'Awful and sad': with nowhere to live, York Region residents look to vacant homes tax to solve housing crisis

More than 7,000 homes considered 'vacant' or unoccupied

Yorkregion.com
Sept. 7, 2022
Kim Zarzour

The Region of York could start taxing vacant homes as early as 2023.

A survey conducted this summer found nearly 80 per cent of respondents support the idea of a levy on vacant homes to alleviate the housing crisis.

A staff report, to be presented to regional council Sept. 8, estimates there are up to 7,250 vacant homes (defined as “not occupied by usual residents”) in York Region.

About 1,600 of those homes could potentially be subject to a vacant homes tax, according to estimates by KPMG, a consulting firm hired by the region in April 2022 to provide independent research and advice. The firm looked at estimated prevalence of vacant homes in the region and case studies from other major cities including Vancouver, Melbourne and Toronto, and Peel and Halton regions.

Vancouver, for example, allocates all net revenues from its vacant homes tax -- more than $86 million since its inception in 2017 -- to affordable housing initiatives. Nearly 60 per cent of York Region’s survey respondents support that idea.

In 2021, regional council declared a housing affordability crisis and later established the Housing Affordability Task Force.

The vacant homes tax is one potential tool the region is considering to address affordability challenges.

Home prices in York Region reached record highs in March 2022, the staff report said, and rising interest rates have resulted in only a modest decline in pricing. At the same time as prices and personal debt is on the rise, personal incomes have not increased in step, the report said.

Between 2006 and 2016, York Region median household income grew by only 17 per cent. Median monthly payments for rented dwellings, meanwhile, increased by 146 per cent.

The report said 27 per cent of renters in York Region spend more than half of their total income on housing costs -- significantly more than the 30 per cent share of total gross income that has traditionally been viewed as “affordable.”

A vacant homes tax could help with that problem, disincentivizing some owners of vacant homes, such as speculative investors, from leaving properties vacant, KPMG said. “If it becomes more expensive to keep a unit empty ... vacant homeowners may choose to release units into the rental market while they hold them, or potentially sell them outright.”

In early June, the region launched a multiplatform communications campaign to inform and seek feedback from the public about a potential tax along with a dedicated campaign webpage at york.ca/vacanthomestax that has had nearly 20,000 unique webpage visits.

From June 24 to July 13, the region hosted an online survey seeking feedback on a potential tax from residents and property owners. Of more than 2,750 surveys received, nearly 88 per cent strongly or somewhat agreed the region is facing housing affordability challenges and nearly 80 per cent believed the region should levy a vacant homes tax to help address these challenges.

“Empty houses negatively affect the look of a community, but most importantly, the feel of it.”

“There is nowhere to actually live. People are buying houses and they are just sitting empty. It’s awful and sad,” said another.

The minority who disagreed raised concerns about the tax harming the real estate market, especially for investors, and “it’s not the government’s business if someone wants to keep a residential property vacant.”

Nearly 51 per cent said the rate should be two per cent or higher.

A regionwide vacant homes tax between one and two per cent could generate between $13.4 million and $26.8 million in the first year, which would likely decline as vacant homes become occupied, the staff report said. There would be a one-time implementation cost of $6.5 million with ongoing annual costs of $3.5 million, it said.

Regional staff is asking council’s direction to continue the work and report back during the first quarter of 2023 with a proposed detailed program design, draft tax bylaw and a potential recommendation seeking designation by the province, which could enable the region to begin implementing the tax in 2023.