Vancouver hits empty houses with new tax

Vancouver (Getty)
Vancouver (Getty)

Vancouver has passed a law to tax the owners of empty houses. It is the latest attempt by the city to try to curb property prices and increase the number of homes available for rent.

The move comes just months after the introduction of a 15 percent tax on foreign home buyers.

From next year property owners will be charged a 1 percent per year tax on dwellings that are not their principal residence or are not rented out for at least six months of the year.

That means the owner of a house with an assessed valuation of $1 million would be taxed $10,000 per year. The first payments due in 2018.

Owners must report themselves to the authorities.   If they don't and are caught there are penalties. They could be fined CA$10,000 a day (NZ$10,547) for as long as the offence continues.

The council believes it is a way to combat what it says is Vancouver's "housing crisis."

It is believed there are more than 10,800 empty homes, with another 10,000 that are not fully used.

Rental properties are snapped up within hours of being listed, and there have been bidding wars for many of those properties.

The city expects the new tax could boost the supply of available rental properties from 0.6 percent to 3.5 percent annually.

In the past 15 years, Vancouver house prices have increased by 140 percent and a studio apartment now costs more than CA$500,000. That compares to a median household income of CA$76,000.

In August the city put a 15 percent tax on foreign citizens buying houses in Vancouver. Mortgage insurance eligibility rules have also been tightened.

There will be exemptions to the new empty house tax. These include properties that are being renovated; are empty because the owner is getting medical care or has recently died; and properties that are used by the owner for work purposes for six months a year.

Owners will be required to show a driver's licence, medical services card or vehicle insurance that proves the home is their principal residence.

Like the foreign buyers tax, the new empty home tax will be closely watched by other countries to see how effective it turns out to be.