Empty Homes Tax—Vancouver City Hall barking up the wrong tree
As it turns out, very few homes qualify—meaning city hall should consider other ways to address Vancouver’s housing shortage, namely by enabling the construction of more homes.
Of the 183,911 submitted “property status” declarations (representing 98 per cent of Vancouver homeowners), 6,349 were either eligible for one of several exemptions from the new tax or declared vacant. Pending audits on these cases, city hall will only issue tax bills (and a $250 penalty) to the remaining 2 per cent of homes—2,132—that failed to submit their declarations.
All this to say, very few units in Vancouver can be considered “unoccupied,” raising questions about what other phenomena might be driving home prices in Canada’s most expensive major city.
Vancouver, like other in-demand cities, has experienced a growing population, rising incomes and low mortgage interest rates. Combined, these factors account for almost three quarters of house price growth between 2010 and 2016, according to the Canada Housing and Mortgage Corporation or CMHC.
Faced with so much demand, municipal governments should (and are better equipped to) focus on the supply side of the equation. How? By simply streamlining approvals for new homes.
Consider this. It takes 21 months (on average) for homebuilders to obtain building permits from Vancouver City Hall—with considerable variation and uncertainty. It also costs almost $80,000 per housing unit (on average) in fees and regulatory compliance costs. Of course, the building permit process exists for a reason, but there’s obvious room for improvement. Building permits take fewer than seven months to obtain in neighbouring Burnaby, where compliance costs and fees are also significantly lower.
With municipal elections fast approaching, it’s understandable that local governments—including Vancouver’s—want to showcase their attempts to address citizen concerns. However, when it comes to Vancouver’s chronic housing shortage, a vacancy tax on less than 2 per cent of the city’s homes does little—if anything—to help remedy the severe imbalance between demand and supply. Only by enabling the construction of many (many) more homes will Vancouver begin to increase housing affordability.