Vacant Homes Aren’t Making Cities Expensive
Taxing vacant homes as a means of improving housing affordability is a hot idea right now, despite mounting evidence that it wouldn’t do much good.
Earlier this month, Canadian Prime Minister Justin Trudeau—whose Liberal party is coming out ahead in yesterday’s parliamentary elections—tweeted that “houses shouldn’t sit empty when so many Canadians are trying to buy a home. So, we’re going to ban foreign ownership in Canada for the next two years, and tax the existing vacant, foreign-owned properties.”
Houses shouldn’t sit empty when so many Canadians are trying to buy a home. So, we’re going to ban foreign ownership in Canada for the next two years, and tax the existing vacant, foreign-owned properties.
— Justin Trudeau (@JustinTrudeau) September 7, 2021
That national tax would duplicate local measures in Canada. In 2016, Vancouver, British Columbia, became the first city in North America to impose a tax of 1 percent of a property’s assessed value on empty homes. This year, the tax increased to 3 percent.
Here in the U.S., a number of California cities have adopted or are considering adopting vacancy taxes. Oakland voters approved a vacancy tax in 2018, which charges the owners of empty or undeveloped properties between $3,000 and $6,000 a year. The Los Angeles City Council will put a vacancy tax on the 2022 city ballot.
The idea behind these vacancy taxes is two-fold. First, the financial penalty would incentivize the owners of empty homes—supposedly real estate speculators holding out for higher rents—to put their properties on the market. Second, the revenue from the tax could then be spent on affordable housing programs.
A vacancy tax “would help deter speculative vacancy, mitigate the harms of speculative real estate investment, and deliver necessary financia
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