A new report going to Toronto’s executive committee recommends the city implement a vacant home tax to increase its housing supply.
Both the city’s chief financial officer and treasurer, as well as the executive director housing secretariat are recommending the new tax which, if enacted, would come into force in 2022.
The report notes the program’s aim is to influence a homeowner to either occupy or rent out their dwelling for at least six months of the year, or pay up.
At a Thursday morning news conference, Mayor John Tory said the move would encourage people not to leave homes vacant in Toronto.
“That is the real purpose of the tax … it will help to make more housing available,” Tory said.
The mayor also noted that the “vast majority” of Toronto residents would not pay the tax citing various exemptions, for example for people who are out of a home because they’re sick, spending half a year in Florida or conducting renovations.
“We simply can’t afford … to have housing accommodation for thousands of people sitting empty,” Tory said.
“You can live in it, you can rent it, but if it sits empty, you will pay a tax.”
The city is estimating that program start-up costs could be in the $10 million to $13 million range over a two-year period.
The report uses a similar tax enacted in Vancouver for comparison, and using that city’s metrics, states the tax could yield $55 to $66 million in revenue per year in Toronto.
However, the report notes, the prevalence and reasons for properties being left vacant in Toronto may have also been affected by COVID-19, and so revenue projections could be similarly affected in “ways that cannot be reasonably estimated.”
Vancouver’s empty homes tax came into effect in 2018 amid a housing crisis and low vacancy rates, with the aim of motivating owners of empty and under-utilized properties to put them onto the rental market.
Owners are taxed based on the assessed value of a home that isn’t their principal residence or isn’t rented out for at least six months of the year.
According to the Canada Mortgage and Housing Corporation, the tax, combined with other market forces, helped push 5,000 condominiums to the rental market in 2019, including 3,000 in downtown Vancouver.
The city of Vancouver says since its inception, the tax has helped reduce the number of empty homes in the city by 25 per cent.
“We know that Toronto’s vacancy rate has been historically low, making finding housing a challenge,” said Coun. Ana Bailão, chair of the planning and housing committee, in a statement. “Transitioning vacant homes to occupied homes would improve housing choice and affordability for a number of Toronto residents, and revenues from the vacant home tax could go toward creating more affordable housing in the city.”
If approved, Toronto’s report would go before city council at its Dec. 16 and 17 meeting.