Condo buildings in Vancouver.Rafal Gerszak/The Globe and Mail
Vancouver is reaching out to owners of thousands of empty condos, trying to coax at least 2,000 of them to lease their units – and avoid a coming vacant-homes tax – to help ease the city's rental crisis.
Councillor Geoff Meggs, the ruling Vision Vancouver party's point person on housing issues, said on Monday that staff have no idea how many people will choose to rent out their secondary or underused units to avoid paying a 1-per-cent levy on their property's assessed value. But renting out 2,000 out of the up-to-20,000 units that may be sitting empty for most of the year would increase Vancouver's 0.7-per-cent vacancy rate and represent twice the number of new rental units approved by the city last year, he said.
"We're not in this to raise money," Mr. Meggs said of the tax. "The best news would be we've actually mobilized thousands of units for long-term rental that would help us with our vacancy rates.
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"And that those homeowners are now successful landlords as well and we have tenants in those places that are able to stay in the City of Vancouver."
City staff are now mailing all owners a bulletin outlining details of Canada's first tax on vacant houses and links to a new program from British Columbia's biggest rental-industry association that will educate aspiring landlords on the ins and outs of the Residential Tenancy Act.
David Hutniak, chief executive officer of Landlord BC, said at the Monday news conference that his association has already had dozens of people preregister for its free Landlord 101 webinar on Jan. 19. He added that his organization, which represents more than 3,000 members that own about 150,000 housing units across the province, has created a registry of property managers that homeowners can search if they want help renting their units.
Eric Tse, a representative with Aedis Realty's property-management division, said the industry standard for handling an unfurnished property is a flat fee of around 10 per cent of gross rental revenue. That would cost a homeowner roughly $127 a month for a one-bedroom apartment renting at $1,268, the average in the city, according to the latest Canada Mortgage and Housing Corp. data.
Even if a landlord pays a company to find a tenant and manage the unit, filling that home and earning rent still makes more financial sense than paying the vacancy tax. That levy is equivalent to 1 per cent of a home's assessed value, meaning a person with a $400,000 condo would pay an additional $4,000 a year in taxes. Homeowners will first pay the tax in 2018, after self-reporting on the status of the homes they owned throughout 2017.
However, critics have said the tax will be difficult to police because it relies on owners to self-report and enforcement will in part be based on random audits and complaints from neighbours.
Also, a number of exemptions have been outlined. For instance, homeowners won't need to pay, even if they are away for large parts of the year, if their house is a principal residence – the place listed on their driver's licence, tax forms and health cards.
Homeowners will also be exempt – even if it is a second home – if they can prove that they or a family member have been living there for more than six months of the calendar year, or that they have rented it out for at least that much time.
People will also be exempt if they own condos in buildings where the strata council had a rule in place, as of the start of the new tax, restricting rentals.
Staff expect to audit about 3,000 self-declarations a year, based on reports from residents, on evidence of high-likelihood areas of empty homes, and on random checks.
The B.C. government passed legislation in the summer allowing Vancouver to impose a tax on empty homes, but has since said it will consider similar requests from other cities.
West Vancouver is studying the issue.
Mr. Hutniak said this tax will help open up more rental units, but said his industry is awaiting announcements from the federal government in January on how it will start the wider creation of more than 5,000 rental units that regional planners predict Metro Vancouver will need each year for the next decade. One clear way Ottawa can ease the rental crisis is by exempting developers from paying GST on purpose-built rentals, he said.
Mr. Meggs said his city has created a host of measures aimed at making Vancouver more affordable for renters and homeowners and that the empty homes tax is specifically targeting speculators that are taking advantage of the region's hot real estate market.
"That offends people who think housing is a right and not a commodity," he said.