A Tax on Empty Homes is Not Enough to Fix the Problem

The B.C. Residential Tenancy Act needs an update


Vancouver Mayor Gregor Robertson’s 1 per cent tax on vacant homes may be a step closer to addressing the housing crisis, but it’s far from a wholesale solution.

The CBC reports that Robertson justified the measure as a “business tax” on owners he said were treating housing as investment property, and that he hopes the tax will improve Vancouver’s rental vacancy rate—which is currently around 0.6 per cent—by persuading owners of thousands of empty apartments and houses to put them up for rent. The keyword in that phrase is “persuading,” but it’s not clear how the tax will succeed in doing that.

According to the City of Vancouver’s official website, anyone who owns residential property in Vancouver will be required to make a property status declaration. This declaration will determine whether the Empty Homes Tax affects them.

However, the owner of a residential property is exempt from the tax if it is the principal residence of the owner or their family, or it’s rented for a total of 180 days of the year, in periods of at least 30 consecutive days. Exemptions also apply if the property is being used for work purposes within the City of Vancouver for a minimum of six months per year.

A study by Ecotagious Inc. published in February 2016 concluded that the non-occupancy rate within the City of Vancouver was “relatively stable” from 2002 to 2014. It was 4.8 per cent at that time.

It also determined that “the non-occupancy rate is in-line with that of the rest of the [Greater Vancouver Regional District], and fairly uniform throughout the geographic sectors of the City.”

The analysis revealed that apartments were driving non-occupancy in the city at 7.2 per cent in 2014. These apartments represent 60 per cent of the City of Vancouver’s residential housing.

Based on the city’s objective and the available data, it seems unlikely that this tax will provide the intended outcome of improve the vacancy rate. For the desired result, this tax would have to be focused on incentivizing those who own apartments buildings to rent the space—and even that comes with a few hurdles that make the problem harder to solve.

According to CBC News, homeowners often don’t know much about their tenants, and when things go wrong, evicting them can be a major headache since navigating the B.C. Residential Tenancy Act can be a complicated process.

Vancouver-based Lawyer Lisa Mackie specializes in residential tenancy law and has heard her fair share of tenancy horror stories over the years.

“Unfortunately, sometimes when you let the tenants in the door, it’s very hard to get them out,” she told B.C. Almanac’s Duncan McCue.

If the government of Vancouver were serious about solving this problem, they would consult with lawyers like Mackie and address the flaws in the B.C. Residential Tenancy Act. Simplifying this piece of legislation, in combination with the Empty Homes Tax, would improve the chances of successfully persuading landlords to rent their apartments.

In that case, the government’s goal becomes more realistic than expecting a 1 per cent tax to curtail Vancouver’s housing crisis. Perhaps then we’d the see the proper incentivization of behavior.