Is there an empty homes problem on the North Shore?
If so, should there be an empty homes tax to address the problem like there is in Vancouver?
What are the challenges of creating this kind of tax?
North Shore Community Resources’ Community Housing Action Committee researched these questions in the summer of 2017. Our public report: Knock Knock: Exploring the Prospects for an Empty Homes Tax on the North Shore, makes four recommendations after concluding that the data confirms there may well be an empty homes problem on the North Shore.
To answer the first question – Is there an empty home problem? – let’s look at the stats.
According to the 2016 census, there are 5,005 empty homes on the North Shore.
Of the 26,426 total private dwelling units in the City of North Vancouver, 1,781 units or 6.7 per cent were deemed to be “unoccupied by usual residents.”
In the District of North Vancouver’s 32,624 total homes, 1,508 units or 4.65 per cent were unoccupied.
And of the 18,649 total homes in the District of West Vancouver, 1,716 units or 9.2 per cent were vacant.
In CHAC’s view, these numbers are significant enough to indicate that we do indeed have an empty homes problem (with variances) in the three North Shore municipalities.
The census data is not perfect – it is meant to take a snapshot of a day in the life of Canada and Canadians. But Statistics Canada’s data collection methodology means that census enumerators have attempted to contact the property owners over a three to four month period.
That’s a substantially long enough time to indicate that the home is empty to give rise to a concern that the property is being underused as a home.
As for the second question – should there be an empty homes tax on empty homes on the North Shore? – it is helpful to look at the City of Vancouver’s experience.
In June of 2016, a City of Vancouver report revealed that there may be more than 10,000 empty housing units in the City of Vancouver, based on a 2014 study. The 2016 census data indicates that there are more than 25,000 empty homes. Based on the earlier study, at the request of Vancouver’s city council, the province amended the Vancouver Charter to enable city council to impose an annual vacancy tax on a parcel of “taxable property,” by way of a bylaw. On Nov. 16, 2016, the City of Vancouver passed the vacancy tax bylaw. Vacant property is defined as residential property unoccupied for more than 180 days in a year. The empty homes tax is applicable as of Jan. 1, 2017 and will be one per cent of the assessed property value as determined by B.C. Assessment.
The tax will either have the effect of providing enough of an incentive for property owners to either occupy or rent out their homes with the hoped for effect of increasing the supply of homes for people. Or, the city will have a new source of significant tax revenue.
CHAC sees empty homes tax as a reasonable approach to dealing with an empty homes problem on the North Shore. CHAC would also want to see any new tax revenue generated by an empty homes tax to be used exclusively for creating and supporting affordable housing, after covering the costs of administering the tax. By our calculations, based on the Real Estate Board’s home price index for August 2017 and the 2016 census data, the maximum revenue that could be produced by the tax to be more than $80 million in the three municipalities.
Now, to the third question: What are the challenges of an empty homes tax?
Vancouver’s studies suggest there will be significant startup costs in administering this tax. That said, given the potential revenue stream, we believe these to be surmountable.
The more significant immediate challenge is that under current provincial law only the City of Vancouver has the legal authority to create an empty homes tax. So municipalities will need to get together to lobby the provincial government to amend the law to enable them to create a tax. As a matter of fairness, the province should agree.
CHAC recommends that North Shore municipalities undertake energy consumption studies to better understand the empty homes problem while assessing the challenges of a new empty homes tax. In the interim, there should be a full-court press on the province to amend the law to allow municipalities to create an empty homes tax while monitoring the City of Vancouver’s experience.
We don’t believe that an empty homes tax is a panacea to solve the housing affordability crisis – far from it. The federal and provincial governments need to take the lead and real action to address this crisis. But an empty homes tax is one tool that municipalities should be exploring to improve housing affordability.
Read the full report online at nscr.bc.ca/pdf/EmptyHomesReportFINAL.Sept2017.pdf.
Murray Mollard is executive director at North Shore Community Resources.