VANCOUVER (Reuters) - Vancouver, fighting a rental shortage in Canada’s most expensive property market, warned owners of empty homes on Tuesday that they faced stiff fines if they failed to fill out empty-home tax declaration forms that they had been sent in the mail.
Home owners who do not to submit the declaration by Feb. 2, 2018 will be automatically charged the 1 percent tax on the assessed value of their home. Owners who make false claims will also face a steep fee of C$10,000 per day, the city said.
The empty home tax, the first of its kind in Canada, will be charged on any homes left empty or occupied for less than six months per year. It would add up to C$36,000 a year on a C$3.6 million detached home, the typical price on Vancouver’s west side, according to the Real Estate Board of Greater Vancouver.
The hope is that investor owners will rent out their homes rather than paying the tax, potentially adding some 25,000 units to the rental market as the vacancy rate in the region hovers near zero.
“Housing is for homes first, and as business and investments second – we need a tax on empty homes to encourage the best use of all our housing, and help boost our rental supply for locals,” Vancouver Mayor Gregor Robertson said in a statement.
Vancouver’s real estate market has been a hotly contested issue, with many residents and housing advocates complaining that foreign buyers, especially from China, were driving up prices and making homes unaffordable for local people.
In an effort to increase affordability, British Columbia last year introduced a foreign buyer tax on Vancouver housing sales, a move that has hit sales volumes in the detached market.
Reporting by Julie Gordon; Editing by David Gregorio