29 ms·

Vancouver plans to tax empty properties 1% of their assessed value

544 points by huangc10 10y ago

huangc10 10y ago
I grew up in Vancouver and I think this law is necessary (maybe). The big question here is...how do they tell if the house is unoccupied or if the owner is on an extended vacation? Can it really be enforced?
- sriram_sun 10y ago
  I think there is a similar issue in Geneva.
- vkou 10y ago
  They can't - this is all for show.
  - vehementi 10y ago
    Why post with such confidence when you're not informed?
    - vkou 10y ago
      When you're throwing two million dollars at a house, sight-unseen, that you then let stand empty for years, how difficult would it be to hire a housekeeper to come around the place every week, and make it look lived-in?
      - gorkemyurt 10y ago
        you might as well actually rent it out at that point..
        snrplfth 10y ago
        That means tenancy contracts, risk of damage, and a whole raft of legal obligations.
        derefr 10y ago
        If you're an absentee building owner, you don't (can't, really) worry about any of those things yourself. Instead, you lease your building to a property management agency, who handles all of that for you.
        jonknee 10y ago
        Well being a tax cheat also introduces a whole raft of legal obligations...
        snrplfth 10y ago
        I mean, as compared to the cost of making it look lived-in, or just stopping by so as to technically "be occupying it". Rents in Vancouver are at a very low ratio to the cash value of property, as bad as 70:1 (value:annual rent.) In the normal world, it's more usually 20:1. This means that the costs and risks of renting a property in Vancouver are often considered not worth it.
      - anindha 10y ago
        They could have a whistle blower reward. Someone is going to find out. Say 20% of the fine goes to the person that reported it.
      - eli 10y ago
        Having someone keep the house clean and presentable is in itself a laudable goal.
      - OJFord 10y ago
        > When you're throwing two million dollars at a house, > sight-unseen, that you then let stand empty for years, ... you're not breaking a sweat paying the $20k. It sucks, you'd rather keep your $20k, of course. But it's not worth risking cheating it...
- mahyarm 10y ago
  Well with a gov't power monopoly, they can do things like check power and water utility usage. You can also look at tax return address records for the BC income tax part. Driver license / BCID / immigration records are another. You can also do a 'prove you have a resident in X months or be assessed fines' like many HOAs and mortgage agreements do for various things. Policies over large numbers aren't about %100 enforcement, a general behavior modification is considered a success usually.
  - charlesdm 10y ago
    They do this in Monaco as well. I read in an article a while back that some nonresidents have automated timers to turn on/off the lights, turn on the heating, water, etc.
    - spitfire 10y ago
      I think that's mostly for tax avoidance purposes. So they can claim they were in Monaco for tax purposes - Avoiding taxes in their home country.
      - charlesdm 10y ago
        Tax evasion, actually. But yes. Was just implying that checking (or data mining) might not always lead to positives when you're dealing with cunning individuals.
    - shermablanca 10y ago
      I was going to say this. These rules will drive investment in home automation. I'm also willing to bet that a large portion of the revenue generated from this scheme will be spent on the manpower necessary to enforce it. That being said I'm happy to be proven wrong, but can we expect any sort of data to support a hypothesis? I'm not sure as I'm unfamiliar with Canada's policies on access to public data.
      - charlesdm 10y ago
- seanmcdirmid 10y ago
  They ask politely, and you either lie or tell the truth. This is a big difference between the west and a country like the PRC where strong rule of law isn't a given. In the west, they will simply ask, with the caveat that perjury is a serious crime if you are found out. In China, they will figure out another way since trust isn't assumed and lying is considered a much weaker offense. Completely different systems. (The PRC is trying to go in a trust direction with income self reporting, but it doesn't affect the taxes you pay, oddly enough.)
  - seanmcdirmid 10y ago
    Here is a better description: http://www.calgaryherald.com/vancouver+slaps+year+empty+homes+about/12372683/story.html http://www.calgaryherald.com/vancouver+slaps+year+empty+home... (Vancouver slaps $10,000 a year tax on empty homes. Lie about it and it’s $10,000 a day)
- elchief 10y ago
  It's not a criminal trial. The burden of proof is low and the onus is on the homeowner, not the city. So if the city decides your property is vacant, you can go ahead and prove you were there, or you pay up.
  - gravypod 10y ago
    That's going to go well. "Why didn't you use any power?!?!" "I have solar" "Can you give an alibi!?!?" "I was home alone" "Not good enough, pay up!"
    - elchief 10y ago
      So cynical...give it 6 months
- no1youknowz 10y ago
  > Can it really be enforced? Yes, it can be enforced. For example, in the US. Housing associations have staff that run around in cars taking photos of literally everything. Grass too long - Fine. Bins out outside of trash date - Fine. This happens daily. I know because I used to live at an HOA. My point being, hire individuals with cars to keep track of houses. Have photos of non-residency and then impose heavy fine to recoup costs.
  - schwap 10y ago
    That doesn't seem feasible for an entire city at all.
    - bacongobbler 10y ago
      It wouldn't be a daily thing. Maybe once every other year at most. The cost would be minimal to the government to hire a few contractors for a one-day thing.
      - derefr 10y ago
        Sort of like how the Consumer Price Index gets calculated, then.
    - the_watcher 10y ago
      If you are thinking about having someone driving around to photograph everything frequently, yes. But a couple of cars outfitted like the Google Street View cars, each given a section of the city to drive every other month or so is very feasible. You could also put cameras on any public transit vehicles to keep photos coming in from vehicles that are already being operated by city funds.
    - quickben 10y ago
      Why not? If you are looking at least 10k/house in taxes, it's very efficient to have a full time staff to check out the recently flipped (well...) MLG houses.
    - 10y ago
- Kluny 10y ago
  I think Vancouverites are going to be phoning in to report their neighbors.
cperciva 10y ago
I expect to see a thriving "rental" market. How is a poor home owner expected to know that the person they rented their house to wasn't actually living there?
- tlack 10y ago
  They could provide a copy of the contract when asked, I presume
  - viraptor 10y ago
    That's the point of the "rental" market. It's still real. But maybe I'm happy to rent 2-3 houses for a very low price? I have business in different parts of the city over a week, so that seems like a convenient arrangement. (wink, wink)
    - bbcbasic 10y ago
      But how do I know you won't actually live there full time causing me wear and tear costs. I mean ... you now have a contract that says you can!
      - viraptor 10y ago
        You don't hand over the key.
        jacalata 10y ago
        Pretty sure that any locksmith will make you a key to a house you have a copy of the lease for.
- the_watcher 10y ago
  Can you clarify this? Are you saying that homeowners will create fake "rental" contracts with straw man renters, and then when fined, provide the rental contract as evidence that they tried to comply? My guess is that the city will simply take the position that the onus is on the homeowner to ensure the renter is actually there, which is the correct approach if the concern is that homeowners would create straw man renters.
mahyarm 10y ago
I'm really surprised that this was implemented into law. I remember suggesting it on twitter without hearing anyone say it before a couple of years ago. But I'm guessing what happened is other places might have similar laws.
bhc 10y ago
Is a flat rate fine a good idea in this case? I imagine an investor keeping his or her $30M mansion just as a hedge against RMB depreciation and keeping it empty will think nothing of the $10,000 fine.
- elchief 10y ago
  it's 1% of the previous year's assessed value. $10,000 was an example http://vancouver.ca/news-calendar/vancouver-introduces-empty-homes-tax-framework-as-rental-housing-crisis-persists.aspx http://vancouver.ca/news-calendar/vancouver-introduces-empty...
- cecilpl 10y ago
  The headline assumes a $1m house. From the article: > The empty-home tax will take effect by Jan. 1 and will be calculated at 1 percent of the property’s assessed value.
- pbhjpbhj 10y ago
  Why could you not make the charge for non-payment be something like 50% of the assessed value or repossession of the property. Why do you have to leave an easy route out.
brandur 10y ago
I wonder how they picked the magic number of $10,000. (Edit: as mentioned below, the figure is actually 1% assessment.) Vancouver real estate prices jumped 20% in 2015 -- a $200k gain on a $1M house. If pricing trends continue along that trajectory then Vancouver real estate still looks like a great investment even if you just eat the entire tax. Still, I'm impressed by how quickly Vancouver is moving forward with these measures (going into effect Jan 1st!). They're sorely needed, and it's great that they don't have to sit in limbo for years before being enacted.
- Zyst 10y ago
  >I wonder how they picked the magic number of $10,000. As per the article: They didn't, it's 1% of the property value. The title is misleading.
  - huangc10 10y ago
