This Wednesday October 29th, a report is going to Vancouver City Council recommending some minor modifications to the Empty Home Tax policy, to improve the fairness and effectiveness of the EHT.
Unfortunately, the need for a more significant policy change, in the name of fairness, is not included in the staff report. This relates to the fact that small builders of projects with less than 5 units must pay EHT on their unsold inventory if it is not sold by a certain date. However, builders of larger projects are not charged the EHT on unsold inventory.
So we now have a situation whereby if a small builder cannot sell a duplex by a certain date due to market conditions, they must pay 3% on the assessed value. Larger builders are not in the same situation.
The city's response? Rent them out. However, if they rent out the unit, how do they repay the loan? They also must pay the GST knowing it will be much harder to sell a 'used' rather than new unit.
I worry than one of these builders is going to commit suicide. Maybe then, the Mayor and Council will finally take notice. And I'm not being overly dramatic. I know of one builder who is so stressed out I truly worry about his health.
So here is a letter I have sent to the mayor and council. I can't attend the meeting and speak to the matter since I'm in London. But if you agree this seems most inequitable, maybe you will let council know by sending a letter or speaking to the matter.
Here's a link to the staff report and how to contact the city. https://council.vancouver.ca/
https://vancouver.ca/your-government/contact-council.aspx
While I do not have any concerns regarding the amendments going forward, it is unfortunate that a much-needed policy amendment that I have been discussing for the past year with the empty home tax office, the mayor's office, and members of council is not included in this list of amendments.
I refer to the current inequity that allows unsold inventory in projects with 5 or more units to be exempt from EHT, while the units are actively being offered for sale, but units in a project of less than 5 units can be subject to EHT while being actively offered for sale.
Given that these smaller projects are usually developed by small builders who are often under considerable financial stress, how can this possibly be deemed to be equitable?
Especially at a time when the market is so very soft, and even when substantial discounts are being offered, duplex and similar units are not selling.
I became aware of this inequity when I was approached by a small builder who has several unsold duplexes on the market. He has been doing his best to sell the units and reduce the price on several occasions.
It has been suggested to him that he should just simply rent them out, but this is not a practical solution since he has a loan to pay back, and this requires payment of the GST. It will also make it more difficult to sell the unit at a later date.
I have spoken to several builders undertaking four unit multiplex projects, and none of them were aware of this provision in the EHT policy. Similarly the Homebuilders Association of Vancouver was not aware of this until I informed them.
Charging small builders who are unable to sell their duplexes or multiplex units a 3% EHT is put simply, most unfair, especially when builders of larger projects are exempt.
I would therefore urge council to either defer this report until this issue can be addressed and included, or instruct the EHT office to not enforce this aspect of the bylaw until market conditions improve.
As someone who has been advocating for more duplex, triplex and multiplex units for 50 years, I would hate to see builders not proceed with these types of projects once they learn about this aspect of the EHT bylaw. Once more are being charged the tax, this will become very public.
Thank you for your consideration of this request.
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