Demonstrators protest against high housing prices for single family homes in downtown Vancouver, May 23, 2015. (Photo: REUTERS/Jim Jeong)
It’s no secret that Vancouver, B.C. is in the midst of a major housing crisis. People there cannot find affordable housing due to rapidly rising house prices and “skyrocketing rents.”
Now the City of Vancouver, backed by the provincial government, has decided to do something about the crisis by implementing a novel new tax targeting house and condo owners who leave their properties unoccupied.
Though the provincial government has been accused of doing little to alleviate the crisis thus far, by allowing the city to pass this new tax, it hopes that those with empty homes will now be persuaded to rent out their properties so that rental prices drop. The province is responsible for giving the city the legal power to change the Vancouver Charter that allows the city to implement the tax.
The tax may be a necessary evil, as a recent report by Josh Gorden, assistant professor at Simon Fraser University, suggests that foreign investment may be the “main culprit” for the housing crisis in Vancouver, specifically “foreign investment from China.” Vancouver is considered to have the highest rate of foreign ownership of condos in Canada.
The report also points out that many foreign buyers leave their properties empty or under-used, which also contributes to the crisis as well as weakens communities.
It is estimated that almost 11,000 homes and condos are standing empty in Vancouver and yet the rental vacancy rate is only 0.6 per cent, where a “healthy” vacancy rate should be between 3 percent to 5 per cent. A low vacancy rate results in rising housing costs.
Vancouver would be the first major city in Canada to implement this new tax but could others follow?
Certainly. Other municipalities in British Columbia are already looking at their options and considering an empty home tax. As for other provinces, Ontario certainly comes to mind as Toronto, too, has an overinflated housing market heavily influenced by foreign investment, especially in its condo market.
While the tax may help alleviate the problems people have in finding affordable housing, is it actually going to work?
Vancouver Mayor Gregor Robertson said that the city would only implement the tax on houses that stand empty for 12 months a year. However, critics say this could be easily circumvented by renting properties on Airbnb for a few days a year.
What will the new tax look like?
That’s unclear as of now. However, Robertson told CBC News that it would likely be substantial: