendar year,
- Registers with the Office of Short-Term Rentals (OSTR),
- Maintains records of compliance for two years,
- Complies with all provisions of law and code,
- Maintains liability insurance,
- Complies with rent stabilization provisions, and,
- The unit is not subject to Building, Fire, Housing, or Planning Code Enforcement.
Dedicated affordable housing units, including below market rate (BMR) units; as well as student dormitories, and those residential units approved as Accessory Dwelling Units (ADUs), are ineligible to register for short-term rental use. In addition, if a property features multiple residential units, short-term rentals may only be hosted in the same residential unit where a host also resides at least 275 nights per year.
The City’s registration system is tied to both the individual residential unit and the current host (whether the property owner or a long-term tenant), which allows hosts to use short-term rental websites and to register their rentals with a business license and a short-term rental application with a fee of $250 (for a two-year certificate period).
An eligible short-term rental host may offer/host up to 90 cumulative nights of un-hosted (where the host is not also present overnight) of short-term rentals per calendar year. While there is no limit on the number of nights a host may offer “hosted” short-term rentals (where the host is also present overnight in the same residential unit), a host may not offer more than five simultaneous short-term rentals at the same time (e.g. no more than five different bedrooms being rented as private room offerings to five different tourist couples at the same time).
Why are Short-Term Rental Regulations Important?
Unregulated short-term rental activity can result in residential units being converted to de facto year-round tourist use. This can lead to the loss of long-term housing availability and issues such as:
Recorded and un-recorded owner move-in evictions, where a long-term tenant vacates the unit (including through a payout in lieu of legal action) and the owner sometimes fails to move their family members into the unit and subsequently operates the unit as a de facto tourist hotel.
Instances where a long-term tenant moves out of a unit on their own accord, and the owner then operates the unit as a de facto tourist hotel.
The development of one or more illegal living spaces for use as tourist rentals at both residential (e.g. garage or shed conversions with unpermitted kitchens and living spaces) and commercial or industrial properties.
Persons or groups of persons renting up to twenty different homes or apartments at the same time, often without permission of the property owner, to operate de facto tourist hotels at locations that generally were previously offered as long-term rental housing.
Prior to 2014, all short-term rentals were prohibited by the City’s Planning Code. However, the City was continuing to experience a sharp growth in illegal short-term rental activity. In February 2015, the City began registration of short-term residential rentals, allowing for limited short-term rental activity, for hosts who were permanent residents of the eligible residential unit. However, compliance was very limited, and the City continued to conduct enforcement primarily on an individual property basis, with limited impact on reducing the overall number of illegal short-term rentals.
The City later amended the short-term rental rules in 2016, to require hosting platforms to remove illegal listings that were involved in the operation of unpermitted short-term rentals. Those rules were challenged in Federal court, and a settlement agreement took effect in 2017 that resulted in the removal of many illegal listings. This included the removal of a significant number of listings that represented full-time and part-time tourist use of rent-stabilized apartments, affordable housing locations, commercial/industrial properties, and high-volume operators in single-family homes. The implementation of the settlement agreement also resulted in a surge of applications to legally host short-term rentals, as hosts found most of their short-term rental revenue curtailed due to de-listing of online offerings for short-term rental activity.
Prior to the settlement agreement that went into effect in 2017, short-term rental platforms were not obligated to ensure that listings were legal and properly vetted. After the settlement agreement went into effect, the City implemented an online registration system to require hosts to register their short-term rentals. The implementation of the agreement gives the City the ability to require hosting platforms to remove listings and cancel pending reservations for individual applications that have been denied. The settlement agreement allows the City to subpoena a short-term rental platform for more information about a host and the use of the host’s rental if necessary.
Issues with Regulating Short-Term Rentals
The existing legislation limits OSTR’s flexibility in its approach and operations. Any suggested changes to the existing legislation may trigger a new legal process.
The primary challenge OSTR staff encounters are the overall volume of pending short-term rental applications (over 1,000 pending applications as of fall 2019). As the 2017 settlement agreement allows hosts to offer short-term rentals while an application is pending, this results in a few hundred residential units being used as de facto tourist units, and typically represents a loss of long-term housing availability.
