By Tim Syrianos, TREB President
The Toronto Real Estate Board is concerned that another tax on residential units in the city of Toronto will have unintended consequences on the housing market and property owners.
City Hall is considering introducing such a tax to encourage property owners to free up empty units to increase rental supply, however TREB is concerned that not enough empirical data has been collected to support the merits and enforcement tools of such a tax.
At this time, it is not clear that the issues targeted by a vacancy tax are fully understood, nor is it clear how effective such a policy would be, or if it would have unintended outcomes that run counter to the stated City goal of increasing rental supply.
TREB believes that not only is this tax premature, but it poses legal and ethical questions about the government’s ability to undermine private property rights. The application of a vacancy tax on a property owner who is abiding by property standard by-laws, zoning rules, and all other municipal requirements, must be carefully considered.
The administrative challenges of running this program, including the approach for identifying vacant homes (e.g. a mandatory system, a self-declaration by owners, and/or a complaints-based model) are overwhelming. In addition, a vacancy tax could possibly result in a net loss to the City’s budget when program start-up costs of $5 million and $700,000 net annual revenue are factored into the equation (if we look at the Vancouver statistics).
There are better and more sensible policy measures to assist in increasing housing supply, and TREB has participated in discussions with policymakers and has taken the initiative to conduct research that has contributed valuable data, and we will continue to do so, including on this issue.
In light of recent policy measures aimed at the housing sector at both the provincial and national levels, it may be time for a pause to assess the impacts of these already announced policy decisions.
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Courtesy of the Toronto Real Estate Board. TREB Wire http://ift.tt/2vVAT6f