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Housing advocates argue the experience in Vancouver shows Toronto’s new tax is not high enough to make speculators turn vacant housing into much-needed rental accommodation
For too long, Toronto has allowed real estate speculators to buy up the city’s housing stock and leave it vacant, even as renters struggle to find affordable housing. The city’s new vacant homes tax, which is set to be voted on next week, offers an important opportunity to address this problem by pressuring speculators to turn their vacant units into a rental accommodation.
Estimates of how much vacant housing is left in Toronto are imprecise. The city has yet to begin monitoring them. But a recent report by city staff suggests that between 9,000 and 27,000 housing units could be sitting vacant. That estimate is based on low water consumption levels at the addresses. But this estimate doesn’t include condo buildings.
In a now-famous independent study, Toronto resident Jaco Joubert used light-detecting camera technology to investigate vacancy rates in apartment buildings (most of which were condos) and found an average of 5.6 per cent of units were vacant. His research revealed the vacancy rate in some buildings as high as 13 per cent.
But even if we take the city’s lowest estimate of how many units are sitting vacant, that’s enough housing to provide a home for every person in a Toronto shelter population and encampment.
In the midst of an affordable housing crisis, it’s unacceptable for so many homes to be treated as locked safety deposit boxes. We need a policy with teeth to make house hoarding untenable.
Housing advocates have been campaigning for a consequential vacant homes tax but they’re concerned that Toronto’s proposal – 1 per cent of a vacant home’s value collected annually – won’t be enough to act as an incentive.
In many areas of Toronto, house prices have doubled over the past five years alone. The tax should be significantly higher than 1 per cent if the city intends for this policy to do more to persuade the majority of vacant homeowners to list their properties for rent.
This is a lesson that Vancouver has learned the hard way.
Vancouver introduced its 1 per cent vacant homes tax in 2018. The policy has certainly been effective in collecting revenue — more than $60 million in three years, all of which has been dedicated to supporting affordable housing initiatives.
However, the policy has made limited progress in persuading owners of vacant properties to place them on the rental market. Vancouver has experienced a 25 per cent decline in vacant properties since 2017. Many renters remain in crisis.
In the context of a homelessness emergency and affordable rental housing crisis much like Toronto’s, Vancouver’s Mayor, Kennedy Stewart convinced council to triple the tax to 3 per cent in 2020. The change has helped move thousands of homes back onto the rental market, but as Stweart explained, “there are still too many homes that remain empty.”
Toronto has an opportunity to act decisively right now. For far too many, there’s no time to lose. Toronto should send speculators a message they can’t ignore — houses are for living in, not financial speculation.
Toronto’s own report indicates that a 3 per cent tax could generate upwards of $190 million annually for affordable housing initiatives. But most importantly, a strong vacant homes tax will ensure the tax achieves its goal: no longer needing to be collected because every house will be a home.
A vacant homes tax is not a silver bullet to Toronto’s housing crisis. But it offers one of a number of important tools that Toronto could be using to make access to adequate housing a reality. Also needed is much more investment in social housing, real rent control and a strong Inclusionary Zoning policy that requires 20-30 per cent of new residential high rises to be permanently affordable rental housing.
The City has made real strides in recent years towards supporting the expansion of affordable housing. But with the waiting list for social housing eclipsing 81,000 and 11per cent of renters in arrears due to pandemic-related loss of income, far more needs to be done to address a relentless homelessness emergency.
Jeremy Withers is a Ph.D. candidate and the outreach coordinator for the Affordable Housing Challenge Project at the School of Cities, University of Toronto. Saman Tabasinejad is a project manager with Progress Toronto.