April 28, 2015

Vacant Homes: Opening Pandora’s Box

Good for the City in attempting to get a handle on the number of vacant homes, and the reasons why they are: Vancouver looks to gather data on vacant homes.  With some reliable data, we can at least separate the myths from the reality – though that alone is unlikely to answer the obvious next question: What to do based on what we find.

There are at least three factors beyond the City’s control that impact affordability: interest rates, capital flows and immigration  (influenced by the state of the world economy), as well as taxes on property purchase and transfer, capital gains, etc.  There are three factors that can be influenced directly: property taxes, density and form of development, and transit, all of which over time affect the market.  Unfortunately not quickly, and maybe not at all.

And then there’s the problem of who benefits or loses.  Many of the same people who decry the change in their neighbourhoods do not for a moment believe the City should do anything that would negatively affect the value of their homes nor their ability to cash out.

Further, the idea of people ‘reporting’ on vacant houses has a distasteful odor to it, not to mention privacy concerns.  But this was not an issue that could be ignored for much longer (though it certainly has been at the provincial and federal levels).  At least the City has taken the initial step.

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  1. “Many of the same people who decry the change in their neighbourhoods do not for a moment believe the City should do anything that would negatively affect the value of their homes nor their ability to cash out.”

    Yeah, I know plenty of families that piss and moan about all the changes that are ruining their city, but then spend half the year in Mexico and lose it if anything is proposed that might hurt their property value.

  2. What does ” vacant ” mean ? Some folks show up twice a year for a few weeks, with few furniture pieces, but otherwise well kept lawns and trimmed hedges, yet vacant for 48 weeks ? Why is that worse than one that might be occupied or partially occupied for 20 weeks but hedges overgrown, dead flowers and weeds on the grass ?

    The core issue is foreign ownership and/or ownership by passport seekers ( I call them ” fake Canadians”) that might come here for 3-4 years, perhaps while they attend UBC or SFU then buy a house or condo, then leave and repeat this process in the UK or USA or Australia.

    This issue is easily solvable with outright restrictions like they do now in Australia, Switzerland or some other countries, or with higher taxation.

    The critical debate missing is that provinces have usually relied on income tax and PST for a bulk of their revenues, with nary a look at properties. Many fake Canadians, and most of the non-Canadians pay no or very little income taxes or PST here. Yet many of them use provincially funded education or healthcare services for themselves, their kids and/or their elderly parents. Look no further than last year’s teachers strike for ESL support. As such, the province, and certainly the cities, need to look at land transfer taxes and property taxes as a major revenue tool, perhaps by increasing both sharply, and giving rebates to income tax filers that are BC residents.

    The vacant home debate is just a timid sideshow as the elected politicians can’t be seen offending foreign investors. As usual, they tip toe around the real issue.

  3. I would also like the City to look at its own permitting process for home renovations as a way to promote affordability. It is a nightmare to understand, and there are “triggers” that require other upgrades that are not understandable up front and end up costing your project 30% more. There are so many areas in which we just can’t meet the new code requirements because the house is 60 years old… I’m beginning to understand why people just rip houses down and start again, much as it makes me sad.

    1. Ownership comes with privileges. Unless a house is a true iconic, historic building with significant heritage value (and maybe 5-10% of houses are, but most are not) I think we should allow the property owner to decide what he or she wants to build, within the zoning guidelines.

      Capital gains taxes are also an issue to be looked at as I suspect that there is much abuse here on non-payment on one’s primary “residence”.

      As stated earlier, the taxation of properties needs far more attention by city and provincial politicians as it is a major revenue source, and not just incomes or PST.

      Personally I think 1% per $1M would be a reasonable land transfer tax, up to 15% for houses over $14M.

      So: house or condos sub $1M: 1%
      house or condo $1M to $2M: $10,000 plus 2% over $1M
      house or condo $2M to $3M: $30,000 plus 3% over $2M
      house or condo $3M to $4M: $60,000 plus 4% over $3M
      house or condo $4M to $5M: $100,000 plus 5% over $4M

      etc. up to 15% for houses or condos over $14M

      Give a rebate, perhaps once a decade, to BC residents that pay income taxes.

      Don’t restrict foreign ownership or foreign money, or new immigrant money: just monetize it far more for the benefit of (permanent) BC residents to flush $s into empty city, MetroVan and/or provincial coffers.

  4. Another rather disgusting waste of taxpayer money.

    The city has no power to do anything anyway.

    What if we decide, after working hard all our lives, to go and live somewhere else for an expended period, as quite a few people that I know have and do? Might our properties then be subject to some sort of Stasi reporting? Might we then be subject to increased taxation because we are not taking advantage of, or using the cities’ services?

    If we are from China will our property be subject to some sort of special tax? Will the property of local born Vancouverites that go abroad for an extended period be taxed too?

    One of the exciting things will be to see how many speculative properties are bought and left empty, waiting while the city ponders re-zoning. We all know that the properties all along and around Broadway are suddenly more valuable. The new zoning along the Cambie corridor will obviously be repeated along the Broadway corridor. Now is the time to snap up any little properties all along the Broadway corridor and wait for the subway, or whatever to go through. The city will then rezone it all and the values will jump. We know that deals are being considered right now. In fact, some deals are highly likely to be contingent on the success of the TransLink vote. Are these properties going to be counted too?

    All this waste of money will do is create resentment and make useless work for some kids.

    1. Indeed. It is a con game. The real issue is foreign ownership and lack of taxation of folks living here while getting a passport. As stated above, “vacant” is hard to measure and just a tip toe around the real issue.

  5. Gathering data to figure out the scope of the problem is the logical first step. But that does not require creating a database with actual addresses and all the ugliness that entails. Anonymized BCHydro data does a much better job at getting a very accurate reading on the problem. And it is cheaper and easier too.

    Creating a database of addresses at this stage is just plain stupid.

  6. Vancouver’s chief housing officer, Mukhtar Latif said there are few tools available to determine how many homes are empty, and why. He said the city will use BC Hydro consumption data and national census information to get a handle on the problem. The city will also set up a website where people can report houses they believe to be empty.

    [Councillor Kerry] Jang said the city doesn’t control how investors influence the housing market. But the results of the city’s research should be given to the federal and provincial governments, who do.

    “We will share it with the province and the feds to see if they want to do anything about it. They are the only ones with the power,” he said.

    The city could levy special fees for houses that remain empty for investment purposes, but that has potential downsides, Jang said.

    Read more: http://www.vancouversun.com/business/Vancouver+looks+gather+data+vacant+homes/11009031/story.html#ixzz3Yd9cGGG5

    Clearly stated by the councillor as a useless exercise. Any special fees would probably be appealed in court and the excuse of a mild ailment of a family member causing the owners absence should be sufficient to quash and reverse any tax or fee exacted. Any lawyer will take the case for the owner. The city will only lose money.

    The owning of property for investment purposes is a problem in many, many of the great cities around the world. The city allowing the building of investment quality high-rise dwelling sculptures is really to blame. Would there be this nasty clamouring if Coal Harbour and other similars had been developed in the style of a community with 5-9 story buildings, with commercial on the ground levels?

    This witch hunt is not good for the reputation of Vancouver.

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