Late last week, the City of Vancouver announced details of its plans to tax vacant residential properties, which plans are part of its efforts to address the low rental vacancy rate and high cost of renting in the City.

At the end of July, the British Columbia government announced that it would be amending the Vancouver Charter[1] to pave the way for the City of Vancouver to impose a “vacancy tax” on owners of unoccupied homes in the City of Vancouver. The amendments leave it up to the City to define the circumstances in which a residential property is considered to be unoccupied, set the rate or amount of the tax, set out the procedure for determining if a property is unoccupied, and establish other requirements, penalties and exemptions.

On Wednesday, September 14, Vancouver Mayor Gregor Robertson held a press conference to announce details of the proposed tax by-law, following the publication of a staff report to City council which sets out potential approaches and makes recommendations for the tax (available here). It is expected that City council will approve the approach set out in the staff report this week, and begin public consultations in October. The City aims to have the tax in place for 2017, so that it will begin receiving revenue from the tax by 2018.

The tax will apply to both single family homes and to residential strata units that are not the principal residence of the owner, a long-term tenant or a family member of the owner. The report recommends that the tax be levied as a percentage of the assessed value of the property, at a rate between 0.5% and 2%, a rate it says is high enough to incentivize owners to rent out or occupy their homes. Any revenue from the proposed tax will be applied to affordable housing initiatives in the City.

The City will administer the tax using what it calls a “self-declaration, audit and complaint response”, which requires homeowners to declare annually that the property is their principal residence or that of a long-term tenant or family member. The City will also use random audits and targeted audits based on complaints. The amendments to the Vancouver Charter empower the City to compel owners to provide evidence to support their property status declarations and impose penalties for failing to make a declaration or making a false declaration.

The length of time homes must be vacant to attract the tax will be settled through public consultation this fall. The exemptions will also be defined through the public consultation process, but are expected to include properties that are in probate, subject to rental restrictions, going through renovations or changing owners.

These changes are part of the series of reforms in the Miscellaneous Statutes (Housing Priority Initiatives) Amendment Act, 2016, which are in response to growing concern over the housing affordability crisis resulting from escalating home prices and low vacancy rates in the Greater Vancouver area. The changes also include the foreign buyers’ tax, which we previously discussed here, and dispensing with the self-regulation of realtors, previously reported on here.