    Agreed, perhaps the title is misleading, but keep in mind a lot (if not most) houses in Vancouver are greater than 1 million.
  - brandur 10y ago
    Thanks, I missed that. It's strangely written because it re-iterates the $10,000 figure in the first paragraph of the article, but then notes 1% in the second.
- detaro 10y ago
  It's 1 percent of the assessed home value, not a fixed fee. Bad headline...
- serge2k 10y ago
  But you get rental income and don't get docked 10k if you just rent it out. That's the goal with this tax. The earlier tax by the province is to discourage investors.
- soperj 10y ago
  Since they've gone ahead with the 15% foreign buyers tax, things have started to tank.
rdmcfee 10y ago
The title is misleading. The tax is apparently 1% of property value. $10,000 would be the tax on a $1M home.
- BDGC 10y ago
  A typical home in Vancouver BC is $1.4M[0], so if anything it's an understatement. [0] http://www.cbc.ca/beta/news/canada/british-columbia/vancouver-real-estate-house-prices-1.3564528 http://www.cbc.ca/beta/news/canada/british-columbia/vancouve...
  - darkstar999 10y ago
    Wow. This is what happens when it's too easy to borrow money.
    - dmix 10y ago
      Possibly, but only easy to borrow money to buy homes...rather than build more homes, otherwise that'd drive prices down.
      - titanomachy 10y ago
        There's lots of development, but it takes time to see the effects of that. The recent spike in prices has been extremely fast, up by 20% in 2015. Also, the city has to approve any increases in density, which doesn't happen overnight. Faster than silicon valley, though.
  - jannotti 10y ago
    Which still qualifies as "misleading"
- deleted 10y ago
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jestersidekick 10y ago
So I could get paid to escape Trump for 4 years? This is looking pretty awesome
- snrplfth 10y ago
  Amusingly, you can't just move to Canada for 4 years. They are pretty good at finding and deporting people.
- darkstar999 10y ago
  Would you want a bunch of conservative Canadians flocking to America every time they get an elected official they don't like? Why do you think Canada wants you?
deleted 10y ago
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jorblumesea 10y ago
So they will find someone to show up every week or two and turn on lights on, add some furniture, moving things around etc. I feel like the city of Vancouver is going to always lose the free market game of cat and mouse.
- yazaddaruvala 10y ago
  You seem displeased. At least Vancouver is trending in a positive direction.
- fencepost 10y ago
  No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. Enforcement isn't based on whether the lights are on or not. And I'd assume that if you're declaring it as your principal residence but you're registered elsewhere for little things like voting it may trigger investigation that could get Very Expensive if you are determined to be lying.
  - rsync 10y ago
    "No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. " I don't understand - what if it's neither ? What if you are a plain old canadian who has a home in Vancouver and (for instance) a home in Golden ? It's not at all unreasonable to have a home that: a) is not your primary residence b) you live in for 2-3 months of the year c) you have no intention of renting out because you go there regularly or sporadically What does one do in that circumstance ?
    - caylus 10y ago
      Pay the tax. Owning a home in a crowded city, not living in it the vast majority of the time, and refusing to rent it out to people who desperately want to live there imposes a negative externality on the city, which you need to pay for.
dghughes 10y ago
>Lie about it? That’ll be C$10,000 a day in fines. Ouch! I think you should have to live in your home at least six months of the year (sounds weird!) that would also appease snowbirds. If the owner can't be there for six months of the year then require the owner to rent or lease it.
- derefr 10y ago
  Interestingly, something similar is already enforced for Alaskan oil tax credits: you have to live in Alaska at least six months of the year to receive them. One could probably look to their enforcement system.
baybal2 10y ago
When I was living there in 2014, I made a guess that 1/3 of Coal Harbor appartments were unoccupied or unsold by counting dark windows. My guesstimates were not far from what the city hall counted in 2015. B.T.W. I'm no longer living in Vancouver
- elchief 10y ago
  Ya if you stand at Georgia and Denman on a clear evening, say 9 PM, 3/4 of the West End will have lights on, and 1/4 of Coal Harbour will. It's a ghost town.
flukus 10y ago
I'd be worried about unintended side effects here. A lot of places might get rented out to the poor to avoid a fine, but the rental arrangements might be shorter term and force the poor to move more frequently.
- likeapaper 10y ago
  Why would that be the case? These places are currently not being rented at all. Why would people favour short-term arrangements? I own 2 apartments and rent one of them (mostly to students). I look for tenants who can stay for longer periods so I don't have to spend a lot of my time finding new people.
  - flukus 10y ago
    We don't know why they're empty. A lot could very well be "I'll lower the rent until I can find someone to pay more".
    - HelloNurse 10y ago
      "I'll lower the rent until I can find someone to pay more" is the very definition of free market; a free market in which rent rates stabilize downwards, as socially desirable. Attempting to rent the house for a shorter time is simply going to restrict the target market to transient residents who plan to move away shortly (e.g. students), which is rather orthogonal to being rich or poor. Owners need to seek a balance between not renting at all, or renting very cheaply, and accepting longer-term contracts; it's never a unilateral decision.
maverick_iceman 10y ago
Instead of maintaining a facade that people still have a right to property they might as well announce that government owns everything, you know just like communist countries.
- mdanger007 10y ago
  What is property without laws and enforcement to protect it?
eggy 10y ago
How can you be said to own anything if you are forced, basically 'extorted' by government, into occupying your own house or not? I guess it is whether you believe in property rights. If you inspect your property to see squatters or others haven't criminally occupied it, and you maintain it so that it does not cause any harm or damage to your neighbors homes, why this? More pressure to not own/maintain and just rent or leave the community. How can a neighborhood that's basically empty fetch any high rents for the units that are not empty and for rent?
- vkou 10y ago
  The same way you can be said to own property, while having to pay an annual property tax. You only have property rights because your taxes pay the government to enforce them. Vancouver has a crippling detached housing shortage.
  - beamatronic 10y ago
    It seems the test of whether you "own" something is whether you can sell it. You can sell your a home you "own" without owning it "free and clear"
    - Daishiman 10y ago
      Even if you can sell a bunch of different things there are still things you are legally liable for, and for the most part those things end up making a lot of sense.
- deleted 10y ago
  [deleted]
- beamatronic 10y ago
  There is a saying, if you want to find out who owns your land, stop paying the mortgage. The same is true with property taxes. A few years ago I looked to see if there was anywhere in the US that you could buy property and truly own it in perpetuity. There were a few places in Nevada at the time but they may have changed the law by now to eliminate this.
techxit 10y ago
This is great (although it's not enough) and more cities should do it. It's an effective use of public policy and a powerful statement and I'm thrilled to see it. This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1% instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials). I wish that our recent display of nationalism in the US had not been one of the disgusting kind.
- secfirstmd 10y ago
  Based on Dublin's experience. I think that a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.
  - kareemm 10y ago
    > a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Don't know how much you know about Vancouver's geography, but there's not much of this kind of land. > Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes. An influx of foreign capital (excess demand) and zoning (not enough supply fast enough) are the biggest drivers of this in Vancouver.
- raldi 10y ago
  And even the libertarians should be on board with this tax, because it's correcting a huge negative externality: empty units are bad for a neighborhood. Occupied units support local merchants, reduce crime, and generally make a neighborhood more fun and interesting to live in.
  - nostromo 10y ago
    Libertarians would argue that this is a problem created by onerous zoning requirements to begin with.
SilasX 10y ago
Anyone know how hard of a "token effort" you have to make to get a home classified as "used"?
- jacalata 10y ago
  Show them a rental contract to someone for at least six months of each year. If they're fake, hope none of your neighbours dislike you.
huangc10 10y ago
I want to clarify that the $10,000 is not a fixed value. It is simply the 1% assessed value of the house. However, most houses in Vancouver are greater than 1 million.
charlesdm 10y ago
I understand some cities have exuberant property values, for various reasons. Is it that great of a city? I've never been, but what makes Vancouver special to see such high value increases?
- jmschlmrs 10y ago
  It's one of the nicest/only cities in the Pacific Rim, where Chinese investors seem to prefer to invest.
- cossatot 10y ago
