After generating much discussion, action on a Vacant Homes Tax was not ultimately part of this year’s budget cycle. This will, however, be something Council takes a close look at over the coming months.
Over a relatively short number of years, the issue of housing affordability in Toronto has grown from concerning to crisis level. Real estate prices have escalated so quickly, both for home ownership as well as for rentals, a whole generation is finding itself priced out of the market. Rental vacancy rates are also extremely low making units hard to find for even those able to afford them.
Tools in the City’s arsenal to adequately address this crisis are somewhat limited. Contributing factors such as low-interest rates and foreign ownership policies are outside the purview of municipal governments. But Toronto must keep looking at the powers it does have to alleviate these pressures.
When Toronto City Council last looked at Vacant Homes Tax in 2018, concerns were raised about how effective it would be in creating more rental units and whether the revenue from the tax would cover the costs of administering the program. More research was recommended at that time. When the Budget Committee took another look in 2020, they again asked for more information.
Over the last year, however, data on a Vacant Homes Tax implemented by the City of Vancouver has become available and illustrates how such a policy can be tremendously successful. Property owners in Vancouver are required to rent out an empty or under-utilized property for at least 6 months of the year or pay the city a rate of 1% of the property’s assessed value each year. That program brought in $38 million in new revenue to the City of Vancouver in its first year alone, much of which will be allocated to affordable housing programs.
At a time in which Toronto is struggling to get rental units on the market, and still looking for revenue streams that would address the growing backlog of housing needs and state-of-good-repair projects across the city, this has become a natural policy fit. It also opens the door to collecting more data on home usage in Toronto and examining options to more fairly apply tax policies to those uses.
The Budget Committee adopted a motion to bring a Vacant Homes Tax discussion back to Council in April 2020. If you have thoughts on a Vacant Homes Tax and whether or not this would be a good move for Toronto, please share your thoughts with me at email@example.com