Proponents of vacancy taxes argue that they can increase housing supply and affordability while reducing speculation.
In Vancouver, it seems that they’re also helping to reduce the amount of empty dwellings.
While it’s hard to pinpoint exactly how many homes are sitting vacant at any given time, census data provides the total number of housing units and the total number of homes occupied by ‘usual residents.’ Vacant homes and short-term rentals make up the difference between those two numbers.
According to the most recent census data, Vancouver’s percentage of homes that aren’t occupied by usual residents dropped from 8.2 per cent in 2016 (25,502) to seven per cent last year (23,011). That marks the first decline in two decades, and Vancouver’s Empty Homes Tax (EHT) is being credited as a primary influence.
Introduced in 2017, Vancouver’s one per cent tax on empty dwellings — properties unoccupied for six months of the year — was implemented to encourage real estate investors to transition their properties to long-term rentals rather than having them sit unused.
Although industry experts are divided on how much vacancy taxes contribute to increased housing supply, a report by the City of Vancouver found the number of vacant homes dropped from approximately 2,200 to 1,600 between 2017 and 2020 after the tax was introduced.
Meanwhile, Vancouver’s EHT generated $33.6 million in revenue in 2018, $23.3 million in 2019, $27.9 million in 2020, and $20.8 million as of December 2021, helping to fund affordable housing initiatives in the city.
After staring out at one per cent, the tax was increased to 1.25 per cent in 2019 and more than doubled to three per cent last year.
“This groundbreaking tool has helped move thousands of homes back onto the rental market to help house our neighbours, but there are still too many homes that remain empty,” Vancouver mayor Kennedy Stewart said following the most recent tax hike.
“By tripling the tax from one to three per cent since the tax launched, we’re sending an even stronger message that homes are for people, not speculation.”
While Vancouver is the only municipality in Canada with a tax on vacant homes, Toronto and Ottawa are planning to introduce their own versions next year, and the federal government is debating a nationwide vacancy tax as part of its housing strategy.
South of the border, San Francisco is also using Vancouver as a model for its own vacancy tax, proposed last month after data revealed that 10 per cent of its total housing supply is currently vacant.
