Taxing Vacant Home Owners Becoming Election Issue

Joannah Connolly
September 19, 2014

A hot topic in the news this week has been Vancouver mayoral candidate Meena Wong’s pledge that her council would tax owners of vacant properties, leading the other mayoral candidates to ponder the proposal.

Vacancy rates in Vancouver have long been a hot-button issue, especially for condos in pricey downtown Vancouver. A 2013 report by UBC adjunct professor Andrew Yan suggested that as much as 25 per cent of condos in the densest areas of downtown (such as Coal Harbour) are unoccupied.

But the subject has been gaining particular media traction over the past week, ever since the candidate for the Coalition of Progressive Electors (COPE) announced the taxation policy as a key plank of her electoral campaign.

"As a capitalist free market, I cannot control who can come [to Vancouver], who cannot come," Wong told the South China Morning Post. "But I do say, if you are going to use Vancouver as a resort, then you are going to pay more.

"If you can afford to come and buy a million-dollar home and leave it empty for eight or 10 months, then you can afford to pay more — a surcharge, or a surtax."

Wong said that she would use the tax revenues to create more affordable housing in the city, which has been described as North America’s least affordable housing market and second only to Hong Kong in the world.

The idea of taxing owners for leaving property vacant could now become a significant electoral issue after the two key candidates, incumbent Vision Vancouver Mayor Gregor Robertson and Non-Partisan Association candidate Kirk LaPointe, both expressed cautious interest in Wong’s policy this week.

Robertson told the Vancouver Sun, in response to Wong’s proposal, "We have real concerns around empty homes and affordability."

Robertson noted that there was a lack of reliable current data on vacant properties, adding that the city's recently created Affordable Housing Agency is researching the topic, so it is "a work in progress."

"We will look at the next steps once we have that information," he said.                    

NPA candidate LaPointe said this week that he would want to see comprehensive data on vacancies before drawing up any new policies. He also questioned how the city would effectively monitor and enforce the rules and whether such a tax would be legal.

Data from schemes in other high-priced markets overseas suggest that taxing such vacant home owners might not be as effective as Wong hopes.

In the UK, individual district councils are permitted to charge an extra 50 per cent of council tax (similar to property tax) on homes that are left vacant for two years or longer (monitored by utility bills). This is in part an attempt to curb the influx of foreign home purchases that have likely assisted in the rocketing house prices, especially in central London, where as much as 70 per cent of property is being snapped up by overseas buyers.

However, Camden in north London is the only council to implement this additional taxation system, with many councils actually offering tax discounts for empty homes, as their owners are not using local infrastructure and services.

Hong Kong, which is the only housing market deemed more expensive than Vancouver, has since 2012 imposed a 15 per cent tax on all overseas buyers — mainly from China — whether or not properties are left vacant.

Nevertheless, Vancouverites seem in favour of the taxation idea, with nearly 80 per cent of 600 respondents (as of Thursday September 18) to a Metro poll asking “Should Vancouver tax owners of vacant condos?” clicking “Yes — there's a housing shortage in Vancouver.”

Do you think owners of vacant homes should be taxed? Share your thoughts in the comments below.

Joannah Connolly
Joannah Connolly is editorial director of Glacier Real Estate, Glacier Media's real estate division. Joannah writes and curates real estate news for Glacier Media's local newspaper websites, including the Vancouver Courier, North Shore News, Burnaby Now, Tri-City News and others. She also oversees editorial content in Real Estate Weekly Homes, West Coast Condo, Western Investor and Glacier's special real estate publications. A dual Canadian-British citizen, Joannah has 22 years of journalism and editing experience in Vancouver and London, with a background in construction, architecture, healthcare and business media. Joannah has appeared on major local TV outlets as a real estate commentator, has moderated and spoken on various industry panels, and spent two years hosting the Real Estate Therapist radio show on Roundhouse Radio.