  Canada's housing bubble hasn't yet popped, and prices are high in many places. Vancouver itself is attractive to investors because it has a very mild climate, is close to Seattle and the rest of the U.S. West Coast is a short flight, and it's much closer to Asia than the rest of Canada is. It's also a very beautiful place with lots of amenities for those living there rather than overseas investors or occasional business travelers.
- huangc10 10y ago
  I grew up there and have since moved away but what I loved about it was just how calm, peaceful, and beautiful it was. I think I wouldn't want my kids to grow up anywhere else (if I can jump back in time to Vancouver in the mid 90s). Vancouver also welcomed multiculturalism which helped a lot. The city has since moved on (like all cities with time and technology) but I think many people still want that feeling of what it was like in the 90s. It was just a extremely nice place to start a family.
eli 10y ago
In DC vacant homes are taxed at 5% assessed value and "blighted" homes at 10%. It's the city's main weapon against vacant properties. People complain that enforcement is uneven or that sneaky developers find loopholes, but it seems like a good program overall.
- titanomachy 10y ago
  Wow, that's an incredibly high tax! I bet it works pretty well, I'd want to offload that property damned fast if I couldn't rent it.
  - eli 10y ago
    I wonder how many people end up actually paying it, but at the very least it's got to make it inconvenient and risky to own vacant property.
reneherse 10y ago
Shameless plug, for my just-released "fake home occupancy as a service", where my family and I charge you only 0.5% of the property value to satisfy the government's occupancy requirements. Contact info in my profile.
- charlesdm 10y ago
  Every tax has its loophole.
  - Scoundreller 10y ago
    Except the loophole is what they're incentivizing. Just like personal taxes: Don't work, just inherit money and invest in blue-chips.
- greenshackle2 10y ago
  I wouldn't trust reneherse's service. My competing service, "actual home occupancy as a service", is bulletproof; we guarantee that we will occupy your house full time.
  - reneherse 10y ago
    Competition is always welcome! We do however build solid relationships with the neighbors and enroll the kids in local schools to provide complete residency simulation. All for one low fee.
- fdgdasfadsf 10y ago
  Letting someone have possession of property (yes tenants have possession) like this can be a dangerous thing to do in some jurisdictions - they can quickly gain rights to live there and you lose the rights to evict (or increase the rent - which could be a problem if they are charging you to live there!). Far more likely is that people start renting the empty property out+ - which will increase the supply in the rental market and help the housing costs... I.e. the intended effect. EDITED + (with proper tenancy agreements which usually provide some balance of power between owner and tenant)
radicaldreamer 10y ago
They really need to crack down on black money flooding into the Canadian economy. This seems like a quick way to assuage the criticism without addressing the core issue.
- CyberDildonics 10y ago
  Governments don't usually crack down directly on money flooding into their economy.
- colechristensen 10y ago
  One way to crack down is making it less attractive to bring in such money which this seems precisely tailored to do.
- sprocket 10y ago
  This is starting to happen already. China has started launching lawsuits in Canada to seize real estate purchased with questionable money: http://www.reuters.com/article/canada-china-court-idUSL1N19K03D
RowanH 10y ago
Wouldn't be sad if that was implemented in NZ - same problems here of ridiculous price rises = land banking. Seeing empty (million dollar +) houses around you is surreal and totally against community spirit we're so widely known for. Good move Vancouver !
- EdwardDiego 10y ago
  I really really really hope that Winston Peters polls well with this as a policy so John Key will appropriate it.
gragas 10y ago
Hey, attacking the 1% is attacking 43% of the Jewish population. Check your gentile privilege. #EndAntiSemitism https://en.wikipedia.org/wiki/American_Jews#Socioeconomics https://en.wikipedia.org/wiki/American_Jews#Socioeconomics
- maxander 10y ago
  This is an honest request for clarification: Are you serious?
  - beachstartup 10y ago
    this is called the ol' reddit switcheroo. he's being anti semitic.
    - gragas 10y ago
      No, I'm just trying to show that it's ridiculous to make "check your privilege" arguments.
      - maxander 10y ago
        You've only convinced me that you don't really understand what people mean when they say "check your privilege."
  - gragas 10y ago
    Obviously, people aren't being antisemitic when they attack the 1%. I'm trying to show that arguments like the one I made are ridiculous (for example, white privilege).
- sctb 10y ago
  We detached this subthread from https://news.ycombinator.com/item?id=12925468 https://news.ycombinator.com/item?id=12925468 and marked it off-topic.
yummyfajitas 10y ago
It's hardly clear how this will help much. Vancouver has a population of about 600k people. According to the article, 10k houses are empty. This will, at best, increase the housing supply by 1.6%. Meanwhile, Vancouver is extremely low density - 13k people/square mile, about 1/3 that of high-rise megacities like...Brooklyn. Great work guys! Scapegoating a few rich Chinese people with second homes while ignoring the massive self-inflicted harm that locals do.
- wvenable 10y ago
  https://en.wikipedia.org/wiki/Vancouverism https://en.wikipedia.org/wiki/Vancouverism
  - snrplfth 10y ago
    Vancouverism-as-high-density only applies to the small downtown area, and tiny slices of land near transit stations. Nearly all the city's area is single-family homes on tenth-acre lots.
- snrplfth 10y ago
  Vancouver voters simultaneously want: a) a low-rise, spaced-out city, b) rising property values for people who already own, and c) low home prices for people getting into the market. If you point out that you can only have two of these three things, you will not have any electoral success there.
- mrfusion 10y ago
  If demand is inelastic changing supply by even one percent could make a big difference in prices.
- marcosdumay 10y ago
  Prices are set on the margin. Knowing that it is "only" 1.6% of the houses (by the way, that's a big number) means nothing without also knowing how many more people are willing to live there by current prices.
- colechristensen 10y ago
baybal2 10y ago
Another thing about Vancouver is the staggering amount of brand new real estate being unsold for years. Every developer thinks that one day there will be a naive Chindonesian/Eastern European nouveau riche that will buy it no matter the cost. And yes, such people were coming in great numbers
mrfusion 10y ago
What about vacation homes though?
- scott_karana 10y ago
  What about them? Mean value of a home in Vancouver is $1.4 million. ;) How could speculative empty homes be distinguished?
mrfusion 10y ago
Is their an exception if you're trying to sell your house?
- colechristensen 10y ago
  I would hope not. The whole idea is to lower prices, what better way to lower prices than to tax you for holding out for more money?
bufordsharkley 10y ago
This is an incentive to demolish a home in order to drive the assessment down (and keep ownership of the valuable land). Right?
nacho2sweet 10y ago
They are going to try and tie in AirBnB regulation with this as well (sort of). Since places wouldn't be considered occupied when you have 20 of them renting them out as full time AirBNBs. To get around it you will need a business license for each unit, which is also taxed. Business license #'s must be displayed on the temporary rentals website under the listing. Business licenses can only be obtained with permission from your strata. They think they can free up another 2000+ rentals this way as well. AirBNB is running an insane ad campaign here that mostly pisses off every Vancouverite I know in my echo chamber of EVERYONE UNDER 35. I work at one of the big Universities here. It is crazy biking in the summer through affluent ghost neighborhoods. Lots of the older big houses that were tore down were rentals to like 6-8 students at a time, or had basement suites. Now they are empty boxy white McMansions.
meganvito 10y ago
I think it is the government to be blamed failed to give a proper direction of the hot money.
- meganvito 10y ago
  Namely the incompetence in other sectors.
diyseguy 10y ago
I wonder if the tax will apply to unused office space too
gt2 10y ago
Read something recent about vacant properties in Amsterdam: http://nltimes.nl/2016/09/29/amsterdam-fine-vacant-buildings/ http://nltimes.nl/2016/09/29/amsterdam-fine-vacant-buildings...
mikeash 10y ago
Is this supposed to sound like a lot? My house is taxed at about 1% annually and that seems normalish.
- alexland 10y ago
  This is in addition to standard property taxes.
  - mikeash 10y ago
    That would bump mine up to about 2% total, which still doesn't look particularly unusual.
notadoc 10y ago
Doubt a 1% tax is going to deflect any of the foreign funds parking, but it's a start.
deleted 10y ago
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perseusprime11 10y ago
Does anyone know how empty properties are handled in U.S? Do you still end up paying property taxes?
- e15ctr0n 10y ago
