For years, short-term rentals in San Francisco were illegal, even if that wasn’t always aggressively enforced. But the past few years have reshaped the city’s vacation rental market: They became legal in 2014, the Office of Short-term Rentals opened in 2015, and—after new regulations were passed in 2017—a crackdown on illegal rentals cut the number of listings by more than half.

 

The short-term rental market has since been relatively stable, with the San Francisco Chronicle reporting that inventory has held between 3,600 and 3,700 during the past two years. If managing a vacation rental in San Francisco is an opportunity you’re considering, there are some rules and requirements you need to know. Here’s an overview.

San Francisco favors hosted rentals

One critical point is that any short-term rental property must be the primary residence of the owner or tenant who lives there - and they need to have lived there for at least 60 days before the application process can be started. And even then, you could face restrictions:

  • If the property is vacant when rented, it’s considered an unhosted rental and limited to 90 nights per year. Otherwise, the owner or tenant must live there for a minimum 275 nights per year.
  • If the primary resident is home, it’s considered a hosted rental, which doesn’t have the same restrictions. Bedrooms can generally be listed and rented separately.

If you’re confident you can meet the residency requirements, you can move onto the next two steps: register the vacation rental as a business, then register the property as a short-term rental.

Step 1: Register as a business

Every business needs to register with the Office of the Treasurer and Tax Collector and get a business certificate. This certificate then needs to be renewed on an annual basis (due May 31).

Beyond the residency rules outlined above, you also need to meet a number of other rules and regulations. For example:

  • Rentals aren’t allowed in a few neighborhoods: the Presidio, Fort Mason, or Treasure Island
  • The unit must be in a residential building that meets any relevant City codes.
  • You need to have Property Liability Insurance of at least $500,000—a requirement that may be waived if you use a site like Airbnb, which automatically includes some coverage.

Once you’ve registered and have a Business Account Number (BAN) in hand - which should be free for short-term rentals - you can submit your vacation rental application.

Step 2: Apply to be a short-term rental

Be sure you can check off all the necessary requirements before you submit an application to the Office of Short-term Rentals: San Francisco charges a non-refundable $250 application fee. Once approved, the certificate is good for two years.

During that time, your vacation rental needs to stay compliant. This means sticking to the above requirements as well as:

  • Paying the 14% Transient Occupancy Tax (TOT). This tax applies to any income earned from rentals of fewer than 30 days, including any service fees you might charge. Some listing sites, referred to as Qualified Website Companies, will collect and submit tax filings on your behalf.
  • Quarterly reporting of short-term stays. Four times a year, you’re responsible for reporting how many hosted and unhosted stays you’ve had - even if you haven’t had any.

Sticking to the rules and regulations is a fairly straightforward process, and if you have any questions the city has made it easy to find the answers.

Where to find more information

To register or get more information, call 311 or check out:

The Office of Short-term Rentals also regularly hosts information meetings, an opportunity for people in the community to ask questions, submit an application, or register complaints. You can find more information about these meetings and other events on their website.

 

The information above is intended for informational purposes only; it is not legal advice and should not be relied upon as such. If you need legal advice, you should consult a licensed attorney in your area.