Vancouver Wields C$10,000-a-Day Fine in Crackdown on Empty Homes

[Sheba]

Want to keep your million-dollar luxury pad in Vancouver empty? Get ready to pay C$10,000 ($7,450) annually in extra taxes. Lie about it? That’ll be C$10,000 a day in fines.

Canada’s most-expensive property market, suffering from a near-zero supply of rental homes, announced the details of a new tax aimed at prodding absentee landlords into making their properties available for lease. The empty-home tax will take effect by Jan. 1 and will be calculated at 1 percent of the property’s assessed value, Vancouver Mayor Gregor Robertson told reporters at City Hall.

“Vancouver is in a rental-housing crisis,” Robertson said. “The city won’t sit on the sidelines while over 20,000 empty and under-occupied properties hold back homes from renters.”

The measure is among efforts to make housing more accessible and affordable in Vancouver, ranked the world’s third-most-livable city, and has drawn attention for its sky-high prices fomented by global money flows. Public scrutiny has focused on absentee landlords, particularly from overseas, who are accused of sitting on investment properties where windows remain dark throughout the year.

In August, the provincial government imposed a 15 percent tax on foreign buyers, and last month the federal government tightened mortgage insurance eligibility requirements. The city of Vancouver has focused its efforts on the rental market, where vacancies can get scooped up within hours while bidding wars drive up leasing costs.

Empty Homes

Robertson estimated that more than 10,800 homes are empty and 10,000 more are not fully used. The city expects that instituting the tax will boost the supply of homes available for lease to the point that the vacancy rate increases to about 3.5 percent from 0.6 percent currently.

The city will allow certain exemptions to ensure that most homeowners who are Vancouver residents, including those who spend their winters at nearby ski resorts, won’t be affected. Principal homes, as well as properties that are rented for at least six months of the year on 30-day minimum leases, won’t be taxed.

Homeowners will self-declare whether their property is a principal residence or a secondary investment. People who pay the new tax late will face a 5 percent penalty, while those who don’t declare will automatically be taxed. Falsely declaring that a home is occupied or that it’s a principal residence could lead to a maximum fine of C$10,000 a day for as long as the offense continues, according to the mayor’s office.

Bloomberg.com

[osirisboy]

So just to clarify. This just applies to detached homes and not strata properties right?

[twoNeurons]

All while the migration of suites to AirBnB continues unabated.

Basement suites are the last bastion of affordable rent in Vancouver. AirBnB is slowing sucking that away. AirBnB residences should require a business license, business insurance, and be taxed properly. Limits on how many days per year should also be enacted. San Francisco, despite being a free-market haven near Silicon Valley has instituted AirBnB controls already.

[excel]

This is good news. Hopefully the AirBnB issue is addressed next.

[Spork]

Originally Posted by osirisboy

So just to clarify. This just applies to detached homes and not strata properties right?

It covers detached homes, basement suites, coach houses, and strata properties. Strata properties with rental restrictions applied before some date (today? when Jan 1 2017? when this law is enacted? when the law goes into effect?) are exempt, but where a rental restriction does not exist, it still applies to those properties.

[Spork]

It is just too bad that this isn't going into effect until 2018! A year of warnings. My god.

[Klazu]

Originally Posted by twoNeurons

Basement suites are the last bastion of affordable rent in Vancouver. AirBnB is slowing sucking that away. AirBnB residences should require a business license, business insurance, and be taxed properly. Limits on how many days per year should also be enacted. San Francisco, despite being a free-market haven near Silicon Valley has instituted AirBnB controls already.

+100

If they will crack on AirBnb and the likes of it, only then will I retain some hope for this city. It shouldn't be illegal, but AirBnB properties should operate just like normal BnB's and pay for all the licenses and taxes. I laugh at their tv ads trying to wake some sympathy in me for their multi-billion dollar business.

[excel]

Originally Posted by Spork

It is just too bad that this isn't going into effect until 2018! A year of warnings. My god.

It will go into effect in 2017 with first payments to be made in 2018 if they remain vacant.

[scryer]

See I always felt that the 15% increase on foreign home buyers was weak. Now this is something I can see being effective if it is regulated properly.

[excel]

Originally Posted by twoNeurons

All while the migration of suites to AirBnB continues unabated.

Basement suites are the last bastion of affordable rent in Vancouver. AirBnB is slowing sucking that away. AirBnB residences should require a business license, business insurance, and be taxed properly. Limits on how many days per year should also be enacted. San Francisco, despite being a free-market haven near Silicon Valley has instituted AirBnB controls already.

Airbnb removes 130 Vancouver listings

http://www.cbc.ca/news/canada/britis...ings-1.3213200

[WarrenC12]

Guys, council has already directed staff to look into this issue (back in April 2016). Proposed rules were put forward in October, including having a license and displaying that license in your airbnb listing.

http://vancouver.ca/doing-business/s...m-rentals.aspx

Furthermore as you can see, it is currently against zoning regulations to rent for less than 30 days outside of having a true B&B license. The problem is enforcement.

