Owners of empty homes in Vancouver could soon be paying an extra two per cent tax on the properties assessed value each year, Mayor Gregor Robertson revealed this morning.
While the tax is expected to generate $2 million a year in revenue for the city, Robertson stressed the aim is to encourage owners to rent out investment properties that might otherwise sit empty.
“Vancouver’s dangerously low vacancy rate is putting our renters in crisis. Our proposed empty homes tax is first and foremost about bringing rental homes back into the market,” said Robertson.
“We need to ensure the best use of all 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.”
Secondary holdings targeted
Robertson introduced the plan at city hall Wednesday along with Kathleen Llewellyn-Thomas, the city’s general manager of community services.
It will only apply to homes that are empty year round and not primary residences — that is, “secondary properties that are business holdings,” said Robertson.
Snowbirds and other residents who live only part of the year in Vancouver would not be taxed, stressed Robertson.
“Almost all Vancouver residents will not pay this tax,” he said. “It is focused on the empty homes that are being held as businesses or effectively holding properties.”
The tax will be in the range of 0.5 to 2.0 per cent of the assessed value of each home, she said.
Self declaration of empty homes
Owners will be required to declare their homes’ status themselves as part of the property tax process in 2017, and the new tax would be payable in 2018, said Robertson.
The proposed tax will be enforced with an audit and complaint response process “that will keep people honest,” Llewellyn-Thomas said.
“It will be random, but we will be having a very high level of audits in the first months and years that we run this,” she said.
Penalties for non-compliance are still being worked out, but they would have to be significant enough to ensure it made financial sense to pay the tax instead, she said.
Additional staff would be hired to administer and monitor the program, but it is expected to generate enough revenue to cover its own costs, they said.
Proof of residency required
Other details confirmed by the mayor included:
- Owners will be required to declare their principal residence (or tenancy), similar to declaring the Home Owner Grant, which generally will not be subject to the tax.
- If audited, owners will have to prove that the home was a principal residence for the owner, a tenant or a licensee.
- Proof of primary residency could include a B.C. driver’s licence or BCID, a completed Home Owner Grant, a tenancy agreement or similar documentation.
- If the owner is unable to prove the home was a principal residence for a minimum number of days in the previous year (to be determined by staff through consultation this fall), the tax will apply.
- If a declaration is not made, legislation allows for owners to automatically be charged the empty homes tax.
- Homes that are vacant because they are awaiting development permits or are in probate will be exempt.
The proposal will be presented at council next week, and if approved, a extensive public consultation process will be launched before the tax is implemented.
The mayor has also promised to reveal more details soon on a proposal to regulate short-term rentals such as Airbnb.
City gets new taxation power
Earlier this year, Robertson’s indication he only wants to tax homes that are vacant year round raised questions over how vacancy will be determined, and how much it will cost to administer the tax and monitor and enforce compliance.
Robertson first proposed the tax in June to encourage property speculators in Vancouver’s hot real estate market to rent out unoccupied homes.
At the time, the city’s rental vacancy rate was 0.6 per cent. A city-commissioned report in March estimated there were 10,800 homes and condos sitting empty.
Though the rate of empty homes has remained flat over the past 14 years and is in line with other Canadian cities, it’s thought a high percentage of the homes that remain empty are owned by foreign investors who do not live in or rent out the units.
Originally, Robertson proposed either tracking vacant homes as part of the annual provincial property assessment, or creating a new business tax, vowing the city would act alone if the province did not help.
In July, the province responded by granting the city the power to tax vacant homes. The province also introduced a 15 per cent tax on foreign home buyers in August aimed at curbing property speculation.
Victoria City Council has also indicated it wants to tax vacant homes as well, but has not tabled a proposal.
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