Vancouver plans to tax its vacant homes by the end of the year, the city’s mayor said on Wednesday, announcing the second government move in as many months to address foreign investments that officials say have helped drive up home prices.
The tax on the city’s 10,800 known empty homes will increase costs for foreign buyers and owners who have helped make the west coast city Canada’s most expensive property market. It could also send investors elsewhere.
The measure will push absent homeowners to rent out their properties, easing the unaffordability crisis that is plaguing the city’s housing market, Mayor Gregor Robertson told a news conference.
Last month the province of British Columbia, which includes Vancouver, imposed a 15 percent property transfer tax on foreign real estate buyers, cooling some parts of what remains Canada’s most expensive housing market. The move has also led to speculation that foreign buyers, mostly from mainland China, will shift to other markets.
A voter backlash against foreign investors in Vancouver, where prices have risen 249 percent since 2005, has put pressure on both the city and provincial government to reduce demand.
Robertson said the tax, which targets properties left empty or underutilized, would be levied through self-declaration, audit, and compliance measures. For example, owners will have to prove they or tenants occupy the homes for a minimum number of days a year.
”Vancouver’s dangerously low vacancy rate is putting our renters in crisis,” Robertson said in a statement. “Our proposed empty homes tax is first and foremost about bringing rental homes back into the market.”
The annual tax rate had not yet been decided, but had been proposed at between 0.5 percent and 2 percent of the property’s assessed property value, the mayor said. If the tax is collected on just 5 percent of the nearly 11,000 empty homes, it would raise $2 million in annual revenue, he said.
More than 90 percent of detached homes in Vancouver are worth more than $1 million ($780,000), compared with 19 percent a decade ago, according to a study released in June.
Vancouver prices rose 1.7 percent in August from July, even as the 15 percent tax on foreign buyers took effect, and were up 25.8 percent on the year, according to the Teranet-National Bank Composite House Price Index released on Wednesday.