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Vancouver to implement empty home tax by next year

Last Updated Sep 14, 2016 at 1:06 pm PDT

Vancouver Mayor Gregor Robertson (Photo by Dustin Godfrey for NEWS 1130)

The provincial government supports Vancouver's push for the tax

Revisions were made to the Vancouver Charter allowing the city to create and collect the tax

VANCOUVER (NEWS 1130) – If you own an investment property in the City of Vancouver, you’ll soon have to prove you’re actually living in it regularly or pay up. The City of Vancouver is explaining how it plans to implement a vacancy tax as a way to increase the supply of rental housing in the tight market.

The mayor says the proposed tax will target the city’s 10,800 “empty homes.” He adds staff will report back to City Council by November to determine how much the levy will be. “We expect that many people will choose to rent their empty home, rather than pay an empty home tax. So, that will return some thousands of units to the rental market. Some people, who can afford it, will not want to rent out their property, and therefore, they are going to make a generous contribution to affordable housing,” explains Mayor Gregor Robertson.

The idea behind the tax is to force the owners of those vacant homes to either sell or rent, in an attempt to increase the number of available units in a market where the rental vacancy rate sits at 0.6 per cent.

“Vancouver’s dangerously low vacancy rate is putting renters in crisis. Our proposed empty homes tax is first and foremost about bringing rental homes back into the market,” adds Robertson. “We need to ensure the best use of all of our housing. Empty and underutilized investment properties are holding back badly needed homes for thousands of renters who are struggling to find a secure and accessible place to live in a tight rental market.”

He adds when collected, the tax on just five per cent of homes could bring in about $2 million in annual revenue that will be re-invested in affordable housing.

“In principal residences that are occupied by the owner, or by a tenant or a family member, will not be subject to the tax,” says the city’s General Manager of Community Services Kathleen Llewellyn-Thomas.

The city will essentially use the honour system to determine whether properties are vacant or not. Homeowners will have to declare their principle residences — if they can’t, or fail an audit, the tax will be applied.

We have heard concerns from people like snowbirds or those who work abroad about being hit with the levy. The city says there will be exemptions but they’ll be determined later through public consultation.

The tax proposal goes before council next week.

How to separate speculators from those caught in development limbo or with other legitimate reasons not to be renting, is a tough question to answer says Economist Tom Davidoff with UBC’s Sauder School of Business. “If you define vacancy narrowly enough, it’s very easy and cheap for somebody to fix the property so they don’t really do anything different, but they avoid the tax.”

Things like running electricity and cutting the lawn to make it seem as though a home is actually being lived in. Davidoff adds the key for the city is to define “vacant” in such a way that it forces someone to live in the home.