  Generally speaking, a homeowner pays the full property taxes if the home is not the primary residence. (Some states offer to reduce the property taxes if the home is the primary residence; this is known as a homestead exemption.) On top of the property taxes, the homeowner also pays insurance (home + hazard + flood) and the mortgage (principal + interest). If the home is part of an HOA, monthly fees to the HOA are also due. At all times the homeowner is responsible for the full upkeep of house. For example, tree trimming, fence repair, lawn maintenance, etc. If troublemakers identify a house that remains empty most of the year, be prepared for them to move in secretly and indulge in nefarious activities (like setting up a marijuana grow operation in a state where that is illegal). All in all, an empty property is a headache to maintain. A professional property manager helps, at which point you may as well rent the damn thing out.
muninn_ 10y ago
Told ya
conanbatt 10y ago
"I manufacture T-shirts. Hand made T-shirts which are not spectacular, but kind of unique. I have been selling them for a long time, but in the past few years, people from other places are buying all my T-shirts, more than the ones I can make. I increased prices because of it, but I still sell all the T-shirts I have. Maybe i can make more T-shirts, but right now this is the amount I can make. Maybe, i should tell Bob to go check if my customers are using the T-shirt, and if they are not using it, well, they must pay Bob or Bob will take the T-shirt away. "
- cesarbs 10y ago
  New land can't be manufactured.
  - conanbatt 10y ago
    This is not land, this is new dwelling units, which most certainly can.
    - ludston 10y ago
      Righteo. You go build a house in the middle of Vancouver, and I will go make a shirt. (The race is on)
      - conanbatt 10y ago
        I can't make a car in the middle of a Volkswagen factory either, whats your point?
- titanomachy 10y ago
  We're talking about regulating the use of a limited-supply common good: the land in a city. The residents of that city have the authority to regulate the use of that land to ensure that it is providing the desired benefits, in this case housing. They mechanism by which the residents can regulate land use is taxation imposed by an elected municipal government. More broadly: the only sense in which one can "own" property is within the framework that society has created. If there was no society or government, your land title would mean nothing and anyone with more physical power than you would take your home as soon as they so desired. Fortunately, we live within a civilized society which enables ownership in a sense other than immediate possession. However, that framework of ownership has a caveat that allow property to be reclaimed if the public good demands it (cf. eminent domain). The framework could have been built without that escape hatch, but that would have caused its own problems. This example isn't specifically eminent domain, but the same principle is at play: regulation of common goods by a collective. Any introductory class in game theory will provide half a dozen examples of why this is necessary.
system16 10y ago
Many people complaining that "1% is nothing to Chinese millionaires" are missing the point. These people didn't get rich by throwing their money away. Yes, they can easily afford an extra $10k or $20k or even more a year, but this combined with the recent 15% tax makes Vancouver a lot less attractive. After that last tax, foreign investors are already getting spooked and starting to flood Toronto's housing market instead - this too will have an effect. It's a great start, and I hope to see it in Toronto and other cities as well.
- spangry 10y ago
  This is a good observation, and supported by even a casual glance at international macro over the past 35 years. "Hot money" flows very quickly in countries with deregulated captial markets.
MR4D 10y ago
Wow. Should be interesting to see what happens in the next recession. My guess is that property values will get hammered down, and the city will lose much more than 1%. Not to mention the money people will lose selling property in exacerbated conditions.
ww520 10y ago
Why don't they just build more? Flood the market with supply and see how the price goes.
- Tiktaalik 10y ago
  A fair question, but it assumes that they aren't already doing this. There is already a great deal of new supply creation and there has been for decades. Vancouver has nimby tendencies just like any other city, but it's not SF. There is lots of new condo construction. The problem with a supply only solution is that supply takes time to create, and there are limits to the rate of supply creation (ie. how many trades are available). Even if city government really made a push to increase the pace of supply, they only be able to move the needle slightly, and it'll take years for that supply to appear. If the speculative demand is overwhelming it might not have a noticeable affect. I would say this has been the case for the last several years where Vancouver housing starts climbed to the highest it has ever been and yet prices climbed ever higher. If you want to solve the problem quickly, you need to not only increase supply, but also have a look at curbing speculative demand.
beagle3 10y ago
Intelectual Property (especially patents and copyrights) should also be taxed at 1% of their assessed/declared value. And a single infringer should never be liable for more than the assessed value. Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.
- reitanqild 10y ago
  This really seems like a great idea! Anyone see any reason why it shouldn't be?
  - simonbw 10y ago
    Patents and trademarks maybe, but copyright? You have copyright on basically anything you create. Should I pay taxes on everything I put on github? On essays I write? What if I'm a famous artist? If I make some artwork to go in my living room, should I really pay 1% of the assessed value of that every year? If I write a book, is it not enough to pay taxes on the income I get by selling my book? Should I really have to pay taxes on it to keep it out of the public domain?
    - reitanqild 10y ago
      Thanks! I feel a little less smart now which is a good sign. :-)
    - bostonvaulter2 10y ago
      Who said anything about copywright?
      - lordnacho 10y ago
        Copyright is a form of IP.
      - jahnu 10y ago
        > Intelectual Property (especially patents and copyrights)
occamrazor 10y ago
A fair approach is the Swiss one. Every property is taxed as if it is rented out at market rates, no matter whether it is rented, owner-occupied, or vacant. On the other hand there are (almost) no taxes on the value of the property. This removes most distortions in the rental market.
- dajohnson89 10y ago
  How is market rate determined without one party feeling slighted?
  - cjlars 10y ago
    They do fairly comprehensive land value + structure value assessments for property tax in many US states. Basically they collect data on every property like square footage of building, size of plot, age of structure, etc and do a regression based on comparables in the area where the real price is known. It's not perfect for every property, but is a fairly straightforward analysis. Individuals can challenge the model's output if it's too far off. The same method could easily be adjusted for rental rates.
- firethief 10y ago
  That's not fair if rental availability is a positive externality, though Switzerland may not have the absentee investor problem that makes the difference matter there.
  - pzone 10y ago
    Rental availability is no more a positive externality than the availability of frozen spinach at the grocery store is.
- pzone 10y ago
  That's a beautiful solution. Why is it so hard to get intelligent legislation like this passed in the USA?
  - 10y ago
tendersej 10y ago
While I think it is a step in the good direction, I am skeptical as to how successful this measure will be. The problem at stake is that Chinese buyers are not buying property in Vancouver for speculative investment purposes only. They see these properties as safe stores of value in order to diversify their risk profile in case the situation in Mainland China or their own financial situation goes down the gutter, and / or to support their future potential effort to gain Canadian residency / citizenship for themselves or their kids, and / or to vacation outside of mainland china once in a while. Sure, this tax will hurt some of them, but the number of Mainland Chinese people with the means to write off such an amount as the cost of security is massive. Source: lived in Mainland China for a few years, worked for this specific demographic.
- ringwalt 10y ago
  If they're not just in it for short-term speculation, then they can rent the house out and hire someone to manage it. Make some more profit while contributing to the Vancouver economy and rental market.
  - tendersej 10y ago
    This would go against the ideas of being able to go to Vancouver on a whim, and finding things as they were left, or being able to jump on a plane in case of Mainland China Meltdown and directly move into their house/flat. Those apartments are not meant to be rented, they are safe places. Contributing to the Vancouver economy and rental market? This demographic could not care less, this does not factor in their decisions. (I have only empirical evidence of this mindset, but I would be willing to expand on what I base my reasoning on.)
mcguire 10y ago
In the rural US, it's reasonably common to bulldoze unused agricultural buildings like silos and barns (and old houses on the property) to reduce the property value and thus property taxes. It's also somewhat common to fine owners of unused urban houses because they attract "transients" and cause other assorted problems.
ranprieur 10y ago
They should just legalize squatting.
- science4sail 10y ago
  That's definitely one of the more anarchistic approaches, especially if you combine it with adverse possession. The absentee owners will either have to worry about the squatters "stealing" their million-dollar houses or will have to hire locals as security guards. Either way there's some more money being recycled back into the local economy.

