Vancouver mayor-elect Kennedy Stewart outside the City Hall in Vancouver, on Oct. 22, 2018.DARRYL DYCK/The Globe and Mail
A plan from Vancouver’s new mayor to triple the city’s tax on empty homes is facing skepticism from incoming city councillors and the real estate industry that the policy will make housing more affordable.
Kennedy Stewart, a former NDP MP who won the municipal election earlier this month, campaigned on a promise to increase the city’s vacant-home tax to 3 per cent of a property’s assessed value from the current rate of 1 per cent. The tax, which took effect this year, is aimed at encouraging owners of vacant properties to rent them out and return them to the housing supply.
While it’s not clear what impact the tax is having on the number of empty homes, Mr. Stewart said it’s having an effect, and he argues the city needs to be aggressive against speculation.
“Having people paying record high rents while condos are sitting empty is not acceptable,” he said in an e-mail. “The evidence I saw is that the current [vacant-home tax] is having an effect. Units are being rented, and in some cases speculators have sold condos off and families have purchased them and are living in them.”
Josh Gordon, assistant professor at Simon Fraser University’s School of Public Policy, said he agrees that the vacant-home tax should have been set at a higher level to start.
However, he said an increase may be less urgent after the provincial government announced its own tax this year on out-of-province owners that largely targets vacant homes. The province also has a tax on home purchases involving foreign buyers.
“There is already a fairly steep penalty on vacant units, especially by foreign owners, and so the idea of tripling the vacancy tax in the context of that other vacancy tax is debatable.”
Mr. Gordon noted that it’s also unclear whether Mr. Stewart’s proposal would be passed by the new city council. Council will be made up of five members of the right-of-centre Non Partisan Association and five members from parties on the progressive side of the spectrum.
Patrick O’Connor, a spokesperson with the Non Partisan Association, noted the party’s position during the campaign was that the vacant-homes tax has been ineffective and doesn’t appear to have had any impact on the housing supply. Still, newly elected NPA councillors declined to say how they would vote on Mr. Stewart’s proposal.
Likewise, councillors from the other parties were also reluctant to weigh in, saying they would need to study the idea.
Green councillor-elect Pete Fry said he is certainly not against expanding the tax, but has to make sure it strictly targets speculative investors who leave their properties empty.
Jason Liu, president of Luxmore Realty, said tripling the tax would make more real estate investors take a “wait-and-see attitude,” but wouldn’t affect foreign buyers that much as the province’s increased foreign-buyers tax has already shut out many overseas investors. He said the city needs to create more rental units to make housing more affordable.
Vancouver realtor Tina Mak said the current Empty Homes Tax has already “done the damage,” and there is no need to expand the tax.
The issue of vacant homes has been intertwined with the debate about foreign buyers and property speculators. Before the provincial government implemented its 15-per-cent tax on foreign buyers in 2016, government data showed 15 per cent of property purchases in the greater Vancouver region involved foreign buyers; since the tax came into effect, the rate has been about 5 per cent or lower.