By Granite State Report
New Hampshire is at a housing inflection point. Costs are high, supply is tight, and the question is no longer whether affordable housing should be a priority — it’s how we meaningfully fund and scale it. One promising, though politically bold, tool: a vacancy tax on homes that sit idle for six months or more, with the proceeds earmarked for affordable-housing funds. Below I lay out the policy, the rationale, the risks, and how it could fit the Granite State.
Why this matters
Vacant homes and unrented rental units constitute wasted housing potential. The logic: if a structurally viable home is empty while families struggle to find housing, there’s a misalignment of resource and need. Other jurisdictions are already experimenting with “vacancy taxes” or “empty‐homes taxes” as part of broader housing strategies. New Hampshire’s property-tax system is locally administered; municipalities are versed in property valuations and tax collection. That means the state already has infrastructure to build on. It appeals to fairness: those holding homes off the market pay something; the revenue helps those locked out of the market.
The Proposed Policy
Here’s a draft framework. Consider it a working theory (because there will be trade-offs!) rather than a firm final version.
1. Scope & definition
Applies to residential properties (single-family homes, duplexes, small apartment buildings) within New Hampshire. A property becomes subject if unused — either vacant or unrented/unoccupied — for more than six consecutive months during a calendar year. “Vacant/unoccupied” means no registered primary occupant, not listed for rent/sale, and not legitimately unavailable (see exemptions below).
2. Tax rate & structure
For the first instance of vacancy beyond six months: surcharge of 1.0% of assessed value for that year. If vacancy persists into a second year: surcharge increases to 2.0%. Third year or more: surcharge of 3.0% (or possibly higher by local option). Revenue is earmarked: 100 % of the surcharge goes into a Affordable Housing and Home Use Fund managed by the state (or via partnership with municipalities) for building/renovating affordable units, rental subsidies, etc.
3. Exemptions & carve-outs
To avoid unfairly penalizing legitimate circumstances:
Property under active renovation with building/trade permits. Property listed for sale or for rent and being actively marketed. Owner death, bankruptcy, extended hospitalization/health reasons. Seasonal/vacation homes that are registered and used at least X days per year (or in counties where seasonal use is customary). Unavoidable vacancy due to natural disaster or condemnation.
4. Local option & administration
The law is statewide, but individual municipalities may opt in or adopt enhanced versions (higher surcharge, shorter vacancy threshold) via local ordinance. Municipal assessors identify flagged properties annually through local records (e.g., utility usage, occupancy records, tax filings) and notify owners. Owners get a “usage tick-box” annual return: did you put the property on market, rent it, are you renovating, etc. If yes, liability may be reduced or deferred. The state provides auditing/back-stop enforcement to ensure compliance.
5. Use of revenues
The Affordable Housing and Home Use Fund must allocate: 50 % for new affordable-housing development/renovation, 30 % for rental subsidies for low- and moderate-income households, 20 % for local municipality grants (to implement housing initiatives, partnerships with non-profits). Annual transparency report required: number of properties taxed, revenue collected, number of units built/supported, geographic breakdown by county/town.
6. Transition & grandfathering
Implementation begins January 1 of Year 2 after enactment (gives time for awareness and compliance). Properties vacant before enactment get a one-year grace period (so owners aren’t blindsided). Review clause after three years: report on effectiveness, vacancy reduction, housing supply impact, adjust thresholds/rates accordingly.
Why this could work politically in New Hampshire
It positions the policy as smart and fair rather than punitive: owners who actively rent/sell/occupy avoid the tax. It allows local variation (opt-in/enhanced local options) respecting New Hampshire’s tradition of municipal control. It directly links a tax to a visible public benefit (affordable housing) — strong argument for voter support. It targets unused housing rather than all homeowners.
The risks and push-back (let’s not kid ourselves)
Property-rights lobby will argue this penalizes owners for what they see as legitimate non-use (seasonal homes, between tenants, personal life changes). Implementation/administration complexity: proving vacancy, exemptions, appeals — the system could get bogged down. Risk of unintended consequences: owners might pre-emptively rent at very low prices, or avoid listing publicly, complicating oversight. If revenue is collected but housing units are not delivered, trust will erode and the policy will become ammunition for opponents. Metropolitan vs rural imbalance: In low-vacancy rural towns the number of applicable properties may be small, making the optics of “taxing homeowners” worse.
What success looks like
After three years: measurable decline in the number of homes sitting unused beyond six months (tracked by municipalities). Hundreds of new affordable units created or subsidized using the fund. Positive public perception: the tax is seen as targeting “dormant homes” rather than innocent homeowners. Municipalities across the state participating (opt-in) and tailoring local surcharges appropriate to their market.
Opponents’ arguments & counterarguments
Opponents: “This is just a stealth property-tax increase on homeowners.”
Counter: It is not applied to occupied primary residences or actively used rental units — rather it targets homes that contribute nothing to the housing supply while the housing crisis deepens.
Opponents: “Owners might have legitimate reasons for vacancy (renovations, health issues, seasonal use).”
Counter: Exemptions carve out legitimate cases. The goal is not to punish, but to incentivize active use or listing for sale/rent.
Opponents: “Will this actually increase housing supply, or just raise revenue?”
