Hiked rate for Empty Homes Tax in Vancouver led to doubling of revenues

Single-family detached house in Vancouver. (Shutterstock)

The increase of the City of Vancouver’s Empty Homes Tax (EHT) rate in 2021 led to a double of revenue on properties declared vacant, according to the office of Mayor Kennedy Stewart.

The mayor’s office stated today the 3% EHT rate in 2021 is estimated to result in the issuance of over $32 million in taxes and penalties based on the number of homes declared vacant, based on preliminary figures compiled by city staff since the February 2, 2022 deadline for the 2021 declaration year.

EHT’s rate is applied as a tax on the property’s assessed value, which has been trending upwards as a result of the region’s hot real estate market.

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This is up from the previous 1.25% rate in 2020, which currently has an interim revenue total of $15 million.

There was a year-over-year decrease of 15% in homes declared vacant without an exemption — from 765 properties in 2020 to 653 properties in 2021.

Vancouver City Council approved Stewart’s member motion in November 2020 requesting the EHT be hiked to 3% starting in 2021, but this was a move opposed by City staff at the time, who cautioned that an increase in the tax rate beyond 1% might have unintended consequences on both the administration and the effectiveness of EHT and on future revenue. City staff wanted more analysis on how a higher EHT would find its place with the provincial government’s separate speculation and vacancy tax, and other interventionist policies on demand.

As of late 2021, city staff reported the EHT generated a total of $106 million since 2017 when the tax was first enacted. At the time, there were 1,627 residential properties deemed, determined, or declared vacant by the city for 2020 — a drop from 1,769 homes in 2019, as well as 2,036 homes in 2018 and 2,193 homes in 2017, the first year of the policy.

Revenues from the EHT are used as a relatively minor funding source for affordable housing building developments, with this revenue source expected to trend lower over time given the falling number of vacant homes — unless City Council increases the tax rate.

City staff will provide a more comprehensive update on 2021’s EHT statistics later this year.

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