544 points by huangc10 10y ago

I grew up in Vancouver and I think this law is necessary (maybe). The big question here is...how do they tell if the house is unoccupied or if the owner is on an extended vacation? Can it really be enforced?

sriram_sun 10y ago
I think there is a similar issue in Geneva.
vkou 10y ago
They can't - this is all for show.
- vehementi 10y ago
  Why post with such confidence when you're not informed?
  - vkou 10y ago
    When you're throwing two million dollars at a house, sight-unseen, that you then let stand empty for years, how difficult would it be to hire a housekeeper to come around the place every week, and make it look lived-in?
    - gorkemyurt 10y ago
      you might as well actually rent it out at that point..
      - snrplfth 10y ago
        That means tenancy contracts, risk of damage, and a whole raft of legal obligations.
        derefr 10y ago
        If you're an absentee building owner, you don't (can't, really) worry about any of those things yourself. Instead, you lease your building to a property management agency, who handles all of that for you.
        jonknee 10y ago
        Well being a tax cheat also introduces a whole raft of legal obligations...
        snrplfth 10y ago
        I mean, as compared to the cost of making it look lived-in, or just stopping by so as to technically "be occupying it". Rents in Vancouver are at a very low ratio to the cash value of property, as bad as 70:1 (value:annual rent.) In the normal world, it's more usually 20:1. This means that the costs and risks of renting a property in Vancouver are often considered not worth it.
    - anindha 10y ago
      They could have a whistle blower reward. Someone is going to find out. Say 20% of the fine goes to the person that reported it.
    - eli 10y ago
      Having someone keep the house clean and presentable is in itself a laudable goal.
    - OJFord 10y ago
      > When you're throwing two million dollars at a house, > sight-unseen, that you then let stand empty for years, ... you're not breaking a sweat paying the $20k. It sucks, you'd rather keep your $20k, of course. But it's not worth risking cheating it...
mahyarm 10y ago
Well with a gov't power monopoly, they can do things like check power and water utility usage. You can also look at tax return address records for the BC income tax part. Driver license / BCID / immigration records are another. You can also do a 'prove you have a resident in X months or be assessed fines' like many HOAs and mortgage agreements do for various things. Policies over large numbers aren't about %100 enforcement, a general behavior modification is considered a success usually.
- charlesdm 10y ago
  They do this in Monaco as well. I read in an article a while back that some nonresidents have automated timers to turn on/off the lights, turn on the heating, water, etc.
  - spitfire 10y ago
    I think that's mostly for tax avoidance purposes. So they can claim they were in Monaco for tax purposes - Avoiding taxes in their home country.
    - charlesdm 10y ago
      Tax evasion, actually. But yes. Was just implying that checking (or data mining) might not always lead to positives when you're dealing with cunning individuals.
  - shermablanca 10y ago
    I was going to say this. These rules will drive investment in home automation. I'm also willing to bet that a large portion of the revenue generated from this scheme will be spent on the manpower necessary to enforce it. That being said I'm happy to be proven wrong, but can we expect any sort of data to support a hypothesis? I'm not sure as I'm unfamiliar with Canada's policies on access to public data.
    - charlesdm 10y ago
seanmcdirmid 10y ago
They ask politely, and you either lie or tell the truth. This is a big difference between the west and a country like the PRC where strong rule of law isn't a given. In the west, they will simply ask, with the caveat that perjury is a serious crime if you are found out. In China, they will figure out another way since trust isn't assumed and lying is considered a much weaker offense. Completely different systems. (The PRC is trying to go in a trust direction with income self reporting, but it doesn't affect the taxes you pay, oddly enough.)
- seanmcdirmid 10y ago
  Here is a better description: http://www.calgaryherald.com/vancouver+slaps+year+empty+homes+about/12372683/story.html http://www.calgaryherald.com/vancouver+slaps+year+empty+home... (Vancouver slaps $10,000 a year tax on empty homes. Lie about it and it’s $10,000 a day)
elchief 10y ago
It's not a criminal trial. The burden of proof is low and the onus is on the homeowner, not the city. So if the city decides your property is vacant, you can go ahead and prove you were there, or you pay up.
- gravypod 10y ago
  That's going to go well. "Why didn't you use any power?!?!" "I have solar" "Can you give an alibi!?!?" "I was home alone" "Not good enough, pay up!"
  - elchief 10y ago
    So cynical...give it 6 months
no1youknowz 10y ago
> Can it really be enforced? Yes, it can be enforced. For example, in the US. Housing associations have staff that run around in cars taking photos of literally everything. Grass too long - Fine. Bins out outside of trash date - Fine. This happens daily. I know because I used to live at an HOA. My point being, hire individuals with cars to keep track of houses. Have photos of non-residency and then impose heavy fine to recoup costs.
- schwap 10y ago
  That doesn't seem feasible for an entire city at all.
  - bacongobbler 10y ago
    It wouldn't be a daily thing. Maybe once every other year at most. The cost would be minimal to the government to hire a few contractors for a one-day thing.
    - derefr 10y ago
      Sort of like how the Consumer Price Index gets calculated, then.
  - the_watcher 10y ago
    If you are thinking about having someone driving around to photograph everything frequently, yes. But a couple of cars outfitted like the Google Street View cars, each given a section of the city to drive every other month or so is very feasible. You could also put cameras on any public transit vehicles to keep photos coming in from vehicles that are already being operated by city funds.
  - quickben 10y ago
    Why not? If you are looking at least 10k/house in taxes, it's very efficient to have a full time staff to check out the recently flipped (well...) MLG houses.
  - 10y ago
Kluny 10y ago
I think Vancouverites are going to be phoning in to report their neighbors.

cperciva 10y ago

I expect to see a thriving "rental" market. How is a poor home owner expected to know that the person they rented their house to wasn't actually living there?

tlack 10y ago
They could provide a copy of the contract when asked, I presume
- viraptor 10y ago
  That's the point of the "rental" market. It's still real. But maybe I'm happy to rent 2-3 houses for a very low price? I have business in different parts of the city over a week, so that seems like a convenient arrangement. (wink, wink)
  - bbcbasic 10y ago
    But how do I know you won't actually live there full time causing me wear and tear costs. I mean ... you now have a contract that says you can!
    - viraptor 10y ago
      You don't hand over the key.
      - jacalata 10y ago
        Pretty sure that any locksmith will make you a key to a house you have a copy of the lease for.
the_watcher 10y ago
Can you clarify this? Are you saying that homeowners will create fake "rental" contracts with straw man renters, and then when fined, provide the rental contract as evidence that they tried to comply? My guess is that the city will simply take the position that the onus is on the homeowner to ensure the renter is actually there, which is the correct approach if the concern is that homeowners would create straw man renters.

mahyarm 10y ago

I'm really surprised that this was implemented into law. I remember suggesting it on twitter without hearing anyone say it before a couple of years ago. But I'm guessing what happened is other places might have similar laws.

bhc 10y ago

Is a flat rate fine a good idea in this case? I imagine an investor keeping his or her $30M mansion just as a hedge against RMB depreciation and keeping it empty will think nothing of the $10,000 fine.

elchief 10y ago
it's 1% of the previous year's assessed value. $10,000 was an example http://vancouver.ca/news-calendar/vancouver-introduces-empty-homes-tax-framework-as-rental-housing-crisis-persists.aspx http://vancouver.ca/news-calendar/vancouver-introduces-empty...
cecilpl 10y ago
The headline assumes a $1m house. From the article: > The empty-home tax will take effect by Jan. 1 and will be calculated at 1 percent of the property’s assessed value.
pbhjpbhj 10y ago
Why could you not make the charge for non-payment be something like 50% of the assessed value or repossession of the property. Why do you have to leave an easy route out.

brandur 10y ago

I wonder how they picked the magic number of $10,000. (Edit: as mentioned below, the figure is actually 1% assessment.) Vancouver real estate prices jumped 20% in 2015 -- a $200k gain on a $1M house. If pricing trends continue along that trajectory then Vancouver real estate still looks like a great investment even if you just eat the entire tax. Still, I'm impressed by how quickly Vancouver is moving forward with these measures (going into effect Jan 1st!). They're sorely needed, and it's great that they don't have to sit in limbo for years before being enacted.

