Vancouver is fending off several lawsuits challenging its empty-homes tax, as irate homeowners and developers start to challenge the charges after losing their arguments in the city’s appeal system.
Four lawsuits have been initiated in the past six weeks by owners facing anywhere from about $4,000 to $289,000 in extra taxes for 2017, the first year that Vancouver’s new empty-homes tax came into effect. The tax is among several measures at the local and provincial level aimed at speculators and foreign owners who have left their properties empty in the middle of a housing crisis.
Owners had to prove that their homes were occupied, either by themselves or renters, for at least six months of the year or be charged an additional 1 per cent of the property’s assessed value, on top of regular city and regional taxes. In 2017, 1,085 homeowners acknowledged empty property and were charged the tax; that figure was down to 922 for 2018. However, the city audited more than 6,000 other accounts in 2017 and charged 331 homeowners with the extra tax.
One lawsuit filed last week, from owner Yi Ju He for her property on Vancouver’s pricey Belmont Avenue, says the city didn’t issue permits in a timely way, delaying development. She is fighting the $249,000 bill on her now $26-million property.
Another owner, Sau Po Wong, who owns a house on Matthews Avenue in upscale Shaughnessy, said in a lawsuit started last Friday that he mistakenly provided utility bills and other documentation for 2018 when he was audited, instead of 2017. He was out of town when the city sent a notice saying that his information wasn’t applicable and that he would be charged $128,310. He tried to appeal to the city’s vacancy-tax review committee and was told he’d missed the deadline.
One property developer, Richmond-based Pure West Financial Holdings Group Inc., filed a petition May 28 challenging the city’s decision to levy the tax on a house that was awaiting demolition before the company’s 134-unit strata building, the Condessa on Cambie Street, was built. The property was valued at $28.9-million in 2017, meaning there would be a $289,000 empty-homes-tax bill.
The lawsuit says the owners were charged the vacancy tax because the city said it didn’t have any of its building permits before July 1, 2017. Having the permits would have qualified the property for an exemption because it would have been categorized as being under development.
But the lawsuit from Pure West, whose directors are Shansan Huang and Jiang Luo, says that the city’s own bylaw doesn’t spell out that all development permits have to be in place, nor does it say which ones are necessary, before a property can be considered to be moving as it should through development and not just left vacant.
And one owner of a single apartment unit in Kitsilano, Jufen Wang, is fighting the city’s assessment of $3,881 in extra taxes, saying that numerous documents and even an affidavit from the building’s strata manager provided evidence that the apartment was rented out.
None of the allegations have been tested in court and the city has yet to file statements of defence. The city has responded to only one of the petitions and said its actions were correct.
Vancouver’s empty-homes tax has generated controversy and interest since it was first approved in 2016.
It’s proved hugely popular among the general public in various polls, with many seeing it as a necessary tool to battle the speculative investment that has driven Vancouver real estate prices sky high.
Some have objected to it, saying it catches too many in its net, especially people who are from B.C. or Canada and have an apartment in Vancouver as a base in the city for visiting family or going to medical appointments.
City developers have raised concerns that they get taxed on condo units that they aren’t able to sell by a certain date, which puts them in a no-win situation. If they rent the condo out, they say, they can never get the same kind of sale price as they can with a newer condo.