Counter: The revenue is mandated to be used for affordable housing. Combined with incentives to bring idle homes to market (or avoid being penalized) it tackles both supply and funding. Evidence from other jurisdictions shows vacancy taxes are part of the tool-box.
Final thoughts
The housing challenge in New Hampshire isn’t going away. Building new units takes time, developers, zoning approvals — all heavy lift. Meanwhile, properties already built but sitting idle represent missed opportunity. A well-designed vacancy tax can align market behavior with public purpose: get vacant homes working, generate funds for the struggling segment, give municipalities flexible tools tailored to local markets.
Would this fly politically? It can — if it is communicated clearly, exemptions are robust, local input is strong and the revenue is used transparently and effectively. The alternative is continuing with the same insufficient strategies and wondering why the needle didn’t budge.
VACANT PROPERTY ACTIVATION AND AFFORDABLE HOUSING ACT
AN ACT relative to taxation of long-term vacant residential properties and the creation of an Affordable Housing and Home Use Fund.
1. Purpose and Findings
The general court finds that:
New Hampshire is experiencing a critical shortage of affordable housing for working families, seniors, and low-income residents. A significant number of residential properties within the state remain vacant or unrented for extended periods, contributing to reduced housing availability and rising costs. A modest vacancy tax will encourage the productive use of existing housing stock, reduce speculative property withholding, and generate revenue dedicated to affordable housing development and rental assistance. Local control and transparency are essential to maintain public trust and effective implementation.
2. Definitions
For purposes of this chapter:
“Vacant property” means a residential dwelling unit that is unoccupied and not actively offered for rent or sale for a continuous period exceeding six (6) months within a calendar year. “Residential dwelling unit” includes single-family homes, condominiums, townhouses, duplexes, triplexes, and apartment buildings with fewer than 10 units. “Active marketing” means listing for rent or sale through a licensed real estate broker, publicly available rental listing, or comparable method indicating bona fide effort to rent or sell. “Assessed value” means the most recent assessed value for property-tax purposes determined by the municipality. “Owner” means any individual, partnership, corporation, trust, or entity holding title to the property.
3. Vacancy Tax Imposed
I. Beginning January 1, 2028, a vacancy tax shall be imposed on each residential property that meets the definition of “vacant property.”
II. The tax shall be levied annually by the municipality at the following rates:
(a) 1.0 percent of the assessed value for the first year the property qualifies as vacant; (b) 2.0 percent of the assessed value for the second consecutive year of vacancy; (c) 3.0 percent of the assessed value for the third and subsequent consecutive years of vacancy.
III. The tax shall be collected by the local tax collector in the same manner as property taxes and remitted quarterly to the state treasurer for deposit into the Affordable Housing and Home Use Fund, established under section 5.
4. Exemptions
A property shall be exempt from the vacancy tax if:
It is under active renovation or reconstruction, supported by a valid building permit. It is listed for rent or sale and actively marketed during the vacancy period. The owner is deceased, incapacitated, or hospitalized for more than 90 days. The property is a seasonal or vacation home registered with the municipality and occupied at least 30 days annually. The property is uninhabitable due to natural disaster, structural damage, or condemnation order. The property is owned by a non-profit or public housing agency and held for development of affordable housing.
Owners claiming exemption shall file a signed declaration with supporting documentation to the municipal assessor by April 15 of the tax year.
5. Affordable Housing and Home Use Fund
I. The Affordable Housing and Home Use Fund is hereby established within the state treasury.
II. The fund shall be administered by the New Hampshire Housing Finance Authority (NHHFA) in coordination with the Department of Revenue Administration.
III. All revenues from the vacancy tax shall be deposited into the fund and used exclusively for:
Development, rehabilitation, or preservation of affordable rental housing; Direct rental assistance for households earning below 80 percent of area median income; Grants to municipalities for local housing initiatives and zoning reforms to increase affordable housing supply; Administrative costs not to exceed five (5) percent of annual receipts. IV. The authority shall submit an annual report to the governor and legislature by December 31 each year detailing revenue collected, expenditures, number of housing units created, and measurable impact on vacancy rates.
6. Local Option Authority
I. Municipalities may, by majority vote of the local legislative body, adopt ordinances:
(a) To impose higher vacancy tax rates than the state baseline; (b) To shorten the vacancy period threshold (no less than three months); (c) To designate local affordable-housing funds to retain up to fifty percent (50 %) of revenues for local use. II. Municipalities opting out of enforcement shall forfeit local revenue share to the state fund.
7. Enforcement and Appeals
I. Municipal assessors shall annually identify properties meeting the vacancy definition based on available records, including utility consumption, postal service reports, occupancy permits, and owner declarations.
II. Property owners shall have 60 days from notice of assessment to appeal to the local board of tax and land appeals.
III. Knowingly filing a false declaration of occupancy shall constitute a civil violation, subject to a fine not exceeding $5,000.
8. Effective Date
This act shall take effect July 1, 2027, for rulemaking and administrative preparation, and January 1, 2028, for taxation and revenue collection.
POLICY RATIONALE SUMMARY
Encourages use or sale of dormant housing stock. Provides a steady, earmarked revenue stream for affordable housing. Balances state leadership with local autonomy. Exemptions ensure fairness for legitimate vacancies. Builds public trust through transparency and measurable results.
