Vancouver’s council is considering exempting newly built, but unsold, housing units from the city’s empty homes tax. A city staff report proposes a number of changes to Vancouver’s empty homes tax program. One is the widely reported suggestion to rescind a vote by the last council to increase the three per cent tax to five per cent this year.
But another recommendation proposes creating the new exemption for “vacant new inventory that is unsold.” This means the city would stop applying the tax on units that sit empty for some period of time after a developer builds a condo project. Some argue the city should not make it easier and more profitable for developers to hold completed homes vacant for an unlimited time, and that if policies push them to cut prices to sell promptly, that would be good for Vancouver’s housing market. But others maintain taxing unsold condos could impede the future supply of a greater number of new homes, by creating new costs and uncertainty for builders and, crucially, for the lenders who finance housing construction.
This was not a problem when Vancouver implemented the empty homes tax in 2017. Then, the Vancouver condo market had almost no unsold new condos. But the Urban Development Institute, a lobbying association for the developers, has been pushing Vancouver to exempt unsold inventory from the tax since it was first proposed in 2016. In a 2016 letter to then-mayor Gregor Robertson and his Vision-majority council, UDI CEO Anne McMullin wrote that her organization agreed with “the city’s objective of freeing up potential housing supply for renters,” but wanted to “ask that new units be exempted from the tax until they are transferred from developer to a buyer.”
The B.C. government’s speculation and vacancy tax, introduced in 2018, is similar to Vancouver’s empty homes tax. But the province’s tax exempts unsold newly built homes. Now, city staff are recommending council approve an exemption consistent with the province’s tax.