Canada is starting to get aggressive about foreign property purchases, especially in some of its major cities.
Just a few months after the city of Vancouver in British Columbia decided to impose an additional property transfer tax on overseas property buyers – no less than 15 per cent of the property price – it is now moving to tax vacant homes within city limits.
Expected to be enforced by the end of the year, the latest move is an attempt to rein in foreign buyers and absentee homeowners who have allegedly contributed to a steep increase in Vancouver home prices.
Overseas buyers are currently being blamed for pricing middle-class families out of the housing market in Metro Vancouver.
The city council reports that there are 10,800 homes lying empty in Vancouver. The government believes that absentee homeowners will be forced to rent out their properties to avoid the new tax, thus easing the unaffordability crisis.
The tax, which targets properties left empty or underutilised, would be levied through self-declaration, audit, and compliance measures, according to Vancouver’s mayor Gregor Robertson.
“Our proposed empty homes tax is first and foremost about bringing rental homes back into the market,” Robertson said.
“Owners will have to prove they or tenants occupy the homes for a minimum number of days a year. Vancouver’s dangerously low vacancy rate is putting our renters in crisis,” he added.
The government is yet to decide the annual amount of tax, but it has been suggested that it could be between 0.5 per cent and 2 per cent of the property’s assessed property value.
If the tax is collected on just 5 per cent of the nearly 11,000 empty homes, it could generate C$2 million (RM6.34 million) in annual revenue.