Our Speculation and Vacancy Tax declaration letter arrived the other day.
The process of registering and declaring my occupancy status was as easy as had been advertised. In less than one minute online, I entered the required information, submitted the forms and received confirmation. I could have called the information in to the toll-free line provided, but that would have taken longer.
I recognize that many other people would love the privilege of having to register and declare their occupancy status in Victoria. As small and old as our house is, it is ours. We bought it many years ago as a place to live while we worked here. Neither of us ever thought it would be worth what it is today.
But what good is that valuation, anyway? Sure, it would allow us to go into greater debt. Or we could cash it in. But unless we move to Windswept, Sask., Bushwhack, B.C., or a cardboard box down the road, we wouldn’t come out much further ahead.
At least I don’t have to choose between keeping a roof over my head or, for example, eating or buying prescription medication.
Not needing to choose — which means I have to declare my occupancy one way or another — is a privilege.
Cities around the world are grappling with many similar issues — homelessness, unaffordable housing for locals with even decent-paying jobs, limited and expensive land on which to build, and Deliverance-like after-hours main streets.
Speculation and vacancy taxes, as partial solutions to these community problems, might be recent concepts, but they aren’t new. We all know about Vancouver’s version of the tax, implemented last year.
However, Strasbourg, in France, adopted its own empty-houses tax nine years ago. Paris followed suit with its own tax in 2015 — then tripled it to 60 per cent in 2017. Since 2013, town councils in the U.K. have been able to charge a 50 per cent markup on local tax if a home has been empty for two years. Australia’s federal government has imposed taxes on properties deemed to be empty for six months or more, while Melbourne began taxing foreign buyers last January. Washington, D.C., levies a higher tax on vacant properties. Hong Kong, San Francisco, Toronto and London are also considering vacancy taxes.
Researchers recently examined the effectiveness of taxing empty homes compared with simply building more housing. After mapping low-use and vacant homes across London, U.K., they found those properties concentrated in small numbers of highly desirable areas.
“In such cases, simply building more homes is not going to solve the problem, as the issue is intense competition for property, not a lack of places to live,” they say. “An empty-homes tax may be more effective, with the potential to generate a not inconsiderable income for local authorities, whilst taxing people who are typically not eligible to vote in local elections, or encouraging them to rent out their properties.”
Vancouver’s experience confirms this. By November, the city had collected about $21 million as a result, and expected to collect $38 million by the end of the tax’s first year — $8 million more than originally estimated. Those funds are earmarked for building affordable housing.
Furthermore, LandlordBC reported that, after the city’s tax came into effect, licensed property managers saw increased business as owners of homes and condos that had sat empty sought to rent them out. The tax, alongside new mortgage rules and higher interest rates, is said to have also helped dampen the local real estate market — as it was designed to do.
In Victoria, considered desirable by the rest of the country, the rental vacancy rate continues at less than one per cent, and the Victoria Real Estate Board predicts continuing high demand will provide little relief for buyers caught between tougher lending rules and higher prices. Not even the new rental and social housing being built will ease the region’s squeeze much.
Whether the speculation/vacancy tax will succeed in converting empty houses and condos into more rentals and otherwise loosening the market here remains to be seen.