Would a vacancy tax work in Whistler?
As Vancouver sees a drop in empty homes, other BC communities say a similar tax hasn’t had the desired effect
One of the most startling statistics found in Whistler’s treasure trove of 2016 census data was that a whopping 61 percent of the private dwellings in the community are empty or at least temporarily occupied for much of the year.
For a city that has been struggling for years against the shortage of rental housing, it is this lever that seems the most obvious to activate. Compared to just 4% in Squamish and 9% in British Columbia as a whole, Whistler’s vacancy rate sticks out like a sore thumb. And while unfortunately we don’t yet have an updated vacancy rate for 2021 from Statistics Canada, we do know from a local housing survey conducted last year that only 10% of all residential properties in the market in town are rented long-term to residents (although that number rises to 75 percent when looking at secondary suites).
With the right incentive, could a fraction of those homes that sit empty for most of the year be offered to local tenants? Well, that depends on who you ask.
Since 2018, the BC government has implemented its Speculation and Vacancy Tax “to help stamp out speculation and discourage empty homes in the province’s largest urban centers,” the minister wrote. of British Columbia Finance, Selina Robinson, in a statement to prick Last week.
Whistler, as we all know, is not an urban center but a recreational resort with a large proportion of second home owners and part-time residents, many of whom prefer to keep their space available year-round for their own use. A major cog in Whistler’s economic engine, it’s safe to say that the incentive to impose a provincial tax on second home owners at the resort isn’t quite the same as in other hotspots. of British Columbia.
“Whistler is a resort municipality, not a major urban center, and we have worked with our partners to put measures in place that respond to this particular region,” Robinson said.
These include an agreement with Airbnb to ensure it collects both PST and Municipal and Regional District Tax (MRDT) on all of its listings, as well as expanding the permitted use of MRDT. to include housing affordability initiatives.
“We are open to continuing to have conversations with municipalities about the different tools available to create moderation in their housing markets, while also being sure that we take into account the effects that different taxes and measures at different levels of government will have on homeowners and the housing market. “Robinson said.
There are nine regions in British Columbia with the Speculation and Vacancy Tax (SVT) in place, and opinions remain divided as to whether the tax – 0.5% of the assessed value of a home for Canadian citizens and permanent residents, and 2% for foreign buyers and satellite families – has the desired effect.
“Targeting specific areas is not good planning policy and it doesn’t work,” said Nanaimo Mayor Leonard Krog, who believes the tax simply encourages real estate investment outside of the city where the tax does not apply.
“For the end it aims to provide, which is to get people to rent their premises, I don’t think it’s been that successful,” he added. “The purpose of the tax is not just to raise taxes, it is to encourage more supply on the market by ensuring that vacant homes enter the rental market. That’s not going to do it.
The City of West Kelowna also pushed back the provincial tax. Earlier this year, the province denied the City’s second request to be exempt from the speculation tax, with elected officials arguing that the tax is paid primarily by Canadians, not foreigners.
According to provincial data, for the third year in a row, more than 99% of British Columbians are exempt from paying the tax and 93% of the income collected comes from non-residents of British Columbia.
In West Kelowna, data showed that strangers and satellite families paid just 30% of the $1.4 million in speculation tax collected in 2019, while B.C. residents and other Canadians accounted for almost 70% of the total.
“We have, on several occasions, demonstrated to the provincial government the reasons why the speculation and vacancy tax should be eliminated in our city and our position remains unchanged,” read a statement provided to prick of the City of West Kelowna. “The significant and demonstrable negative impacts of inequitably applied SVT outweigh any marginal, unquantified gains that may or may not materialize in West Kelowna in the future.”
In its assessments, the city said provincial statistics “clearly indicate that SVT has consistently failed to align with provincial goals,” particularly when applied to West Kelowna.
“In some cases, vacancy rates here are even better than in places where there is no SVT,” the statement continued. “Furthermore, funds raised from the SVT, which were intended to be reinvested in affordable housing in West Kelowna, are not being fairly reinvested directly into the city’s housing market; however, investments are taking place in many municipalities where the SVT is not applied.
Whatever the case in each of the respective communities to which SVT applies, it is difficult to dispute the BC-wide figures. Between 2018 and 2020, the province raised $231 million in revenue through SVT and housing analysts estimate it has helped add about 20,000 units to BC’s long-term rental market this year. period.
Over time, the number of homeowners paying SVT has declined, either because homeowners have rented out their property, sold it, or claimed it as their primary residence. In 2018, the tax applied to 8,920 goods. By 2020, that number had dropped to 6,556.
“The proof is in the pudding”
Before SVT, there was the City of Vancouver’s Empty Home Tax, a council-led initiative first introduced in 2017 to curb the city’s creeping vacancy rates and foreign speculation.
Councilwoman Adriane Carr has been a fan of the tax since day one for two main reasons.
“First, it ended up returning empty homes to the market that are actually inhabited,” she said. “The second is that for those who still don’t put the houses back on the rental market, we get revenue, and that’s about $30 million or so a year. We’ve used that to acquire rental units, so that’s is also a win that way.
Set at 3% for 2021 and 2022, the mayor’s office said the rate would have doubled revenue last year, issuing more than $32 million in taxes and penalties on the number of homes declared vacant. . Between 2017 and the end of 2021, the tax generated a total of $106 million for the city.
The number of reported empty homes has also steadily decreased: 2,193 homes in the first year of the policy, 2,036 in 2018, 1,769 in 2019 and 1,627 in 2020.
While the city isn’t examining the specific reasons a landlord might choose to no longer leave their property vacant, Carr said as long as the trend is moving in the right direction, she’s happy.
“It worked,” she said. “So if Whistler’s goal is to see home occupancy increase…the proof is in the pudding. We were the first jurisdiction to do this and it delivered what we were hoping for.
In April, Vancouver officials gave the go-ahead to increase the tax to 5%, starting in 2023. There was some concern at the council table about the possibility of diminishing returns with rising rate, coupled with SVT in other regions of the province. Carr does not share this concern.
“No, I don’t, and the reason I don’t is because there’s a pull to Vancouver, just like there’s a pull to Whistler because of the unique qualities of our cities,” she said. “These are two beautiful places with incredible benefits in terms of natural environment and recreational opportunities, fabulous restaurants and outdoor and wilderness trails. They are pretty special places so I think there will always be people who want to live in Whistler. There will always be people who want to live in Vancouver.