I am involved in 3 stratas, and all 3 have enacted special laws that go above and beyond this to get the problem out of condo buildings. Almost everybody who actually lives in the building has no desire to have AirBNB customers coming and going in their building. Residents are encouraged to "rat out" their neighbours and it seems to be working.

[WarrenC12]

Originally Posted by scryer

See I always felt that the 15% increase on foreign home buyers was weak. Now this is something I can see being effective if it is regulated properly.

Have you seen any of the stats pre and post tax? Foreign home buyers have dropped dramatically. Housing sales have dropped dramatically (already started prior to the tax). It takes time for actual prices to come down, but there's no reason to think they won't.

This market, like all others, has followed the laws of supply and demand forever.

[s211]

The Vancouver fines would make more sense if they based on the bedroom count. For example, why would a studio get the same penalty as a four-bed penthouse, or real house for that matter. Maybe the penalty should be commensurate with the relative net rent one might get from renting a place out? Otherwise, this tax would disproportionally hammer at the smallest units.

[jlousa]

I liked what council did with the airbnb regulations they brought in. This one is poorly thought out and I expect it to be challenged and defeated.

[connect2source]

Originally Posted by jlousa

I liked what council did with the airbnb regulations they brought in. This one is poorly thought out and I expect it to be challenged and defeated.

Completely agree!!! It's invasive to the sovereignty of home ownership and challenges what we can do with the private spaces within our homes. It will be challenged and Vision is likely toast because of this.

[connect2source]

Originally Posted by WarrenC12

Have you seen any of the stats pre and post tax? Foreign home buyers have dropped dramatically. Housing sales have dropped dramatically (already started prior to the tax). It takes time for actual prices to come down, but there's no reason to think they won't.

This market, like all others, has followed the laws of supply and demand forever.

Problem is inventory has not increased so the market is basically 'stuck'. Owners wont's sell because there are few buyers and buyers won't buy because they anticipate price drops.

As a Realtor in noting that prices for most homes are NOT dropping at all in fact we're seeing very high demand on the few properties that are available especially in the mid-range condo market.

[Jebby]

Originally Posted by connect2source

Completely agree!!! It's invasive to the sovereignty of home ownership and challenges what we can do with the private spaces within our homes. It will be challenged and Vision is likely toast because of this.

Glad someone gets it.

[WarrenC12]

Originally Posted by connect2source

Completely agree!!! It's invasive to the sovereignty of home ownership and challenges what we can do with the private spaces within our homes. It will be challenged and Vision is likely toast because of this.

If I had a dollar for every time I've heard that over the last 10 years...

[WarrenC12]

Originally Posted by connect2source

Problem is inventory has not increased so the market is basically 'stuck'. Owners wont's sell because there are few buyers and buyers won't buy because they anticipate price drops.

As a Realtor in noting that prices for most homes are NOT dropping at all in fact we're seeing very high demand on the few properties that are available especially in the mid-range condo market.

The market price changes based on the inventory vs. sales ratio. This has been proven to be a strong correlation. We are now trending up in the all important "months of inventory" stat. This blog does a good job:

http://housing-analysis.blogspot.ca/....html?spref=tw

Owners can be forced to sell for a variety of reasons (death/divorce/etc.). Of course there is a game of chicken, but the stalemate won't last forever. Banks are beginning to creep rates up so it's only a matter of time before prices begin to dip, unless of course we see an onslaught of immigrants from Trumpland.

[whatnext]

Originally Posted by connect2source

Problem is inventory has not increased so the market is basically 'stuck'. Owners wont's sell because there are few buyers and buyers won't buy because they anticipate price drops.

As a Realtor in noting that prices for most homes are NOT dropping at all in fact we're seeing very high demand on the few properties that are available especially in the mid-range condo market.

Really?

Dropping according to this:

...Statistics published by REBGV show that prices have fallen for most property types in many neighbourhoods between September and October. MLS statistics show the benchmark price for a condo on Vancouver’s Westside fell 2.5 per cent between July and October. But, “from what I see it’s down five per cent,” Saretsky said, basing the statement on his own regular tracking of property selling prices....

...Saretsky believes that effect will now continuing in reverse, with detached homes being the first to slow while condos, and then surburban properties, likely following.

Morrison sells real estate in West Vancouver, where listings dropped 72 per cent between August and October 2016, compared to the same period in 2015. Sellers who are able to wait are sitting on the sidelines right now, waiting to see what the traditionally busy spring period will bring, he said.


That’s what concerns Saretsky. Both buyers and sellers are currently sitting the market out, but if sellers flood the market in the spring with a lot of inventory, “that’s what could potentially topple the market.” He added that the currently low inventory is the only thing keeping prices from falling more dramatically.

http://www.metronews.ca/news/vancouv...ome-slump.html

Sooner or later, likely the Spring, those trying to wait out the market to sell will start to lower their prices even further.