Vacant homes tax gets council go-ahead
Initiative meant to encourage owners to fill empty properties with tenants amid crisis
The city is marching forward with a tax on vacant homes designed to coax more stock into Hamilton’s tight market.
“It is part of a suite of policies, a suite of steps, that council is taking to ensure that we are addressing the affordable-housing crisis that this municipality is facing,” Coun. Nrinder Nann said.
In a 10-5 vote Wednesday, council directed finance staff to prepare the new program that would see the owners of vacant properties pay the one per cent tax on the property value in 2024. The tax will target properties of six units or less that are vacant for more than 183 days in the previous calendar year.
Some scenarios — such as deaths or hospitalizations, major renovations or court orders — exempt owners from paying the tax.
The “most challenging piece” is knowing how many homes are vacant in Hamilton, but staff estimate roughly 1,135 properties fall into that category, Gloria Rojas, senior tax policy adviser, told councillors last week.
The cost of implementing the program is $2.6 million and the annual operating expense is pegged at $2.2 million. The city expects to hire 16 full-time staffers to administer the tax.
The estimated gross revenue in the first year is $4.3 million, while the program is forecast to net $3.3 million from 2023 to 2028, Rojas noted.
“It’s very hard to estimate what will happen after that,” she added, noting the program may no longer be self-funding if enough vacant properties become occupied.
Ahead of Wednesday’s vote, Nann, who has pushed for the tax since 2019, noted the goal is not so much revenue generation but rather “incentivizing and encouraging” owners to fill vacant homes.
The approval of staff’s “framework” was the latest in a series of studies in a preamble dating back to the previous council. A bylaw governing the program is expected in November.
So far, Vancouver is the only city in Canada to implement a tax on vacant homes, but Ottawa and Toronto are preparing similar policies.
Coun. Mike Spadafora said he didn’t oppose Nann’s take on the tax but expressed concern over the recruitment and retention of staff to make it happen amid existing municipal hiring challenges.
“And this is another program that needs 16 more staff,” the Ward 14 councillor said.
Coun. Tom Jackson suggested the “hope” that the cost of the new initiative would eventually be “reimbursed” represented a gamble.
“It’s noble. I guess it’s a worthy attempt,” the Ward 6 councillor said, “but for me, the risk on the taxpayers is just too great.”
Karl Andrus, who leads the Hamilton Community Benefits Network, called Wednesday’s approval a “good first step” toward a tool that addresses the problem of vacant homes.
But the “devil’s going to be in the details of how it’s implemented,” added Andrus, noting an eventual review should flag if owners of empty properties are ducking beneath the city’s radar.
Local real estate agent Martinus Geleynse, however, is skeptical that such regulation will do much to solve the housing crisis.
There are more effective ways to address the issue, including cutting delays in processing development plans at city hall, he suggests.
For instance, he has waited two and a half months for the city to set a date for a formal consultation to advise him on his plan to redevelop a vacant single-family home into four two-bedroom units, Geleynse said.
“It’s exactly what the market needs. It’s right on a transit route. It’s a wonderful area.”
After buying the home in November, it could be months down the road and thousands more in costs before he even secures a building permit, Geleynse said.
“And in the end they wonder, ‘Well, gee, why don’t we have more rental units online?’ Well, that’s probably why.”