Zyst 10y ago
>I wonder how they picked the magic number of $10,000. As per the article: They didn't, it's 1% of the property value. The title is misleading.
- huangc10 10y ago
  Agreed, perhaps the title is misleading, but keep in mind a lot (if not most) houses in Vancouver are greater than 1 million.
- brandur 10y ago
  Thanks, I missed that. It's strangely written because it re-iterates the $10,000 figure in the first paragraph of the article, but then notes 1% in the second.
detaro 10y ago
It's 1 percent of the assessed home value, not a fixed fee. Bad headline...
serge2k 10y ago
But you get rental income and don't get docked 10k if you just rent it out. That's the goal with this tax. The earlier tax by the province is to discourage investors.
soperj 10y ago
Since they've gone ahead with the 15% foreign buyers tax, things have started to tank.

rdmcfee 10y ago

The title is misleading. The tax is apparently 1% of property value. $10,000 would be the tax on a $1M home.

BDGC 10y ago
A typical home in Vancouver BC is $1.4M[0], so if anything it's an understatement. [0] http://www.cbc.ca/beta/news/canada/british-columbia/vancouver-real-estate-house-prices-1.3564528 http://www.cbc.ca/beta/news/canada/british-columbia/vancouve...
- darkstar999 10y ago
  Wow. This is what happens when it's too easy to borrow money.
  - dmix 10y ago
    Possibly, but only easy to borrow money to buy homes...rather than build more homes, otherwise that'd drive prices down.
    - titanomachy 10y ago
      There's lots of development, but it takes time to see the effects of that. The recent spike in prices has been extremely fast, up by 20% in 2015. Also, the city has to approve any increases in density, which doesn't happen overnight. Faster than silicon valley, though.
- jannotti 10y ago
  Which still qualifies as "misleading"
deleted 10y ago
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jestersidekick 10y ago

So I could get paid to escape Trump for 4 years? This is looking pretty awesome

snrplfth 10y ago
Amusingly, you can't just move to Canada for 4 years. They are pretty good at finding and deporting people.
darkstar999 10y ago
Would you want a bunch of conservative Canadians flocking to America every time they get an elected official they don't like? Why do you think Canada wants you?

deleted 10y ago

[deleted]

jorblumesea 10y ago

So they will find someone to show up every week or two and turn on lights on, add some furniture, moving things around etc. I feel like the city of Vancouver is going to always lose the free market game of cat and mouse.

yazaddaruvala 10y ago
You seem displeased. At least Vancouver is trending in a positive direction.
fencepost 10y ago
No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. Enforcement isn't based on whether the lights are on or not. And I'd assume that if you're declaring it as your principal residence but you're registered elsewhere for little things like voting it may trigger investigation that could get Very Expensive if you are determined to be lying.
- rsync 10y ago
  "No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. " I don't understand - what if it's neither ? What if you are a plain old canadian who has a home in Vancouver and (for instance) a home in Golden ? It's not at all unreasonable to have a home that: a) is not your primary residence b) you live in for 2-3 months of the year c) you have no intention of renting out because you go there regularly or sporadically What does one do in that circumstance ?
  - caylus 10y ago
    Pay the tax. Owning a home in a crowded city, not living in it the vast majority of the time, and refusing to rent it out to people who desperately want to live there imposes a negative externality on the city, which you need to pay for.

dghughes 10y ago

>Lie about it? That’ll be C$10,000 a day in fines. Ouch! I think you should have to live in your home at least six months of the year (sounds weird!) that would also appease snowbirds. If the owner can't be there for six months of the year then require the owner to rent or lease it.

derefr 10y ago
Interestingly, something similar is already enforced for Alaskan oil tax credits: you have to live in Alaska at least six months of the year to receive them. One could probably look to their enforcement system.

baybal2 10y ago

When I was living there in 2014, I made a guess that 1/3 of Coal Harbor appartments were unoccupied or unsold by counting dark windows. My guesstimates were not far from what the city hall counted in 2015. B.T.W. I'm no longer living in Vancouver

elchief 10y ago
Ya if you stand at Georgia and Denman on a clear evening, say 9 PM, 3/4 of the West End will have lights on, and 1/4 of Coal Harbour will. It's a ghost town.

flukus 10y ago

I'd be worried about unintended side effects here. A lot of places might get rented out to the poor to avoid a fine, but the rental arrangements might be shorter term and force the poor to move more frequently.

likeapaper 10y ago
Why would that be the case? These places are currently not being rented at all. Why would people favour short-term arrangements? I own 2 apartments and rent one of them (mostly to students). I look for tenants who can stay for longer periods so I don't have to spend a lot of my time finding new people.
- flukus 10y ago
  We don't know why they're empty. A lot could very well be "I'll lower the rent until I can find someone to pay more".
  - HelloNurse 10y ago
    "I'll lower the rent until I can find someone to pay more" is the very definition of free market; a free market in which rent rates stabilize downwards, as socially desirable. Attempting to rent the house for a shorter time is simply going to restrict the target market to transient residents who plan to move away shortly (e.g. students), which is rather orthogonal to being rich or poor. Owners need to seek a balance between not renting at all, or renting very cheaply, and accepting longer-term contracts; it's never a unilateral decision.

maverick_iceman 10y ago

Instead of maintaining a facade that people still have a right to property they might as well announce that government owns everything, you know just like communist countries.

mdanger007 10y ago
What is property without laws and enforcement to protect it?

eggy 10y ago

How can you be said to own anything if you are forced, basically 'extorted' by government, into occupying your own house or not? I guess it is whether you believe in property rights. If you inspect your property to see squatters or others haven't criminally occupied it, and you maintain it so that it does not cause any harm or damage to your neighbors homes, why this? More pressure to not own/maintain and just rent or leave the community. How can a neighborhood that's basically empty fetch any high rents for the units that are not empty and for rent?

vkou 10y ago
The same way you can be said to own property, while having to pay an annual property tax. You only have property rights because your taxes pay the government to enforce them. Vancouver has a crippling detached housing shortage.
- beamatronic 10y ago
  It seems the test of whether you "own" something is whether you can sell it. You can sell your a home you "own" without owning it "free and clear"
  - Daishiman 10y ago
    Even if you can sell a bunch of different things there are still things you are legally liable for, and for the most part those things end up making a lot of sense.
deleted 10y ago
[deleted]
beamatronic 10y ago
There is a saying, if you want to find out who owns your land, stop paying the mortgage. The same is true with property taxes. A few years ago I looked to see if there was anywhere in the US that you could buy property and truly own it in perpetuity. There were a few places in Nevada at the time but they may have changed the law by now to eliminate this.

techxit 10y ago

This is great (although it's not enough) and more cities should do it. It's an effective use of public policy and a powerful statement and I'm thrilled to see it. This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1% instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials). I wish that our recent display of nationalism in the US had not been one of the disgusting kind.

secfirstmd 10y ago
Based on Dublin's experience. I think that a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.
- kareemm 10y ago
  > a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Don't know how much you know about Vancouver's geography, but there's not much of this kind of land. > Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes. An influx of foreign capital (excess demand) and zoning (not enough supply fast enough) are the biggest drivers of this in Vancouver.
raldi 10y ago
And even the libertarians should be on board with this tax, because it's correcting a huge negative externality: empty units are bad for a neighborhood. Occupied units support local merchants, reduce crime, and generally make a neighborhood more fun and interesting to live in.
- nostromo 10y ago
  Libertarians would argue that this is a problem created by onerous zoning requirements to begin with.

