The rental vacancy tax

Over at the Vancouver sun there’s an editorial by former BC supreme court justice Ian Pitfield proposing a rental vacancy tax.

This would be a tax that municipalities could impose to discourage vacant units held for speculation.

A vacancy tax would oblige a non-resident who beneficially owns housing accommodation in British Columbia, wherever the non-resident resides, to ensure that it is ordinarily occupied by the owner as a principal residence or available for rent at a competitive market rate. Failure to satisfy the requirements would result in liability for a vacancy tax equal to the monthly fair market rental value of the housing unit. The tax would be payable annually and not just at the time of purchase as is the case with the property purchase tax, or at the time of sale, as is the case with the income tax.A vacancy tax could increase the rental pool by some 15 per cent across the board, and by as much as 25 per cent or more in certain areas, if Mr. Yan’s estimate is correct. An increased supply of rental accommodation would also tend to put downward pressure on rents generally. The tax need not be seen as a bad thing by speculators. Avoiding the tax will produce income for the owner and offset the cost of owning and carrying the property in the course of speculation.

Read the full article here.

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gokou3
Guest
gokou3

How do you actually enforce it?

Interesting figure for the current vacancy rate (15-25%), btw.

Vote Down The Facts
Guest
Vote Down The Facts

That’s not the vacancy rate. That’s the expected change in vacancy rate.

Priced out Renter
Guest
Priced out Renter

Rental vacancy tax!
It’s about time. Let’s implement it and then worry about enforcement.
The simple fact of having this in place would discourage the speculators and flippers and make the City affordable again.

jesse
Member

I suggest to take it up even further and tax unused bedrooms, not just unused dwellings. Why should someone with a cordoned-off unit have to pay a tax when there are single-family-dwelling land hoarders imparting just as much or more stress?

No joking, the UK is doing this with subsidized dwellings: if you are overhoused based on their occupancy formula, you are taxed until you are not overhoused. Maybe we should say that if you want your mortgage backed (ie subsidized) by the government you need to demonstrate full occupancy. Wouldn’t that be something.

Democrass
Guest
Democrass

“How do you actually enforce it?”

Like income tax. Self-assessment. Penalties for failing to report and pay. Audits would be simple – get hyrdo records (revenue authorities can easily get this kind of info under the enforcement provisions of their statutes). Offer people rewards to rat out cheats. Unpaid bills get registered on title. Get a court ordered sale of the house to pay the tax bill.

Yes, enforcement will costs some money. But the tax will be substantial enough to make the entire profitable for the government.

gokou3
Guest
gokou3

@VDTF (where F=false)

Ya if you like to be nitty-picky, the exact wordings are “A vacancy tax could increase the rental pool by some 15 per cent across the board, and by as much as 25 per cent or more in certain areas”

An increase of rental pool of 15-25% is not equivalent to a change in vacancy rate of 15-25% ok.

Vote Down The Facts
Guest
Vote Down The Facts

“I suggest to take it up even further and tax unused bedrooms, not just unused dwellings.”

How you do define what a bedroom is?

kabloona
Member
kabloona

If you want to buy a concrete box in the sky and then lose money on it thru municipal taxes and monthly maintenance fees, I say knock yourself out. Why should the Government interfere with that sort of stupidity?

Eventually, that situation will sort itself out…

Just my $0.02…

Vote Down The Facts
Guest
Vote Down The Facts

gokou3, you were implying that the vacancy rate is an order of magnitude larger than it actually is, which is rather misleading. How’s that nit-picky?

Priced out Renter
Guest
Priced out Renter

# 7.
Simple. If you have 4 bedrooms, you must have 4 people living there.

Priced out Renter
Guest
Priced out Renter

Kabloona,
Many of these empties where bought to launder dirty money.
The extra scrutiny would think them twice.

shikko
Member

@#4: jesse said:
I suggest to take it up even further and tax unused bedrooms, not just unused dwellings. Why should someone with a cordoned-off unit have to pay a tax when there are single-family-dwelling land hoarders imparting just as much or more stress?

So people whose kids have gone off to university have their taxes go up, unless they want to move out when their kids do?

@#10: Price out Renter said:
# 7.
Simple. If you have 4 bedrooms, you must have 4 people living there.

Does a house with three bedrooms and four people (parents plus two grade-schoolers) get a tax break for efficiency? If not, why not?

Real.Estate Pimp
Guest
Real.Estate Pimp

Surely THIS is a.sign the bubble is about to burst.

Priced out Renter
Guest
Priced out Renter

Shikko,
Tax break for efficiency!!!!
Great idea.
A great idea for increasing housing intensity.
Funny though, this would bring us back to the 60s, 70s and 80s..
Just like fat ties and Buddy Holly glasses, everything eventually comes back.

Anonymous
Guest
Anonymous

The UKs bedroom tax is only on people that live in subsidized accommodation. It is a monstrous penalty that solely penalizes the poor and it does not apply to anyone that owns their home.

It would be a pretty big stretch to suggest that a single mom on welfare that has one child in a three bedroom rental assistance apartment, is the source of what is wrong with the Coal Harbour ghost town or SFH market in Vancouver. In fact, it suggests that you have nothing of value to contribute to the conversation.

JD
Member
JD

Government taxation tends to be an indicator of peaks and troughs. They are late to the party and are good at shutting them down, so new parties can start.
The smart money goes before the taxman shows up.

blah-blah-blah
Guest
blah-blah-blah

Should you also be taxed if you don’t have a basement suite (conforming or non-conforming)?

Not much of a name...
Member
Not much of a name...

@Anonymous #15

Reread what Jesse wrote, especially the last sentence. He was referring to subsidized housing….CMHC subsidization.

gokou3
Guest
gokou3

VDTF,

“you were implying that the vacancy rate is an order of magnitude larger than it actually is”

Where exactly did I imply that? And what is the actual vacancy rate, per your facts?

frank
Guest
frank

this should have been implemented ten years ago!

Priced out Renter
Guest
Priced out Renter

A last, many people are realizing that something has to be done to curb the speculation and flipping that has driven house prices through the roof during the last 10 years.
Families and well educated singles are moving away and may never come back.
The years of 2002 to 2012 will probably be remembered by historians as the “lost decade”.

Saj
Guest

There just aren’t enough regulations and taxes on the citizens. In addition to taxing unused rooms and condos, we should also tax unused bicycles and cars (circulating these would bring down the prices of metal!) and all food stocks that are not consumed (hello, we have a massive global food shortage!) Don’t worry, the government will find good uses on which to spend the extra money.

Why should the rightful owner of a good, who paid the asking price for his product, be entitled to choose how much he uses it? Nay, I say!

gokou3
Guest
gokou3

So the Chancellor high-rise development by Polygon at metrotown is almost ready for move in! Anyone want to rent from these (amateur) landlords:

http://vancouver.en.craigslist.ca/search/apa/bnc?zoomToPosting=&query=chancellor&srchType=A&minAsk=1000&maxAsk=&bedrooms=

Manna from heaven
Guest
Manna from heaven

I think Goya’s painting, “Saturn Devouring His Son”, is an apt metaphor for Vancouver’s RE market.

http://www.wikipaintings.org/en/francisco-goya/saturn-devouring-his-son-1823-1

Dumbest time in 31 years to buy RE
Guest
Dumbest time in 31 years to buy RE

Sounded great at first glance…until all the ifs & buts showed up. Too fast on the trigger, and wish I could change my first few votes. Agree totally with Kabloona #8 and JD #16.

Why let the guvmnt fuck something up with it’s incompetece that could eventually backfire. The market is already heading down all by itself…thank you very much.
The best cure for high prices is high prices.

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