Empty Home Tax Provides Minimal Relief to Housing Crisis
Big news today in Vancouver as Mayor Gregor Robertson announced with or without the support of the provincial government, Vancouver will impose an empty home tax. Gregor Robertson has plenty of critics but kudos to him for stepping up and being the first to take some real action on the Vancouver housing crisis.
Here’s what The Mayor of Vancouver has proposed:
- Option 1: increase property taxes on empty homes with the help of the provincial government.
- Option 2: introduce a new business tax on empty or under occupied properties.
Now he and the rest of us here in Vancouver await Christy Clark and the provincial government to respond by August 1. However a tax will go ahead with or without them come August 1.
Don’t hold your breath waiting to hear back from the provincial government though. “Robertson said he wrote Premier Christy Clark last year asking for the province to support a speculation tax but hasn’t heard back.”
So what impact will the empty home tax have on the Vancouver housing market?
It will most likely have little to no effect on housing prices. What it will do is encourage many foreign investors who are leaving homes empty to actually rent them out. This should immediately increase rental stock which is currently at all time lows of 0.6 percent. It has been said that roughly 10,800 condos are sitting vacant.
There are a couple flaws to the proposed taxation. After speaking with Tom Davidoff earlier today he mentioned it will be difficult to quantify which homes are actually vacant. Checking utility records could be deceiving as some investors may choose to simply run utilities than pay a more expensive tax.
It’s also important to note that this tax will only apply to homes in Vancouver. This won’t provide any relief to those living in the rest of the lower mainland. The Original academic proposal says the tax would only apply to non-residents of Canada and shouldn’t affect Canadian citizens who have vacation homes in Vancouver.
As you can see it’s a minuscule step forward to actually curbing the housing crisis. I guess a small step is better than no steps.
If we want to get more serious about fixing the Vancouver housing crisis the provincial government will need to step up. They should be more seriously considering Tom Davidoff’s property tax surcharge of 1.5% which would target empty homes and foreign investors not paying Canadian income tax. However, don’t expect that to happen anytime soon.