SilasX 10y ago

Anyone know how hard of a "token effort" you have to make to get a home classified as "used"?

jacalata 10y ago
Show them a rental contract to someone for at least six months of each year. If they're fake, hope none of your neighbours dislike you.

huangc10 10y ago

I want to clarify that the $10,000 is not a fixed value. It is simply the 1% assessed value of the house. However, most houses in Vancouver are greater than 1 million.

charlesdm 10y ago

I understand some cities have exuberant property values, for various reasons. Is it that great of a city? I've never been, but what makes Vancouver special to see such high value increases?

jmschlmrs 10y ago
It's one of the nicest/only cities in the Pacific Rim, where Chinese investors seem to prefer to invest.
cossatot 10y ago
Canada's housing bubble hasn't yet popped, and prices are high in many places. Vancouver itself is attractive to investors because it has a very mild climate, is close to Seattle and the rest of the U.S. West Coast is a short flight, and it's much closer to Asia than the rest of Canada is. It's also a very beautiful place with lots of amenities for those living there rather than overseas investors or occasional business travelers.
huangc10 10y ago
I grew up there and have since moved away but what I loved about it was just how calm, peaceful, and beautiful it was. I think I wouldn't want my kids to grow up anywhere else (if I can jump back in time to Vancouver in the mid 90s). Vancouver also welcomed multiculturalism which helped a lot. The city has since moved on (like all cities with time and technology) but I think many people still want that feeling of what it was like in the 90s. It was just a extremely nice place to start a family.

eli 10y ago

In DC vacant homes are taxed at 5% assessed value and "blighted" homes at 10%. It's the city's main weapon against vacant properties. People complain that enforcement is uneven or that sneaky developers find loopholes, but it seems like a good program overall.

titanomachy 10y ago
Wow, that's an incredibly high tax! I bet it works pretty well, I'd want to offload that property damned fast if I couldn't rent it.
- eli 10y ago
  I wonder how many people end up actually paying it, but at the very least it's got to make it inconvenient and risky to own vacant property.

reneherse 10y ago

Shameless plug, for my just-released "fake home occupancy as a service", where my family and I charge you only 0.5% of the property value to satisfy the government's occupancy requirements. Contact info in my profile.

charlesdm 10y ago
Every tax has its loophole.
- Scoundreller 10y ago
  Except the loophole is what they're incentivizing. Just like personal taxes: Don't work, just inherit money and invest in blue-chips.
greenshackle2 10y ago
I wouldn't trust reneherse's service. My competing service, "actual home occupancy as a service", is bulletproof; we guarantee that we will occupy your house full time.
- reneherse 10y ago
  Competition is always welcome! We do however build solid relationships with the neighbors and enroll the kids in local schools to provide complete residency simulation. All for one low fee.
fdgdasfadsf 10y ago
Letting someone have possession of property (yes tenants have possession) like this can be a dangerous thing to do in some jurisdictions - they can quickly gain rights to live there and you lose the rights to evict (or increase the rent - which could be a problem if they are charging you to live there!). Far more likely is that people start renting the empty property out+ - which will increase the supply in the rental market and help the housing costs... I.e. the intended effect. EDITED + (with proper tenancy agreements which usually provide some balance of power between owner and tenant)

radicaldreamer 10y ago

They really need to crack down on black money flooding into the Canadian economy. This seems like a quick way to assuage the criticism without addressing the core issue.

CyberDildonics 10y ago
Governments don't usually crack down directly on money flooding into their economy.
colechristensen 10y ago
One way to crack down is making it less attractive to bring in such money which this seems precisely tailored to do.
sprocket 10y ago
This is starting to happen already. China has started launching lawsuits in Canada to seize real estate purchased with questionable money: http://www.reuters.com/article/canada-china-court-idUSL1N19K03D

RowanH 10y ago

Wouldn't be sad if that was implemented in NZ - same problems here of ridiculous price rises = land banking. Seeing empty (million dollar +) houses around you is surreal and totally against community spirit we're so widely known for. Good move Vancouver !

EdwardDiego 10y ago
I really really really hope that Winston Peters polls well with this as a policy so John Key will appropriate it.

gragas 10y ago

Hey, attacking the 1% is attacking 43% of the Jewish population. Check your gentile privilege. #EndAntiSemitism https://en.wikipedia.org/wiki/American_Jews#Socioeconomics https://en.wikipedia.org/wiki/American_Jews#Socioeconomics

maxander 10y ago
This is an honest request for clarification: Are you serious?
- beachstartup 10y ago
  this is called the ol' reddit switcheroo. he's being anti semitic.
  - gragas 10y ago
    No, I'm just trying to show that it's ridiculous to make "check your privilege" arguments.
    - maxander 10y ago
      You've only convinced me that you don't really understand what people mean when they say "check your privilege."
- gragas 10y ago
  Obviously, people aren't being antisemitic when they attack the 1%. I'm trying to show that arguments like the one I made are ridiculous (for example, white privilege).
sctb 10y ago
We detached this subthread from https://news.ycombinator.com/item?id=12925468 https://news.ycombinator.com/item?id=12925468 and marked it off-topic.

yummyfajitas 10y ago

It's hardly clear how this will help much. Vancouver has a population of about 600k people. According to the article, 10k houses are empty. This will, at best, increase the housing supply by 1.6%. Meanwhile, Vancouver is extremely low density - 13k people/square mile, about 1/3 that of high-rise megacities like...Brooklyn. Great work guys! Scapegoating a few rich Chinese people with second homes while ignoring the massive self-inflicted harm that locals do.

wvenable 10y ago
https://en.wikipedia.org/wiki/Vancouverism https://en.wikipedia.org/wiki/Vancouverism
- snrplfth 10y ago
  Vancouverism-as-high-density only applies to the small downtown area, and tiny slices of land near transit stations. Nearly all the city's area is single-family homes on tenth-acre lots.
snrplfth 10y ago
Vancouver voters simultaneously want: a) a low-rise, spaced-out city, b) rising property values for people who already own, and c) low home prices for people getting into the market. If you point out that you can only have two of these three things, you will not have any electoral success there.
mrfusion 10y ago
If demand is inelastic changing supply by even one percent could make a big difference in prices.
marcosdumay 10y ago
Prices are set on the margin. Knowing that it is "only" 1.6% of the houses (by the way, that's a big number) means nothing without also knowing how many more people are willing to live there by current prices.
colechristensen 10y ago

baybal2 10y ago

Another thing about Vancouver is the staggering amount of brand new real estate being unsold for years. Every developer thinks that one day there will be a naive Chindonesian/Eastern European nouveau riche that will buy it no matter the cost. And yes, such people were coming in great numbers

mrfusion 10y ago

What about vacation homes though?

scott_karana 10y ago
What about them? Mean value of a home in Vancouver is $1.4 million. ;) How could speculative empty homes be distinguished?

mrfusion 10y ago

Is their an exception if you're trying to sell your house?

colechristensen 10y ago
I would hope not. The whole idea is to lower prices, what better way to lower prices than to tax you for holding out for more money?

bufordsharkley 10y ago

This is an incentive to demolish a home in order to drive the assessment down (and keep ownership of the valuable land). Right?

nacho2sweet 10y ago

They are going to try and tie in AirBnB regulation with this as well (sort of). Since places wouldn't be considered occupied when you have 20 of them renting them out as full time AirBNBs. To get around it you will need a business license for each unit, which is also taxed. Business license #'s must be displayed on the temporary rentals website under the listing. Business licenses can only be obtained with permission from your strata. They think they can free up another 2000+ rentals this way as well. AirBNB is running an insane ad campaign here that mostly pisses off every Vancouverite I know in my echo chamber of EVERYONE UNDER 35. I work at one of the big Universities here. It is crazy biking in the summer through affluent ghost neighborhoods. Lots of the older big houses that were tore down were rentals to like 6-8 students at a time, or had basement suites. Now they are empty boxy white McMansions.

meganvito 10y ago

I think it is the government to be blamed failed to give a proper direction of the hot money.

meganvito 10y ago
Namely the incompetence in other sectors.

diyseguy 10y ago

I wonder if the tax will apply to unused office space too

gt2 10y ago

Read something recent about vacant properties in Amsterdam: http://nltimes.nl/2016/09/29/amsterdam-fine-vacant-buildings/ http://nltimes.nl/2016/09/29/amsterdam-fine-vacant-buildings...

mikeash 10y ago

Is this supposed to sound like a lot? My house is taxed at about 1% annually and that seems normalish.

alexland 10y ago
This is in addition to standard property taxes.
- mikeash 10y ago
  That would bump mine up to about 2% total, which still doesn't look particularly unusual.

notadoc 10y ago

Doubt a 1% tax is going to deflect any of the foreign funds parking, but it's a start.

