This week, Taiwan implemented a “luxury tax” on housing properties lying dormant due to speculation (as reported by the BBC). This begs the question: why not take action in Vancouver, where the affordability crisis is similarly severe?
During his 2008 campaign, Gregor Robertson proposed such a “empty condo tax” to get more housing onto the market and cool-down prices. But as with other promises, he has failed to deliver or take responsibility. (BC law allows strata councils to ban renting-out condos – whereas Ontario law, for example, does not – and this partly explains the high condo vacancy rates. Armed with this excuse, and under pressure from developers, Robertson grew content to blame the provincial government instead of using tools at his disposal to slow speculation.)
Another reason for lack of action on speculation is that the real estate lobby has been spinning the numbers. In May 2009, Andy Yan of Bing Thom Architects published a study estimating the percentage of “empty condos” (identified by low hydro usage) at 5-8%. Real Estate interests who were against the “empty condo tax” suggested that Yan’s work disproved the empty condo “theory.” But even this “low” estimate suggests that the condo vacancy rate is 250-400% that of the 2010 rental vacancy rate. With 80 thousand condos in Vancouver, there are about 5000 empty condos, many of these downtown.
The City’s Housing Centre Director Cameron Grey estimates that, in total, there are about 20,000 empty housing units in Vancouver (including all condos, houses, duplexes, etc). For comparison, that number is roughly equivalent to the total number of social housing units in the city (21,500, according to City numbers).
Andy Yan told The Mainlander that the ’empty condo’ phenomenon is only one driver of Vancouver’s spiraling housing prices. “The point of our story is that even if you make 5,000-10,000 available through an ’empty condo’ tax, it might not make a big difference. Other behaviours of property owners, such as ‘flipping’, might be also contributing to skyrocketing housing prices.” He suggested that while an ’empty condo’ tax might be difficult to enforce, regulations on speculation such as property transfer fees are relatively simple to implement. Yan also emphasized that Vancouver is in desperate need of affordable rental, while empty condos rented-out at market price would not fill this need.
Whereas the real estate lobby saw Yan’s study as a vindication of unregulated speculation, on the contrary we at The Mainlander propose an inverse take-home-message: that a multi-pronged approach will be required to regulate the market. Penalizing owners of empty condos is not a silver bullet for the speculation spiral driving up housing prices in the Lower Mainland. But it is a start.