The Vancouver housing market, as many desperate renters and potential homeowners hope, might turn out to be one pleasant bubble fuelled largely by foreign speculation. As things stand now, though, it looks more like an annoying zit plaguing beautiful BC, and she doesn’t want to wait it out.
Following August’s 15 percent foreign home buyers plan, the city is planning to impose a one percent tax on vacant homes, as well as a maximum fine of $10,000 on anybody caught misreporting occupancy status or where their principle home is.
Before delving into details, let’s assess the issue through some stats. According to census data, the non-resident occupancy rate (measuring the percentage of homes either vacant or occupied by non-residents) stood at 3.5 percent in 2001. That figure almost doubled by 2011, and is still increasing. Similarly, the number of homes occupied across Metro Vancouver by non-residents grew from about 27,564 in 2001 to about 58,229 in 2011.
Put bluntly, those numbers have been on the rise for over a decade. While it would’ve been helpful for lawmakers to place greater importance on this issue before it grew so dire, looming exams and elections seem to draw the best from students and public servants, respectively.
In any case, the 15 percent foreign buyers tax from earlier this year and the new one percent tax appear to be “band-aid” solutions, applied to a deep wound that really requires surgery. Having said that, we do need to start somewhere.
Housing shouldn’t be like company stocks, or bullion — a field of speculation, where you buy or sell based on whether the market’s ripe or sinking. Nevertheless, it’s turned out to be just that, more so in historically populous areas like Toronto and Vancouver than, say, towns in the Prairies.
With the demographic shifts of the new century — where people living in rural locales, especially those entering the middle class, are looking to move to the big cities — the influx of people is not going to flatten out. Our public policy experts and city planners will eventually have to grapple with the same housing issues that their counterparts in San Francisco, Tokyo, or Mumbai deal with.
Given the circumstances, this is the perfect time to see the emergence of affordable housing as a human right, in an official way. More importantly, any housing policy must be targeted towards the concerns of the people actually living in the city.
The flat one percent tax does have potential to add volume to the market, as it attempts to disincentivize keeping a second home vacant. However, one percent annually seems like too little, while the daily fine rate for loophole seekers is absurd. Instead, a progressive tax rate would yield better results.
The ostensible crackdown on Airbnb also won’t solve the issue. On average, only about 13 percent of the homes occupied by non-residents are occupied by temporary (e.g. Airbnb) or foreign residents. The mechanics of reporting and verifying the status of homes and the business of catching offenders is going to cost the public exchequer anywhere from $2–2.5 million in the coming years, and there needs to be more clarity on that.
Additionally, while there are some provisions laid out for exemptions, such as those for snowbirds and part-time residents, there need to be additional exemptions to account for other situations, such as deceased owner, owner in residential care, change in ownership, and the like, to avoid legal hardships for individuals.
While the strategies against the housing crisis aren’t perfect right now, they’re the beginning of countermeasures that could really be effective. Right now, the priority should be continuing to refine this response, and to learn from this experience: the sooner we address Vancouver’s problems, the better.