Vancouver rental problem persists despite ghost home tax

VANCOUVER— Vancouver Mayor Gregor Robertson declared the city’s new tax on empty homes a success this week, thanking the absentee owners of 8,500 properties for paying up.

He was less conclusive about whether the tax did what it set out to accomplish. “The ultimate goal here was to encourage people to rent their empty homes,” he said. “Hopefully that’s happening.”

Hopes aside, there’s no sign yet that Vancouver’s near-zero supply of available rentals has eased since the levy took effect at the start of 2017.

The outcome of the new tax is being watched closely as cities around the world struggle with the rise of so-called ghost homes.

These are scarcely used residences in prime urban locations seen by investors as a safe way to park their cash. Vancouver and some London boroughs were among the earliest to impose taxes on empty homes with the aim of boosting the rental supply in tight markets — a strategy that’s now spread to Australia, and is being considered in Toronto and Dublin.

For city coffers, Vancouver’s new levy was a winner. The Pacific coast city expects to raise $30 million from the tax in the first year. That will more than cover the one-time cost to implement the system, $7.5 million, and the annual operating cost of about $2.5 million.

Taxing ghost owners is also more lucrative than annual property levies. The empty homes bill was as high as $250,000 for at least one vacant multimillion dollar home.

“Those who didn’t rent their empty property and chose to pay the empty homes tax, I just want to say thank you,” Robertson told reporters Monday, promising to steer the extra revenue toward affordable housing initiatives.

If observers are watching for improvements in the plight of renters, they may be disappointed. The supply of homes available for lease in Vancouver remained below 1 per cent as of early October for the third year in a row, according to data from Canada Mortgage and Housing Corporation. The city expected it would boost the rental vacancy rate to about 3.5 per cent. Determining what impact ghost properties have on local housing prices and availability is vexing in part because it’s tricky to determine which homes are empty. Vancouver’s program relies on owners to self-declare if a property was used or rented for less than six months in a year. False declarations incur fines of up to $10,000 a day.

Robertson, who isn’t seeking re-election in October’s municipal ballot, has called the program a “carrot-and-stick approach” intended to capture ghost homes and help return them to the rental supply.