After much dithering at the Provincial level this Globe and Mail Article states that Gregor Robertson, Mayor of Vancouver is proposing a tax on property owners that don’t live in their houses. The intent is to ensure that such properties are rented, and provide valuable housing stock to those that need it.
The challenge is that the Provincial government has already rejected previous attempts to tax vacant Vancouver houses.
While suspecting that 10,000 houses are vacant in Vancouver, a figure released by city staff in March, the Mayor proposes that the tax be high enough to encourage the property to be rented locally. The mayor said that the city wants access to an estimated 10,000 empty houses in Vancouver, a figure based on data that city staff released in March. But he didn’t say how high he thinks the tax would have to be to persuade those owners to rent out their houses.
There are now evidence-based studies suggesting that foreign buyers have completely distorted the local market making it unaffordable to citizens of Vancouver. Of course there are other protestations that such statements are akin to racism. The upshot is that people who work in Vancouver cannot afford to live here. The single family home dream is dead.
The intent is to tax all homeowners who do not live in their home, no matter their reasons or their homelands.
“We would love to have thousands of those homes in the rental market right now when there’s almost no vacancy and a real crunch on affordable housing,” the mayor said, “We’d like to see more supply created from the empty homes that are just sitting there in the city.”
Mayor Robertson is expecting a report in short order before Council’s summer break.You may remember that the Mayor had asked the Premier for jurisdiction for a luxury housing tax a year ago, and some remedies to penalize owners who did not live in their properties. These suggestions were rejected by the Province. It was suggested that the city could find “solutions in better land-use planning”.
Creating more density does not address the underlying problem of a lot of vacant houses in Vancouver neighbourhoods. There were two of these vacant foreign-owned houses on my street of nine houses. It would be great to see them occupied by families.
Regarding the cited “evidence-based studies”, well, there is still a lot of anecdote in those studies. Perhaps awaiting the release of the well-funded StatsCan study next year is best because that is probably the most unbiased organization in the country, certainly a lot less so than the BC Libs, the mayor, the real estate and development industries, a bevy of pundits and those who prefer to lash out merely for the sake of appearing to be doing something about the problem. ‘Shoot first, ask questions later’ is not a reasonable approach.
Regarding taxing the hell out of foreign purchases and empty homes, see above paragraph. Where is the evidence that this will reduce prices significantly? Taxing foreign purchases and restricting them to new homes only has not reduced housing prices in Australia’s two largest cities beyond the tiniest of temporary dips. Paying the tax will be a minor annoyance to wealthy Chinese (or other nationalities) seeking safer places to place their money. Corrupt foreign money? Well, by all means do your best to find it and ban it. But it may be worth more to our society to find, retrieve and tax the billions upon billions that have left Canada to seek refuge in foreign tax havens rather than focus only on money entering the country.
Trying to find the best way to tabulate the number of empty homes is a challenge. Again, anecdotal observations are circumstantial and highly biased toward location. To counter Sandy’s observations of a couple empty homes on her street, there isn’t one within a kilometre of my house that I’ve noticed on my walks or even heard about from nosy neighbours. Every house sold / renovated within three blocks in the last few years is occupied by real live families, tenants and pets. A low vacancy rate is a problem here. And owner’s selling out? Three in 22 houses on my street in the last three years, two because of ageing elder issues. Owners sticking to the neighbourhood they love is a Big Deal no matter how high numbers on paper get. This helps explain my great impatience over the anecdotes published in national magazines being presented as evidence with the conclusion that Vancouver — including my neighbourhood that presents much evidence to the contrary — “will become Monaco by 2050.” It will not, and that was pure rhetorical arrogance.
The study of actual BC Hydro readings seemed to be the most neutral research methodology to establish a base line for empties, and that study indicated the average non-occupancy rate for all housing over 12 years (2002-2014) was stable at 4.8%, and was in line with the Metro. The rate for apartments averaged 7.2%. Sure, there may be a few gaps in info, but they are likely to have ranked long Gulf Island cottage stays by retirees (or Snowbirds living in Arizona over the winter) as “empty” and skewed the stats away from the foreign-owned empties. Sure, grow-ops are rated as “occupied”, but the cops know well the signs of a spike in hydro usage. Sure, let’s have a program to rent out the empties under a reputable agency. Sure, AirB&B will also skew the stats toward non-empty (this is a big issue in some Yaletown towers where AB&B owners stack the strata councils). But this kind of study, flaws and all, is orders of magnitude better than anecdote.
The best policy developed yet that I’ve seen was published by Geoffrey Howard who first acknowledged the foreign ownership dilemma but also placed it in context with supply and demand, land planning constraints, a very low diversity of housing types beyond the detached single family home / lot and condos, Vancouver’s power to attract newcomers because of its beauty and quality of life, etc. He proposed targeted taxes like everyone else, but is one of few who put some deeper thought into it and proposed devoting the tax revenue toward rental housing and other initiatives. He also addressed Vancouver’s deficit in land use efficacy.
This is the kind of analysis we need.
http://vancouversun.com/opinion/an-affordable-housing-manifesto
Vacancy is tough to enforce. I also wonder whether it is actually constitutional. Can I not let a house I own vacant, for a number of reasons ? I may be abroad. I may have moved and are wondering what to do with the house. I may rent it. I may use it 2x a month .. I may give it to relatives to use once in a while.
==> A slippery very hard to enforce slope !
Supply AND demand clearly an issue in both markets due to low interest rates, Gen Y folks, immigrants with money and foreign investors all wanting to buy buy buy in choice locations .. and certainly this tactic is a good diversion as the city could do more to increase density and increase supply, for example close Langara golf course and make 50% into a park and 50% into affordable or for-profit housing.
Taxation can have an effect as proven in Sydney and London, UK if high enough .. say 15% or higher. I think 25% is the right figure for SFH in MetroVan or GTA for foreign investors to give local buyers a significant advantage, plus triple the annual property taxes. 50% of that for new condos.
Unmentioned at all is tax evasion by non- or false declaration of real estate sales.
Plenty of blame to lay on all levels of government dragging their heels while “studying” the data ..
MB clearly lives in a different part of the city than some of the others who comment here because their experiences with home sales and vacancy are so different.
On the block I’ve lived for the past 5 years there hasn’t been a day when there wasn’t at least one realtor’s sign or home being demolished/built. Currently there are two houses for sale and two being built. There appear to be 3 vacant houses: one a recent sale, one a sale in March, and one with a month of newspapers on the porch that I’m pretty sure is an owner on vacation who simply forgot to get a friend or neighbour to clean up for him.
The next block has 4 houses built in 2015. I can say with certainty that one is occupied by a reclusive family and one sporting both a basement suite and lane way house has never had an occupant in any of the 3 dwelling units. The third looks like one might contain some furniture, but the fourth is definitely empty. I’m pretty sure the only humans who set foot on either property are the gardeners. Two 1990’s houses on that block sold in 2016 and a third failed to sell because the asking price was $500,000 above that of similar houses in the area. That house is currently undergoing a major interior renovation and I expect it will go back on the market this summer.
If there was a vacant home tax I believe all the vacant houses in my neighbourhood would remain empty. There are many reasons: part time use by the owner, wanting to leave the place pristine for future occupation by the owner or an extended family member, not wanting the hassle of finding good tenants, the fact that rent would be such a tiny fraction of the money gained through appreciation, etc.
If you’re making $30,000 per month in land value appreciation, why go to the effort of renting it for a small fraction of that number?