Tuesday, April 25, 2017

Responses to my Vancouver Sun op-ed on so-called Empty Home Tax

I have received many positive responses to my op-ed on what most reasonable people consider the unfair and somewhat incomprehensible aspects of Vancouver's Vacant Home Tax as it relates to those who keep a second home in Vancouver that is not vacant, investment property. Here are excerpts from just a few. (In some cases names and places have been changed to protect anonymity.)

I do hope the senior city officials and politicians who supported this tax will reconsider at least this aspect of the tax.

Let's start with this exchange between two friends on Facebook:
PB Well written. The city has imposed nothing more than a new head tax. It's a penalty and as you said, will do absolutely nothing to add more units into the rental market.

DF It's a dumb and likely ineffective tax for sure but the whole point is to force more units on to the market. I know a lot of my friends in Vancouver would be pretty happy penalizing those with occasionally used second homes, unfair or not. So I'm not sure they would change their mind given they can't afford to own even one property.

PB I think most agree that in all probability very few (if any) homes/condos will end up as rental properties. Laws (especially tax laws) should never be based on jealousy. Do we not realize what type of slippery slope this is.
Some other comments on the Vancouver Sun website and received by email.
  VG I work as a pilot and am away from home due to work more than 6 months of the year. I can't rent out my place short term legally to cover the days I am away, and if I did 30 month minimum I am unable to have a home when I am off of work. Anyone who works as flight crew is in the exact same position. Short term is the only thing that works for me and I am happy to do it. This rule hasn't been thought through and the 90 day limit the city of Vancouver is proposing to fill this isn't enough to cover this loop hole in empty homes.
IE I know people that own second homes in Coal Harbor ..Even if they could be rented, they would need to be rented for a min $10,000+.. to cover monthly expenses, how many people can afford those kinds of rent?

PB Thank you to the author for raising this point.  This unfair tax will not increase the rental stock because as is pointed out, many of these homes are not empty year round. How does it help a local Vancouverite if some condo in Coal Harbour gets rented out for 30 days at a time, not necessarily consecutively?

This is just politicians trying to appear to be doing something, which ultimately won't work.

From MM:

Greetings! - it has been some time since I last touched bases with you but we do follow you through various media channels especially with your commentary on the Vacant Home Tax being implemented by the City of Vancouver. We are caught in the web and dilemma.  We own a condo in FalseCreek and have done so for the last 12 years - a carryover from when my wife worked in Vancouver for a couple of years.  Our condo is not really vacate - we use it about every 6-8 weeks as well members of our family stay there on occasion as have a grandchild in Vancouver.  We now have received notice of the need to declare our position with the condo.  It is not our primary residence and we do not rent out what we treasure as a very special place that we worked hard to purchase and now maintain as a contributing resident of the province.  We find the imposition of this tax quite repulsive and do not want to sell the condo to avoid paying the tax - as one of our friends who lives in Nelson has done.

Would you have any advice or guidance on how we could best proceed to protect our asset in Vancouver and not be subject to the taxation contemplated.  
From DW
Hello Michael
I read your article in today's Sun and wanted to thank you for pointing out exactly the issues I have with the empty home tax.

I am a retired lawyer, who has recently moved to Kelowna after living my entire life in Vancouver. Although my wife and I now have our principal residence in Kelowna, we keep a one bedroom condo in Vancouver for frequent visits to the city to see family, friends, colleagues and our doctors.

Earlier this month I obtained a copy of the Vacancy Tax Bylaw. Upon review I noted that the wording was flawed. The scheme provides for tax on "vacant" property. Under section 2.3 " vacant" property includes property that "has been unoccupied for more than 180 days". "Unoccupied" property is defined in section 2.2.  By definition it is either (a) a residential property that "is not the principal residence of an occupier", OR (b) residential property that is "not occupied by a tenant or subtenant for a term of at least 30 consecutive days". Subsections (a) and (b) are disjunctive, meaning a property that is not a principal residence is by definition "unoccupied" and subject to the tax whether it is rented out or not.

My sense is that this bylaw will fall flat. But even if I am wrong, I believe I have options to avoid it. For those reasons I have concluded that my interests are best served if I keep a low profile. Nevertheless, I would be interested in any thoughts you might have on overturning the bylaw.
From SR

These guys at City Hall have lost their marbles. If their intentions were Honorable maybe some consideration could be given . But as in the 15% foreigners tax, the numbers do not add up. With the slow down in buying , the buyers tax revenues will be substantially lower this year and there will be a void to fill.
I am not sure what they are on to and how they will define the proposed empty home and for that matter police it. Most of the properties that they are attacking will be at the high end as you noted and renting them (if possible) will do little to help the middle and low ends that need homes. If an owner is concerned at the situation and decides to sell , who sets the price (other than the market) and in what time is he required to complete. Will he be fined for an empty house while on the market?

A lot of people are like me. They have lived some 25-40 years in the same property , have paid off any mortgages they may have had and look to retirement with possible a second residence in the sun (this year badly needed). Some years they may not be 180 days in their homes but spend time at least time monthly to keep in contact with city, bills and friends. Makes it difficult to rent if you or some of your family are spending time almost every month in this residence.

By the way what is the definition of a principal residence by city standards?

How is the City going to police ?. Turn neighbours onto neighbours ,  hire a special policing staff at additional cost ?Might end up like commuters in San Fran who opted to take the high speed lane by using blow up mannequins. Maybe people will leave lights on with a couple of these types sitting by the window.

The solution to housing affordability in Vancouver is to speed up the permit stages and encourage rental through bonusing. Also, we should not just focus on Vancouver.  We should have a more defined regional plan for development tied to transit.

Why should people who have been good citizens and who have based their retirement strategies on a reasonable amount of travel etc be penalized. If taxes are low as discussed ,maybe that is the answer along with focus on new construction . If not, people away from their Vancouver residence over 180 days will probably stay more at home ,thus taking supposed product away from the city inventory. 
What will have been achieved except adding insult to such people and you can guess who they will vote for. This is all about politics and therefore it's time for a change at City Hall. That's my RANT for the moment. Best regards Sid.

I welcome further comments.

1 comment:

Anonymous said...

The Empty Homes Tax is less of a head tax and more of a Vision Vancouver cash grab. If it was really about increasing rental supply it would have focussed on speculative real estate purchases made over the past 5 years - and particularly in the condominium apartment market.

I don't like to see more and more perfectly good homes demolished and replaced by maxed-out luxury homes that sit empty. The issue there is much more about loss of community than housing supply. The foreign buyers' tax was a good Provincial initiative... Maybe that tax needs to be increased? David Ley has proven the impact of foreign investment in this market.

Back to the Empty Homes Tax... It does not distinguish speculative condo purchases (for the purposes of parking money or flipping real estate) from long-time family-owned homes that may sit empty while decisions are made about seniors' housing needs or whether the property will be retained by the family. Those homes tend to still be well-maintained, and there is a strong connection to community. Forcing those families to sell or undertake expensive upgrades to become "landlords" is absolutely idiotic.

If the City was really interested in providing more rental housing, why doesn't it make its entire (large) real estate portfolio available for housing development - on a long-term lease basis?

And, with respect to those empty new luxury homes... If those owners decide to rent them out - they won't be occupied by struggling students, single-parent families, the working poor, or others with limited means. The City is only making sure that there is a luxury rental housing supply - with units going on the market for several thousands of dollars per month. Who ever thought this was a crying need in the community?