Peel Region could be the next municipality to implement a Vacant Home Tax in an effort to make more housing available.
On April 13th, the Region of Peel announced that it had launched an online survey to gather public input on a potential Vacant Home Tax program, a policy instrument that would ideally increase affordable housing supply in the region.
The survey will be open from April 13th to May 16th and coincide with two virtual public consultation sessions on April 26th and May 3rd. Gathered input would be used to gauge public support for the tax, as well as determine the tax’s impact on affordability, its potential effectiveness and any privacy-related concerns.
According to a press release, affordable housing supply had been eroding across Ontario, including Peel Region. The regional government said that between 2011 and 2021, the average resale price for a home in Peel Region grew over $700,000, about $70,000 each year.
In practice, a Vacant Home Tax would discourage speculative behaviour in urban areas that are seeing fast-rising prices or a lack of homes available for purchase or rent.
“As a policy tool to improve housing affordability by implementing this tax, the Region may be able to encourage owners of vacant properties to either sell or rent out their units,” said the press release. “This increases supply of units on the market which should lower average property sale and rent prices, improving the affordability of housing in the Region.”
A vacancy tax is usually applied to homes that are empty for at least six months in a calendar year with some expectations, according to Peel Region. Other municipalities who have implemented or are considering implementing a Vacant Home Tax use the collected revenue to fund rent relief programs, affordable housing projects and to provide grants to non-profit organizations.
Peel Region faces a housing affordability crisis. One way to help get more units onto the market is through a Vacant Home Tax.
A VHT is applied to homes that are empty for at least six months over a calendar year. pic.twitter.com/dn489IF8ux
— Region of Peel (@regionofpeel) April 13, 2022
The Vacant Home Tax is already in effect in some Canadian municipalities, most notably Vancouver. In 2017, the City of Vancouver introduced its one per cent Empty Homes Tax, which was later increased to 1.25 per cent in 2019 and boosted to three per cent in 2021. Since its implementation, Vancouver says that the number of vacant properties in the city dropped 26 per cent between 2017 and 2020, and $86.6 million in revenue has been collected for affordable housing initiatives.
In December 2021, Toronto City Council approved the implementation of a Vacant Home Tax starting in January 2022. Although the number of vacant homes in the city won’t be known until declarations are finished in 2023, Toronto anticipates that a one per cent vacancy rate on the city’s 800,000 residential units could create $55 million to $66 million in annual tax revenue.
A residential vacant unit tax report was approved on March 23rd in Ottawa, which will be implemented in the 2023 taxation year. The one per cent tax will apply to non-principal residences vacant in 2022 for at least 184 days, with exceptions made in the case of the property’s sale, renovation or death of its owner, among other cases.
