While a lot of speculation still looms around the proposed Vacancy Tax that Vancouver’s Mayor Gregor Robertson first pitched back in the Spring, the goal is clear: open new rental spaces. Hand-in-hand with the recent Foreign Buyer Tax, the proposed Vacancy Tax aims to make Vancouver a more feasible place to live again. Affordable? Not so much.
Current Vancouver homeowners and future home buyers should be aware that the tax could be up to 2% of the property’s assessed value; a measure hoped to encourage speculators to rent out instead of leaving a home empty. Based on a recent BC Hydro study (with addresses blacked-out for privacy), there are 10,800 homes and condos in the Metro Vancouver area that are sitting empty. The flip side of that is our city’s vacancy rate of less than half a percentage point. Could this new tax help the rental market? Time will tell.
It is still unclear how the city will proceed with enforcing the tax, other than on good faith. Robertson has cited random audits and complaints to catch tax evaders, while others contest how this will affect privacy issues and the sense of community in Vancouver when everyone is expected to keep an eye on their neighbour’s whereabouts--and how long they’re home for.
What If You’re Away?
Homeowners whose Vancouver properties are not their primary residence and short-term rentals such as AirBNB may fall into the realm of taxation. Reasonable occupancy is still to be determined, and Robertson claims he will ask for public feedback before implementing rules surrounding secondary residences and vacation homes.
Regional mayors suggested a non-resident tax in lieu of Robertson’s proposal, but it appears this measure is on hold for the time being. Robertson himself has also proposed a new municipal business tax on investment properties as a way to bypass provincial government authority. Enforcement issues are key in the success of either of these programs, and have yet to shown without being at great cost to the city.
The bottom line: whichever direction the new tax takes, housing prices are unlikely to drop as a result. As real estate professor Tsur Somerville from UBC’s Sauder School of Business states, “It’s a good first step that would help renters, but ultimately, it is not going to make Vancouver more affordable.”
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Photo: John Lehmann/The Globe and Mail