Hey landlords, got your letter yet from the mayor about the empty homes tax?
I know, I know – nothing says welcome to the holidays like a letter from Mayor Gregor Robertson reminding you that you’ll be hit with a one per cent tax, if you don’t rent out your second or third home to someone desperate to find a place to live in this city.
Don’t worry snowbirds, you’re fine.
As for the rest of you, well, you’re going to have to visit the city’s website to find out whether your situation qualifies for an exemption from the tax. Here’s a fact that may bring you some relief, or raise your blood pressure: The tax will not apply to properties that are rented out for a minimum of six months of the year, in periods of at least 30 consecutive days.
Deep breaths for those suddenly realizing they’re going to get taxed.
Let me do the simple math for you…
The one per cent tax would mean a house assessed at $1 million would be levied with a $10,000 bill, on top of the base property tax bill of $3,165 for a total cost of $13,165. The overall tab would be in line with what a commercial property assessed at the same $1 million value pays in base property tax.
So if that additional $10,000 is enough to scare or shame you into renting out your condo or house – or whatever else all that cash bought you – then has LandlordBC got a deal for you. That’s the organization of owners and managers of rental housing that is working with the city to get you on board the rental train.
It’s not really a deal, but more of a how-to guide on becoming a landlord – from screening tenants to residential tenancy agreements to move-in, move-out inspection reports.
David Hutniak, CEO of LandlordBC, along with Coun. Geoff Meggs and property manager Krishna Mulder were at city hall Monday to highlight the agency’s website and sell the whole idea of becoming a landlord.
Apparently, there could be up to 20,000 empty homes in Vancouver, according to Meggs, who cited data from a city-commissioned study and another by urban planner Andy Yan of Bing Thom Architects. If at least 2,000 of those homes were opened up for rentals, that would have a significant effect on the 0.7 per cent vacancy rate, Meggs said.
“We work night and day to produce a thousand additional market rental units a year,” he said, referring to incentive programs for developers of rental housing. “If we could add 2,000 due to this measure, that would be like two years of rental market production at one whack. That has demonstrable impacts in vacancy rates.”
As for how many property owners will actually want to become landlords, that’s a big unknown. Some might argue that those who can afford two or three homes can afford the $10,000 annual tax, instead of the hassles of being a landlord or hiring a property manager. Others, I’m sure, don’t like governments telling them what they should and shouldn’t do with their property.
“We’re entering into interesting and hard-to-forecast territory,” Meggs acknowledged.
But already, Hutniak said, homeowners have pre-registered on LandlordBC’s site to learn more about becoming a landlord and enrolling in webinars planned for the new year. He didn’t have a total count of registrants but said it was “in the dozens.”
Mulder, who is also a realtor, told reporters after the news conference that renting out one of his homes has greatly benefited him, while at the same time provided a place to live for a person in need of housing.
“[My tenant] has consistently, for the past eight years, paid my mortgage, paid my strata fees and paid my property taxes – never mind also paying my mortgage down,” Mulder said. “It’s a no-brainer. It is really smart to have a tenant in place. It’s a win-win for everyone.”
Though the city has begun its sales pitch to property owners to become landlords, the tax won’t actually take effect for a couple of years. Next December, the city will send out a “property status declaration notice” with the city’s advance property tax notice. Owners must declare the property’s status – i.e., does it qualify to be taxed – by February 2018.
Homeowners found to have made false declarations will be subject to fines and penalties of up to $10,000 a day. The city says revenue from the tax, which is the first of its kind in Canada, will be set aside for affordable housing initiatives. How much potential tenants of all these empty homes will actually pay in rent is another story.
mhowell@vancourier.com
@Howellings