A smaller portion of applications are denied due to the unresolved building and planning code complaints (including overcrowding issues with six to sixteen bunk bed hostel operations), the use of unpermitted commercial or industrial spaces; and the use of affordable housing units and Accessory Dwelling Units that are not eligible for registration.
The City’s short-term rental law does not allow OSTR staff to deny a registration due to a prior owner move-in eviction; and the City’s ability to deny an application based on a prior Ellis Act eviction (a provision of the City’s short-term rental law) is currently under separate legal challenge.
The Rent Board has the most accurate data on whether a unit is rent stabilized or not. If a registrant does have a rent-stabilized unit, it is still difficult to confirm whether profits made from short term rentals do not exceed the rental amount as regulated by the rent-control ordinance.
The largest percentage of all registered STRs lie in areas where most households are moderate- to high-income. Census tracts with a higher number of STRs also have a more frequent occurrence of owner-move in (OMI) evictions. No regulations exist for listing a unit as a short-term rental if a non-Ellis Act eviction has taken place at the property in the past. OSTR staff have observed illegal short-term rental activity involving false assertions of residency by property owners at properties where there was no reported OMI eviction, but a prior long-term tenant was either paid a small sum of money to vacate, or the tenant felt they had little recourse to challenge the threat of eviction.
Issue at a Glance
In November 2018, City Attorneys secured $2.25 million in penalties and investigation costs from two property owners who illegally rented out 14 apartments on a short-term rental listing website. The case was initially brought to the City’s attention when, in 2014, the same property owners evicted tenants from their property and then converted the units into short-term rentals. The City had prohibited them from maintaining their properties as short-term rentals. Although none of the units were registered with the OSTR, which is another violation, City investigators found that all the units were listed on the short-term rental website for two years.
Read more »Key Trends
As of fall 2019, there are 2,450 approved short-term rental certificates, with each certificate tied to an individual host and individual residential unit.1
Since February 2015, 3,832 certificates were issued,
with a portion of those certificates either subject to expiration (certificates are valid for two years), revocation (typically due to the host not being present at least 275 nights per year), suspension (typically due to building or planning code complaints for illegal construction), and hosts discontinuing short-term rental activity.
Approximately 30 percent of short-term rental applications are denied
because it does not appear the host resides in the residential unit for at least 275 nights per year (with the unit often being used as a near full time tourist hotel).
The bulk of short-term rental activity continues to appear organized through online listing platforms,
with a fraction of short-term rentals arranged through offline means.
As applications to host short-term rentals are denied, OSTR identified a pattern where those units eventually tend to be returned to the long-term rental market, or the property is put up for sale.
Neighborhoods such as Mission, Bernal Heights, Castro/Upper Market, and Noe Valley contain the highest concentration of registered short-term rentals
with the Mission containing 13 percent of the total rentals.
The number of both short-term rentals and owner move-in eviction notices are most frequent in the Bernal Heights, Glen Park, Inner and Outer Mission, Bayview, and Castro/Upper Market neighborhoods.
Nearly half (49 percent) of the registered short-term rentals are in census tracts that are predominantly moderate- to high-income.
Another quarter (26 percent) are in census tracts that are predominantly low-income.
For Future Consideration
The ideas for future consideration that have the potential to increase community stability in San Francisco are described below. They provide a starting point for agencies, decision-makers, and community members to explore stabilization efforts and identify critical pathways forward. Based on preliminary information, staff is qualifying these ideas according to the type of task, scale of resources and level of complexity to underscore that any of these ideas would require time and additional resources not currently identified. These are not City commitments or recommendations, rather informed ideas that will require careful vetting and analysis as to their reach, resource needs, feasibility, unintended consequences, legal implications, and racial and social equity considerations.
Assessment of existing legislation effectiveness
As the program progresses, continue to research and monitor the effectiveness of existing legislation. OSTR could conduct an internal audit or use the Controller’s office’s auditing services to ensure that the existing legislation remains effective as time goes on and new services and/or platforms are being created for the short-term rental mark.
| Type of Response | Mitigation |
|---|---|
| Type of Task | Policy Implementation, Data
|
| Resource | Generally only staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Office of Short-Term Rentals, Controller’s Office |
| Benefit | An understanding of legislation effectiveness and a framework to address possible enhancements to the process. |
| Challenge | Any potential revisions to the existing short-term rental law and/or Settlement Agreement could pose legal challenges. |
Housing inventory for all units in San Francisco
Additional information on this can be found in Rent Stabilization and Eviction Protections summary.