deleted 10y ago

[deleted]

perseusprime11 10y ago

Does anyone know how empty properties are handled in U.S? Do you still end up paying property taxes?

e15ctr0n 10y ago
Generally speaking, a homeowner pays the full property taxes if the home is not the primary residence. (Some states offer to reduce the property taxes if the home is the primary residence; this is known as a homestead exemption.) On top of the property taxes, the homeowner also pays insurance (home + hazard + flood) and the mortgage (principal + interest). If the home is part of an HOA, monthly fees to the HOA are also due. At all times the homeowner is responsible for the full upkeep of house. For example, tree trimming, fence repair, lawn maintenance, etc. If troublemakers identify a house that remains empty most of the year, be prepared for them to move in secretly and indulge in nefarious activities (like setting up a marijuana grow operation in a state where that is illegal). All in all, an empty property is a headache to maintain. A professional property manager helps, at which point you may as well rent the damn thing out.

muninn_ 10y ago

Told ya

conanbatt 10y ago

"I manufacture T-shirts. Hand made T-shirts which are not spectacular, but kind of unique. I have been selling them for a long time, but in the past few years, people from other places are buying all my T-shirts, more than the ones I can make. I increased prices because of it, but I still sell all the T-shirts I have. Maybe i can make more T-shirts, but right now this is the amount I can make. Maybe, i should tell Bob to go check if my customers are using the T-shirt, and if they are not using it, well, they must pay Bob or Bob will take the T-shirt away. "

cesarbs 10y ago
New land can't be manufactured.
- conanbatt 10y ago
  This is not land, this is new dwelling units, which most certainly can.
  - ludston 10y ago
    Righteo. You go build a house in the middle of Vancouver, and I will go make a shirt. (The race is on)
    - conanbatt 10y ago
      I can't make a car in the middle of a Volkswagen factory either, whats your point?
titanomachy 10y ago
We're talking about regulating the use of a limited-supply common good: the land in a city. The residents of that city have the authority to regulate the use of that land to ensure that it is providing the desired benefits, in this case housing. They mechanism by which the residents can regulate land use is taxation imposed by an elected municipal government. More broadly: the only sense in which one can "own" property is within the framework that society has created. If there was no society or government, your land title would mean nothing and anyone with more physical power than you would take your home as soon as they so desired. Fortunately, we live within a civilized society which enables ownership in a sense other than immediate possession. However, that framework of ownership has a caveat that allow property to be reclaimed if the public good demands it (cf. eminent domain). The framework could have been built without that escape hatch, but that would have caused its own problems. This example isn't specifically eminent domain, but the same principle is at play: regulation of common goods by a collective. Any introductory class in game theory will provide half a dozen examples of why this is necessary.

system16 10y ago

Many people complaining that "1% is nothing to Chinese millionaires" are missing the point. These people didn't get rich by throwing their money away. Yes, they can easily afford an extra $10k or $20k or even more a year, but this combined with the recent 15% tax makes Vancouver a lot less attractive. After that last tax, foreign investors are already getting spooked and starting to flood Toronto's housing market instead - this too will have an effect. It's a great start, and I hope to see it in Toronto and other cities as well.

spangry 10y ago
This is a good observation, and supported by even a casual glance at international macro over the past 35 years. "Hot money" flows very quickly in countries with deregulated captial markets.

MR4D 10y ago

Wow. Should be interesting to see what happens in the next recession. My guess is that property values will get hammered down, and the city will lose much more than 1%. Not to mention the money people will lose selling property in exacerbated conditions.

ww520 10y ago

Why don't they just build more? Flood the market with supply and see how the price goes.

Tiktaalik 10y ago
A fair question, but it assumes that they aren't already doing this. There is already a great deal of new supply creation and there has been for decades. Vancouver has nimby tendencies just like any other city, but it's not SF. There is lots of new condo construction. The problem with a supply only solution is that supply takes time to create, and there are limits to the rate of supply creation (ie. how many trades are available). Even if city government really made a push to increase the pace of supply, they only be able to move the needle slightly, and it'll take years for that supply to appear. If the speculative demand is overwhelming it might not have a noticeable affect. I would say this has been the case for the last several years where Vancouver housing starts climbed to the highest it has ever been and yet prices climbed ever higher. If you want to solve the problem quickly, you need to not only increase supply, but also have a look at curbing speculative demand.

beagle3 10y ago

Intelectual Property (especially patents and copyrights) should also be taxed at 1% of their assessed/declared value. And a single infringer should never be liable for more than the assessed value. Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.

reitanqild 10y ago
This really seems like a great idea! Anyone see any reason why it shouldn't be?
- simonbw 10y ago
  Patents and trademarks maybe, but copyright? You have copyright on basically anything you create. Should I pay taxes on everything I put on github? On essays I write? What if I'm a famous artist? If I make some artwork to go in my living room, should I really pay 1% of the assessed value of that every year? If I write a book, is it not enough to pay taxes on the income I get by selling my book? Should I really have to pay taxes on it to keep it out of the public domain?
  - reitanqild 10y ago
    Thanks! I feel a little less smart now which is a good sign. :-)
  - bostonvaulter2 10y ago
    Who said anything about copywright?
    - lordnacho 10y ago
      Copyright is a form of IP.
    - jahnu 10y ago
      > Intelectual Property (especially patents and copyrights)

occamrazor 10y ago

A fair approach is the Swiss one. Every property is taxed as if it is rented out at market rates, no matter whether it is rented, owner-occupied, or vacant. On the other hand there are (almost) no taxes on the value of the property. This removes most distortions in the rental market.

dajohnson89 10y ago
How is market rate determined without one party feeling slighted?
- cjlars 10y ago
  They do fairly comprehensive land value + structure value assessments for property tax in many US states. Basically they collect data on every property like square footage of building, size of plot, age of structure, etc and do a regression based on comparables in the area where the real price is known. It's not perfect for every property, but is a fairly straightforward analysis. Individuals can challenge the model's output if it's too far off. The same method could easily be adjusted for rental rates.
firethief 10y ago
That's not fair if rental availability is a positive externality, though Switzerland may not have the absentee investor problem that makes the difference matter there.
- pzone 10y ago
  Rental availability is no more a positive externality than the availability of frozen spinach at the grocery store is.
pzone 10y ago
That's a beautiful solution. Why is it so hard to get intelligent legislation like this passed in the USA?
- 10y ago

tendersej 10y ago

While I think it is a step in the good direction, I am skeptical as to how successful this measure will be. The problem at stake is that Chinese buyers are not buying property in Vancouver for speculative investment purposes only. They see these properties as safe stores of value in order to diversify their risk profile in case the situation in Mainland China or their own financial situation goes down the gutter, and / or to support their future potential effort to gain Canadian residency / citizenship for themselves or their kids, and / or to vacation outside of mainland china once in a while. Sure, this tax will hurt some of them, but the number of Mainland Chinese people with the means to write off such an amount as the cost of security is massive. Source: lived in Mainland China for a few years, worked for this specific demographic.

ringwalt 10y ago
If they're not just in it for short-term speculation, then they can rent the house out and hire someone to manage it. Make some more profit while contributing to the Vancouver economy and rental market.
- tendersej 10y ago
  This would go against the ideas of being able to go to Vancouver on a whim, and finding things as they were left, or being able to jump on a plane in case of Mainland China Meltdown and directly move into their house/flat. Those apartments are not meant to be rented, they are safe places. Contributing to the Vancouver economy and rental market? This demographic could not care less, this does not factor in their decisions. (I have only empirical evidence of this mindset, but I would be willing to expand on what I base my reasoning on.)

mcguire 10y ago

In the rural US, it's reasonably common to bulldoze unused agricultural buildings like silos and barns (and old houses on the property) to reduce the property value and thus property taxes. It's also somewhat common to fine owners of unused urban houses because they attract "transients" and cause other assorted problems.

ranprieur 10y ago

They should just legalize squatting.

science4sail 10y ago
That's definitely one of the more anarchistic approaches, especially if you combine it with adverse possession. The absentee owners will either have to worry about the squatters "stealing" their million-dollar houses or will have to hire locals as security guards. Either way there's some more money being recycled back into the local economy.