Vancouver’s Vacant House Tax Approved, But It May Not Matter

Share this

B.C.’s government has said it will go ahead with allowing property taxes on homes left vacant.

The new tax is one that has been pushed for by Vancouver mayor Gregor Robertson.

The purpose of the tax, according to the government, is to address the housing crisis increasingly affecting Vancouver and cities nearby for approximately 100 kilometers — house prices and availability have been dramatically effected as far east as Chilliwack.

The tax could come into effect some time in 2017 at the earliest.

However, critics are already saying the tax does nothing to deal with the problem. They say that a small property tax will most likely not dissuade buyers in a market where prices are dramatically higher each year, and where many houses are purchased as investments from overseas — most notably, China, where an abundance of wealthy people are seeking investments outside of their nation, and many buyers do not even see the homes they buy.

Currently, property tax is relatively inexpensive in Vancouver compared to other popular North American and world cities. For example, a 2-bedroom unit in Yaletown or Coal Harbor which costs around $1 million has a property tax of around $2500 per year. In many American cities, the property tax would be 3 or 4 to 10 times that amount depending on the city. One reason for Vancouver’s low property tax rate is that the provincial government imposes a high income tax rate, which isn’t the case in the states.

Maintenance fees are also lower in Vancouver. This is particularly beneficial to buyers who resell their house, because they don’t need to invest as much in upkeep.

In Vancouver, an estimated 1 percent of family homes are unoccupied. 7.2 percent of condos and rental apartments are unoccupied. The highest rate is 12.5 percent, for condos alone.

These figures are roughly the same as other Canadian cities.

The lowest metropolitan apartment vacancy rate in Canada is Quebec with 5 percent and the highest is Windsor with 16.5 percent, although London and Victoria also have high vacancy rates.

In West Vancouver “Properties Doubled in Eight, Nine Months”

Share this

According to local real estate agents for Royal LePage, property values have doubled in less than a year in some parts of Vancouver due to foreign real estate investment.

“The luxury market has been driven purely on the demand from investors and the appeal is the perfect storm of geographical appeal,” stated Jason Soprovich, who specializes in the West Vancouver market. “Low interest rates, very low active listing rates and pent up demand.”

“[In West Vancouver] we’ve seen properties double in value over the past eight, nine months,” he said. “In the British Properties, some properties we saw listed 8 months ago at $2.4 million are now selling at $4.5 million.”

Most buying was from a single source, he said, agreeing with other Vancouver real estate agents: Mainland China.

Others have noted that Chinese buyers who live in China make up at least one-third of buying in the area, which is in addition to Chinese buyers who reside in Canada — a demographic for which there are no clear statistics.

The shortage of affordable housing in the Vancouver area is causing people to leave, some creating a notable trend of buying houses as far east as Chilliwack and some moving to other provinces.

Responding to comments made by B.C. Finance Minister Mike de Jong, who has stated that he was himself “biased” in his belief that foreign buyers are not the main factor in what is taking place in the Lower Mainland real estate market, Soprovich said, “It’s naive to think there hasn’t been a lot of investors moving into this part of the country – there is and it has had a major affect.”

Soprovich recommended levying an extra property tax on foreign buyers, which would, he said, deter some buying, but, “If this large number of people are influxing into the city are coming to city and using infrastructure, there needs to be some level of taxation.”