Word came in this morning: on July 25th the B.C. Legislature will be recalled into a summer session to deal with, as the government puts it ‘ the housing crisis in Vancouver’. All the plans, holidays, attending conventions, long set meetings around the province – all ditched. Now, don’t get me wrong – Ministers, MLAs and staff should always be prepared for the unexpected, including a re-call, but that should be balanced with necessity. An emergency like a natural disaster, economic meltdown, constitutional crisis – those are justifiable reasons. A ‘Vacancy Tax’ is bottom of the list for reasons I will outline.
For context: Vancouver (not just the City of Vancouver, but the entire metro region) has a housing problem. It has been festering for years if not decades, but has exploded into an affordability crisis with tear down bungalows selling for millions. In June alone house prices rose over 16%. The rental vacancy rate is below 0.6%, (the consensus among many urban planners and housing experts is anything below 2% is a major problem). Companies, institutions, public sector services are all being impacted as they can no longer attract or retain employees simply due to housing affordability. The Mayor of Vancouver trying to tackle the issue and also lay blame, threatened the provincial government with a deadline: put in a vacancy tax by mid-August or we will do it ourselves. An interesting notion as the charter governing the city is provincial law so the ability of mayor and council to enact their own law is moot. The B.C. Liberal government blinked, and for however long it takes over the rest of the summer we will debate, argue, and eventually have a vote. This after the government was late in accepting it needed data, on foreign ownership and investment, of which we now have a truly irrelevant data set of house sales for 19 days in June. There is no real data on vacant homes, no definition on a vacant property and even the Mayor admits they have no clue on what the tax percentage would be, how it would apply and be collected, how properties would be monitored, and the ultimate end use of any collected taxes on how that would increase housing stock.
We are led to believe that a vacancy tax, in absence of any comprehensive housing policy, investment and legislation, will somehow magically solve the problem. Certainly, it might well be one tool in the kit, in fact a major power tool to dampen down speculation buying. However, it must be applied uniformly across the province. The legislation, at least what we have heard so far, will apply only to the City of Vancouver, pushing the real estate speculation market more emphatically across Metro Vancouver boundaries into Burnaby, Surrey, Richmond, and further afield (as is already happening) to Nanaimo, Victoria Kelowna and beyond.
Secondly, those who can afford a multi-million dollar tear down, to sit on it for profit, are unlikely to suddenly see the light and put it on the rental market. There are likely numerous ways to get around a definition of vacant, in fact I would bet there will be quasi-commercial services that will ‘lease’, hold or somehow occupy a property for far less than the tax cost, doing nothing to increase availability.
Thirdly, by all accounts, and again the data has not been even remotely collected, the majority of unoccupied properties are condos. Certainly, a vacancy tax could, in fact should, increase that supply, but it does little good for parents with children and multi-generational families requiring larger houses.
So why the rush to legislate? The City of Vancouver does not have a plan, only a vague idea and in fact say any new tax and/or bylaws will only be in place sometime next year. The provincial government can, in fact should, collect more data, do a review on the positive and negative impacts, look at how other jurisdictions have dealt with over-heated and speculative markets, and put together a comprehensive package of housing policies for a fall session. Rushed legislation is never good legislation. This is about the B.C. Liberal government making the appearance of quick action, when in fact the warnings have been loud and clear for years.
Rant over: let the summer games begin.