The city of Vancouver is truly stunning. With its mountainous backdrop and interesting architecture, the metropolis is a frequented destination for many homebuyers in search of the good life. Vancouver’s successful housing market, however, has made the city immensely popular amongst those with the finances to purchase lucrative investment properties.
According to the CBC, the city of Vancouver claims that there are over 10,000 empty houses, apartments, and condos within its midst. Furthermore, the low vacancy rate in the city has had negative affects on those looking to rent homes in the market.
Therefore, Mayor Gregor Robertson has publically stated that homeowners who leave their properties vacant in the city may soon be subject to paying an additional 2 percent property tax.
At the time of Robertson’s initial proposal, Vancouver’s vacancy rate was 0.6 percent. The mayor originally wanted to implement a new business tax, or track vacant homes through annual provincial property assessments, with or without the power of the province. However, the government of British Columbia recognized the merit in Robertson’s proposal, and permitted the city the power to tax empty houses.
Although the tax is not being implemented until 2017, here’s what you need to know about the effects it could have on the real estate market in Vancouver.
What’s in store?
While a 2 percent increase is not a staggering figure, the city’s aim is to encourage those sitting on empty homes to rent them out to those citizens who cannot afford to or don’t wish to enter the competitive housing market. The tax rate, however, is not set in stone as of yet and will be between 0.5 to 2.0 percent of the value of a home. If the proposed tax goes through, a homeowner sitting on a house worth $1-million would be forced to fork over an additional $5,000 to $20,000 dollars.
Those who only live in Vancouver for a certain chunk of the year need not be concerned, as the only houses that will be taxed will be the ones that are empty for the entire duration of the year.
Affordable Housing for Residents
According to Mayor Robertson, the tax could restore the notion of affordable housing in Vancouver. If collected on only 5 percent of empty homes in the city, the accumulated sum of money from the tax would add up to around $2-million, and those earnings would go towards building new rental properties.
It is virtually impossible for the city of Vancouver to be aware of every empty house within its borders. Therefore, those who own houses in the city that are used as business holdings or merely investments will need to declare their status during the property tax process in 2017.
To ensure that the owners of empty houses in the city do not fail to comply with the proposed tax laws, the government plans to do regular random audits for the years following the tax’s implementation. If subject to an audit, homeowners will be required to prove that the home is their principal residence, or is that of a tenant or licensee.
Additionally, owners who fail to show that their home was a principal residence for a to-be-determined number of days in the previous year will be penalized. Empty homes that are set for development or are in probate, however, are excused.
While Vancouver’s housing market was once red hot and hard to enter, the recent changes in legislation, such as the upcoming empty property tax, and the 15 percent foreign buyer tax have allowed the city to begin its mission to build affordable housing. These changes in Canada’s west coast metropolis have already begun to affect the housing market in the Greater Toronto Area. Industry experts are forecasting that buyers once interested in the Vancouver market may be diverted towards the GTA.
While this fluctuation could spur Toronto single-family home values to increase further, the condo market within the city remains an easy-to-enter option for first time buyers. If you are currently condo hunting for your ideal home in the GTA, check out ohm.com for stunning listings.