Vancouver empty homes tax to include units used for Airbnb

Vancouver's proposed empty homes tax would include secondary properties being booked on the vacation rental website Airbnb, with the maximum fine for people who evade the levy set at $10,000.

New details of the tax emerged on Tuesday, when council voted topush ahead with public consultations. Mayor Gregor Robertsonstressed the aim was to free up supply in the city's crunched rentalhousing market.

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"Ultimately, the goal is to get thousands of units back intorental housing at a time when it's almost impossible to findarental home," Robertson told council.

The province granted Vancouver the authority to create the tax inJuly, months after a city-commissioned report found that about10,800 homes were sitting empty, most of them condos.

Staff have been speaking with experts and researching other jurisdictions' taxes and presented a report Tuesday with their suggested approach. The levy would be the first of its kind in Canada.

Principal residences won't be taxed

The report proposes that the tax be administered similarly to theBritish Columbia Home Owner Grant. A parcel of residential propertythat serves as a principal residence for an owner, long-term tenantor a friend or family member would not be taxed.

That means that secondary propertiessuch as investment condos that are sitting empty or being rented out for short-term staysusing sites like Airbnb would be subject to the tax.

Tsur Somerville, a University of British Columbia businessprofessor, said it made sense to apply the empty homes tax toproperties being used for short-term rentals, even though they'renot actually empty.

"In a city where accommodation is really, really scarce, thefirst priority should be housing people who live and work here," hesaid in an interview.

The tax would not apply to people renting out their primaryresidences on Airbnb, or to basement suites, rooms or laneway homesthat are either sitting empty or rented for short-term stays.

Airbnb said in a statement it's committed to working withgovernment to establish fair, sensible rules, including aroundtaxation.

The city is also working on separate regulations for short-termrentals, with a report to council expected next month.

Details still being worked out

Public consultation on the empty homes tax will begin this fall,with a proposed bylaw introduced to council in November. The taxwould be in place for the 2017 year, with the first payments in2018.

There are many questions left to be settled through public talks, including whether secondary residences that are vacant for only part of the year should be exempt. The tax rate is also still being considered, with a current proposal of between 0.5 and 2 per cent of assessed value.

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Penalties are also still being debated. The maximum fine the citycan impose under its charter is $10,000, but it will consider acombination of the fine plus a higher tax rate for people who failto self-declare or fraudulently declare, said KathleenLlewelly-Thomas, general manager of community services.

Robertson said the city has asked the province many times toincrease the maximum fine.

NPA opposes motion

The council vote was split 7-3, with councillors from thecentre-right Non-Partisan Association opposed. Coun. George Affleckcalled the tax a "bureaucratic nightmare" and said the city shouldinstead encourage the building of more townhomes and rowhomes.

The mayor dismissed the councillors' concerns as"fear-mongering." Residents will be asked to declare the status oftheir properties as part of the regular property tax process, withenforcement through random and targeted audits and response tocomplaints, Robertson said.

"I'd ask Coun. Affleck if he thinks the Home Owners Grant is abureaucratic nightmareor income tax is a bureaucratic nightmare,"he said.

Vancouver's rental vacancy rate of 0.6 per cent is the lowest ofany major city in Canada and its rents are the most expensive,housing planner Matthew Bourke said. If just 2,000 units becameavailable for rent, the vacancy rate would lift to a healthy 3.5 percent, Bourke said.

Tony Gioventu, executive director of the Condominium Home OwnersAssociation of B.C., said condos built since 2010 do not haverestrictions on rentals. Many of the vacant units are thought to bein new buildings in upscale neighbourhoods like Coal Harbour, hesaid.

But if those condos were rented out, they wouldn't be"affordable housing," he pointed out.

"They'd probably be rented out for $3,000 a month."