Owner Move In (OMI eviction restrictions on STRs
Preventing properties with an owner move-in eviction from listing the property as a short-term rental can ensure OMI2 is not being utilized to do short-term rentals. There seems to be a correlation between the prevalence of STRs and OMI evictions in the same census tract.
| Type of Response | Mitigation |
|---|---|
| Type of Task | Regulation
|
| Resource | Generally only staff time would be required
|
| Complexity | Medium – generally some legislation and/or some change of and existing program, and two to three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Office of Short-Term Rentals, Rent Board |
| Benefit | Restricting units that have exercised an OMI eviction from being able to list the unit as an STR could reduce the incentive for property owners to initiate an OMI for this purpose. |
| Challenge | Altering qualifications for short term rentals would require adjusting existing legislation and may be subject to legal challenge. |
Research on the impact of STRs on commercial businesses
A localized study could be conducted to explore the impact of STRs on existing hotels, motels, and bed and breakfasts, and whether any measures could be considered in stabilizing existing commercial businesses. Such an analysis could also consider whether higher concentrations of STR activity in a given neighborhood results in a corresponding reduction of commercial business activity for neighborhood-serving retailers and service professionals that are typically patronized primarily by long-term residents as compared to tourists. Examples of such could include dry cleaners, tutoring centers, and retailers offering goods typically associated with long-term residency (e.g. local hardware store).
| Type of Response | Mitigation, Prevention |
|---|---|
| Type of Task | Data
|
| Resource | Generally only staff time would be required
|
| Complexity | Medium – generally some legislation and/or some change of and existing program, and two to three agencies involved
|
| Timing | Short Term: 1 year or under
|
| Geographic Scale | Citywide |
| Partners | Office of Short-Term Rentals, Office of Economic and Workforce Development (OEWD) |
| Benefit | Analysis on how STRs affect existing hospitality-related businesses could help the City assess economic impacts, including, but not limited to, potential retail or commercial displacement. |
| Challenge | Requires additional resources and/or funding for a study. |
Vacancy fee on unoccupied rent-stabilized units
Additional information on this can be found in Rent Stabilization and Eviction Protections summary.
Outreach to low-income neighborhoods with high ownership rates
Outreach about STR opportunities and regulations could be conducted in neighborhoods that are predominantly low-income and have high home ownership rates such as: Ocean View, Outer Sunset, Parkside, Outer Mission, Excelsior, Bayview, and Visitacion Valley, among others.3
| Type of Response | Mitigation |
|---|---|
| Type of Task | Service
|
| Resource | Generally only staff time would be required
|
| Complexity | Less Complex – generally no or limited legislation and/or an existing program, and one agency involved
|
| Timing | Short Term: 1 year or under
|
| Geographic Scale | Predominantly low-income neighborhoods with high ownership rates |
| Partners | Office of Short-Term Rentals, community partners |
| Benefit | Information opportunities could be targeted to educate low-income homeowners about the legal opportunities to earn income by hosting a STR, and to educate residents about their ability to challenge illegal short-term rental activity (e.g. rentals where the host does not reside on-site, or rentals where the activity is taking place in unpermitted and/or unsafe spaces). |
| Challenge | Requires funding and resources. May have limited impact as compared to the gains in returning housing to the long-term market by focusing staff resources on false attestations of residency for pending applications. |
The Office of Short-Term Rentals
Visit Site »FOOTNOTES:
1. A certificate may be associated with one or more online listings given the use of both competing short-term rental websites and variations of listing activity (e.g. multiple private room listings and a single whole-unit listing for the same home with varying availability throughout the year).
2. Owner Move-In evictions allow owners to evict the tenant for the owner to live in the unit as their principal place of residence. It is restricted to one OMI per building.
3. San Francisco Indicator Project. Proportion of Owner-Occupied Housing. 2010
