Toronto takes further step towards taxation of vacant homes after mayor’s executive committee vote – .

Toronto takes further step towards taxation of vacant homes after mayor’s executive committee vote – .

The city of Toronto is on track to start taxing vacant properties to try to stop real estate speculators from buying homes and leaving them empty while residents struggle to find affordable housing.
Mayor John Tory’s executive committee unanimously endorsed a recommendation from city staff on Tuesday to implement a 1% vacant housing tax effective January 1, 2022. The proposal will go to council for approval this week. next, then will be the subject of public consultations.

The vacant housing tax mirrors that introduced by Vancouver in 2018 to address the housing crisis and low vacancy rates. Advisors there pushed the rate to three percent last fall after determining that the tax pushed 5,000 condominium units into the rental market in 2019 and reduced the number of empty homes by 25 percent.

Based on Vancouver’s experience, City of Toronto staff estimate that a vacant housing tax will generate between $ 55 million and $ 66 million per year that the city would use to fund affordable housing projects, according to one. staff report to the executive committee.

Staff hope the tax would also force home buyers who plan to leave homes empty to either live in them or rent units.

1% tax “a joke”

But at least one housing advocate thinks the proposed tax is too low. Emily Johnson told advisers the vacant home tax can be both an effective revenue tool to fund housing projects and stop speculative real estate investments. But she said he has to start at three percent.

“People with the capital to buy and sit on properties like this and leave them vacant for their own purposes can afford a 3% tax,” Johnson said. “One percent is not a deterrent. One percent is, frankly, a joke. ”

Heather Taylor, the city’s chief financial officer and treasurer, said Toronto wanted to follow Vancouver’s example by “making its way into the tax to give residents the opportunity to correct any vacancies they encounter.”

But Johnson said Toronto didn’t have time to wait, citing her own life situation as an example.

She has a stable full-time job in a rent-controlled apartment and always pays more than she can afford. When she leaves town to pursue a master’s degree, she says she won’t be able to afford to return in the future.

“I say this as a person with a lot of privilege,” Johnson said. “It doesn’t mean anything to people on low wages or in precarious jobs, with families to support, on social assistance or trying to find stable housing after experiencing homelessness. ”

City considers luxury housing tax

The pandemic has pushed rental apartment vacancy rates to a 50-year high, according to a January survey. Urbanization reported 5.7% of rental apartments were vacant in the fourth quarter of last year, compared to 1.1% in the same quarter of 2019.

However, the consulting firm predicted the city would return to low vacancy rates as the pandemic continues to ease, with people getting vaccinated and returning to offices and schools.

And while rents have gotten cheaper, they’re still too expensive for low-income tenants, advocates say. The median rental price for a bedroom was $ 1,800 in June, according to PadMapper.

The executive committee also reviewed a study by city staff for a tax on luxury residences, which it referred to the 2022 budget process for further consideration. Homeowners worth more than $ 2 million would face an increase in municipal land transfer tax ranging from 3 to 4% from the current 2.5%.

To cover property tax backlogs, the city recently auctioned off this abandoned house on Carling Avenue in the Bloor Street West and Ossington Avenue neighborhood. Councilors are now on track to approve a vacant property tax that will begin in 2022. (Mike Smee / CBC)

Mayor John Tory said “now is not the time” to change fiscal policies until the economic impacts of pandemic lockdowns are better understood, even though the housing market has remained “relatively healthy”.

“I think you have to be very careful when it comes to imposing additional burdens on people,” the mayor told the committee.

Staff estimate that, depending on how land transfer taxes are structured, they could generate up to $ 30 million in additional revenue per year for affordable housing projects. The risk is that homeowners delay upgrading to luxury homes, tightening the supply of “mid-value” homes, according to the report.

Since the average price of single-family homes in Toronto was $ 1.5 million in 2020, the tax will primarily target homeowners who aren’t “super rich,” Kevin Crigger of the Toronto Real Estate Board told the committee.

The tax increase would “have a direct moderating effect” on the supply of housing, he said.


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