Vancouver’s City Council unanimously approved Mayor Kennedy Stewart’s motion to hike the city’s Empty Homes Tax (EHT) from three to five per cent starting in 2023.Photo: yamayu / Adobe Stock

Vancouver homes that are sitting unoccupied will face higher taxes next year.

This week, Vancouver’s City Council unanimously approved Mayor Kennedy Stewart’s motion to hike the city’s Empty Homes Tax (EHT) from three to five per cent starting in 2023. The motion also includes doubling the number of audits under the program from 9,000 to 20,000 for the 2023 vacancy tax reference year.

Since its introduction in 2017, Vancouver’s EHT has been hiked more than once. The EHT was first implemented as a one per cent tax, and was later increased to 1.25 per cent in 2019 and boosted to three per cent in 2021.

In a tweet posted on Wednesday evening, Mayor Stewart called the EHT increase a “big blow to housing speculators.”

Vancouver’s EHT — otherwise known as the Vacancy Tax — was created for properties unoccupied for at least six months of the year. The tax is designed to encourage homeowners to put empty and under-utilized properties on the market as long-term rental homes, therefore boosting housing supply and helping the city’s low vacancy rate.

Research published by the City of Vancouver shows that the number of vacant properties decreased 26 per cent between 2017 and 2020 as a result of the EHT. Thirty-six per cent of properties declared to be vacant in 2019 were later converted to occupied homes in 2020, and $86.6 million in tax revenue has been collected to support affordable housing initiatives under the program as of November 2021.

Information from City of Vancouver staff, who performed 8,000 audits in 2019 and over 9,000 audits in 2020, report that an average of 6.4 per cent of those who were audited were found to be in non-compliance.

According to the City of Vancouver, homeowners are required to submit a declaration each year to determine if their property is subject to the EHT or not. Homes that are found to be empty are subject to the EHT, which is currently three per cent of the property’s 2021 assessed taxable value.

Exemptions to the EHT can be made in specific circumstances, such as the death of the registered owner or major renovations. This also includes homes that are principal residences or are rented out for at least six months of the year.

Vancouver isn’t the only Canadian city to consider a vacancy tax. Peel Region in Ontario recently launched an online survey to gather public input on a potential Vacant Home Tax (VHT) program. Ottawa will implement its one per cent EHT in the 2023 taxation year, while Toronto City Council approved the implementation of its own VHT program starting in January 2022.

In Q1-2023, Vancouver City Council will review additional EHT policies, including altering EHT exemptions to improve fairness, exploring ways to reduce the large number of short-term rental properties and examining how the federal government’s anti-flipping measures may affect the EHT. Members will also consider how increasing the rate to 10 per cent might further increase rental stock.

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