VANCOUVER (Reuters) - Vancouver, a city on Canada’s west coast in the grips of a housing affordability crisis, will introduce a tax on vacant homes ideally as early as next year after winning support of the provincial government, the city’s mayor said on Monday.
A residential vacancy tax could drive up costs for foreign, mostly mainland China, investors who have helped make Vancouver Canada’s most expensive property market and drive new investments to other housing markets. Many investors buy property in Vancouver that they neither live in nor rent out.
“We want this (tax) to happen soon. The affordability crisis is right now,” Mayor Gregor Robertson said.
The British Columbia government earlier in the day said it would introduce the necessary legislative amendments on July 25 to allow Vancouver to push ahead with taxing the nearly 11,000 homes in the city that are empty for at least 12 months.
Robertson sees the tax as one way to increase the supply of rental accommodation in Vancouver, where rental vacancy rates are close to zero.
Vancouver would decide on a tax rate in the next few months, he told reporters.
Robertson last month said the city would introduce a tax with or without British Columbia’s backing. But it would be easier with the province’s support as the city would then not have to draft regulations for a new business tax, he said.
British Columbia already has data on which houses are empty and said on Monday that it aimed to share this with the city. It is leaving the administration and the enforcement of a tax to the city, tasks which Robertson admitted could be complicated.
House prices have soared in Vancouver. Ninety percent of detached homes in Vancouver are worth more than C$1 million ($762,078.95), according to a recent study, leading to demands by the public and opposition politicians that the government take steps to cool the market.
For some, like Vancouver real estate agent Pam Allen, a vacancy tax will not have an impact on affordability.
“I think they are moving in the incorrect direction. The city should instead be making it easier for condos to be built,” she said.
Reporting by Nicole Mordant in Vancouver; Editing by Chizu Nomiyama and Leslie Adler