Vancouver’s empty homes tax generates millions in revenue, effect on rental supply unclear
Posted April 23, 2018 7:24 pm.
Last Updated April 24, 2018 7:50 am.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – Some 3,300 Vancouver properties have been hit by the city’s one per cent empty homes tax in its first year, which is expected to add another $30 million to the city’s coffers.
But whether or not the initiative is achieving the goal of increasing availability of rental properties remains an open question.
“We don’t have any specific numbers on how many people did rent their empty homes,” admits Vancouver mayor Gregor Robertson.
“Obviously, having tens of millions of dollars to invest in affordable housing is much-needed, but the ultimate goal here was to encourage people to rent their empty homes, so hopefully that’s happening at the same time.”
He adds the city is developing better data collection methods to monitor the impact of the tax more closely.
$17 million has already been collected from owners of properties that were determined to be vacant or under-utilized for at least six months of the year. Individual fines ranged from $1,500 to $250,000, with the highest tax bill coming from a home with an assessed value of $25-million.
Over half of the homes declared vacant by their owners were in downtown Vancouver or the West End.
Tom Davidoff, director of the Centre for Urban Economics and Real Estate with the Sauder School of Business at UBC, says the amount of revenue being generated by the empty homes tax is significant.
When combined with the province’s new speculation tax, he says it’s reasonable to think the owners of empty secondary residences will change their behaviour to avoid being fined.
“I think probably, the benefits to Vancouverites of this tax are probably going to change from revenue to units that are freed up over time. That’s a conjecture, but I think it makes sense based on what we know about people’s behaviour,” he says.
However, despite these new taxes and a number of other initiatives from multiple levels of government, Davidoff says rents will likely remain high in Vancouver.
“We still live in a place where there’s lots of demand and it’s always going to be hard to add supply,” he says.
The empty homes tax cost the city $7.5 million to implement, and annual operating costs are pegged at $2.5 million.
