Vancouver City Council approves Empty Homes Tax hike to 5% of assessed value

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Beginning in the 2023 vacancy tax year, the Empty Homes Tax (EHT) regulated by the City of Vancouver will increase to 5% of the property’s assessed value.

On Wednesday evening, Vancouver City Council unanimously approved the member motion by mayor Kennedy Stewart calling for a 5% tax rate on vacant homes. Green Party councillor Michael Wiebe and A Better City councillor Sarah Kirby-Yung were absent from the vote.

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The 2022 vacancy tax year rate will continue to be 3%, which was the rate first introduced for the 2021 tax year, also previously proposed by Stewart. When the EHT was first introduced by the previous Vancouver City Council in 2017, the rate was 1%. In 2020, the rate saw its first increase to 1.25%.

“It’s a good move, I’ve loved the Empty Homes Tax from the beginning. The whole point of this was to ensure homes don’t sit empty in a city that’s desperate for housing, and it has achieved that,” said Green Party councillor Adriane Carr during the deliberations.

“The secondary consequence is that the tax itself has helped fund homes that are affordable for people who are in deep need of affordable housing. It’s a win-win situation as far as I’m concerned.”

At a rate of 5%, based on BC Assessment’s latest average assessed values for homes within Vancouver’s jurisdiction, there would be a $100,000 EHT tax on a vacant single-family house worth an average of $2 million, and a $38,000 EHT tax on a vacant strata condominium or townhouse worth an average of $760,000.

In addition to the EHT rate hike, the number of audits for non-compliance and tax evasion will be increased from the current rate of 9,00 annually to 20,000 for the 2023 vacancy tax reference year. Additional city staff hires will likely be required to conduct the expanded auditing, which is required to be fully cost-recovered from EHT revenues.

Numerous amendments were made to the motion, including a direction to city staff to analyze how further hiking the EHT to 5% or 10% could potentially increase rental stock, and increase the risk of tax evasion or unintended consequences. The analysis is also expected to explore the impact of the current 3% rate.

City staff will also explore how EHT exemptions could be altered to improve fairness for those with legitimate reasons for vacancy and/or having a secondary property, and how the EHT will be affected by the new federal anti-flipping measures. As well, city staff will conduct a cost-benefit analysis of doubling the number of audits.

City staff previously warned city council that they were against increasing the rate beyond 1% due to the law of diminishing returns, and the provincial government’s introduction of its own Speculation and Vacancy Tax.

“What I heard is that council supports this by and large and they want to see empty homes available to residents and family to live in, but I do note that there is some risk identified by city staff, and I hope that it will be evaluated and there will be a swift report back on the last changes,” said A Better City councillor Lisa Dominato.

Earlier this month, the mayor’s office stated the 3% EHT rate in 2021 is estimated to have doubled revenues — the issuance of over $32 million in taxes and penalties 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.

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.

In another meeting earlier this week, city council also approved the mayor’s request to formally ask the provincial government to consider an Empty Stores Tax on vacant commercial storefronts. Like how the City of Vancouver originally gained its tool of the Empty Homes Tax, a vacancy tax on commercial businesses requires the provincial government to enact legislation to amend the Vancouver Charter.

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