Vancouver’s precedent-setting empty-homes tax – part of a set of policies created to tackle a housing crisis judged to be among the worst in North America – generated a windfall of $38-million in its first year, more than originally projected.
The city announced the tally Thursday. But it’s unclear what will happen next with the program, which is attracting attention from other cities in Canada also faced with out-of-control housing prices.
Mayor Kennedy Stewart wants to step it up by tripling the existing vacancy-tax rate from the current 1 per cent of value. A councillor from the five-member Non-Partisan Association faction on council says she doesn’t think there’s any evidence the tax has helped with housing affordability. And the council’s Green Party is concerned that the tax is too broad and hits Vancouver residents who are contributing to the economy.
Mr. Stewart said the numbers in the report are reinforcing his belief the tax should be tripled because there were still 2,500 properties deemed vacant for 2017 that the owners chose to leave empty. He is hopeful that if the tax is tripled, that might push another 1,200 owners into renting their places.
He acknowledged that they are expensive units, but “if more higher-income folks move in, it will ease pressure on the middle.”
But NPA Councillor Sarah Kirby-Yung said the report is unconvincing because there is no evidence the tax has made any difference to housing affordability or availability.
“The purpose was to return units to the market. There’s no indication it’s been successful.”
This week, the Canada Mortgage and Housing Corp. released a report that found Vancouver’s purpose-built rental vacancy rate hovered just under 1 per cent, among the lowest in the country. Meanwhile, rents in Vancouver are among the highest.
Ms. Kirby-Yung said any city initiatives need to focus on real affordability and availability, not just work as mechanisms to generate money.
And Green Party Councillor Pete Fry said that although his three-member team on council supports a tax that truly targets speculators, his party is concerned about many non-speculator owners who have been affected by it.
“We want to make sure we’re catching the right people and protecting the right people,” Mr. Fry said.
In the meantime, officials are pleased with the way the program has been working; much of the revenue will be earmarked for affordable-housing initiatives.
“At this stage, we’re particularly happy with the number of people who have gone online to file their declaration,” said Melanie Kerr, the city’s director of financial services.
So far, about $21-million of the total has been collected. About $9-million is going to cover the costs of running the program, including the 8,000 audits that were conducted or are still under way.
But $8-million will be going into affordable-housing programs, including $3.5-million aimed at improving living conditions in privately owned residential hotels, $1-million to upgrade existing co-ops and build new ones and $375,000 for acquiring land that could be used for affordable housing.
The empty-homes tax is the first of its kind in North America, although some U.S. states charge extra taxes for non-resident owners.
Vancouver has also introduced rules to limit property owners’ ability to rent out homes for short-term vacation rentals.
A 2016 city study of electrical use in all Vancouver homes showed that about 10,800 homes, mostly condos, had such minimal signs of activity over a 12-month period that they were likely empty year-round.
Only about 2,000 property owners did not file a declaration for 2017 and many are now disputing their empty-homes-tax assessment and penalty.
The city has completed 6,200 audits and has another 1,300 in progress.