Should absentee owners pay for affordable housing?

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      A year ago, Vancouver housing researcher Andrew Yan created a minor uproar when he revealed that almost 25 percent of condos in the downtown were either empty or occupied by nonresidents for only part of the year.

      Yan, who works with BTAworks—the research arm of Bing Thom Architects—presented his conclusions at an SFU Woodward’s forum on foreign investment in Vancouver’s real-estate market.

      The City of Vancouver hasn’t taken any action since Yan released this information. But in the United Kingdom, Islington London borough council is considering imposing fines of up to $109,800 (£60,000) on investors who buy new homes and leave them empty.

      “The council is proposing to place the responsibility for demonstrating occupancy on the owners of individual dwellings to which the new planning obligation will apply,” states a discussion paper on the Islington government website. “This could be via submission of evidence such as utility bills on request from the council where it is suspected that properties are left unoccupied.”

      A news release on the borough’s website defines so-called buy-to-leave residences as “new homes that are sold as investments, often marketed off-plan overseas, and left to stand empty”.

      Up to half the residences in new developments in one district, EC1, are not occupied by people on the electoral roll.

      “The council has said that new homes sitting empty represent ‘wasted’ supply, making no contribution to meeting Islington’s need for new places for people to live,” the news release states.

      The borough is inviting comments from the public until April 14. Meanwhile, the discussion paper states that overseas buyers paying cash “are causing a ripple of price inflation spreading throughout London”.

      It also asks: “Do you agree with Islington Council’s intention to require owners of properties which are kept unoccupied to make a financial contribution to the council, which would be used to deliver affordable housing elsewhere in the borough?”

      Comments

      14 Comments

      Bruce

      Apr 1, 2014 at 8:12pm

      Islington's policy is a great example. Pity that even COPE is too intimidated by the real estate industry and/or "homeowners" to propose such a measure. Symbolism above substance is the way of the modern left too often.

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      Schmidt

      Apr 1, 2014 at 8:58pm

      Politicians won't talk about this or even acknowledge it as a concern out of fear it might interrupt their "cash flow"

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      More Affordable Housing

      Apr 1, 2014 at 9:39pm

      At COPE's Policy Conference this past weekend, there were any number of affordable housing related <a href="http://cope.bc.ca/policy/policy-proposals/" target="_blank">policy proposals</a> that were considered by the membership, including ...

      1. An Investment, or Income-Producing, Property Charged at a Business Tax Rate proposal, a partial goal of which would be to raise millions more in tax revenue for the City that could be applied to the construction of affordable housing on City-owned property (part of the $3 billion Property Endowment Fund), and

      2. Implementation of a Vancouver Affordable Housing Levy / Community Amenity Contributions / Co-op Housing proposal, the affordable housing levy portion of which is not dissimilar to the successful housing levy programme that has been in effect in Seattle since 1981, and is responsible for the construction of more than 10,000 units of affordable housing, charged at a median per bedroom rate. The median per bedroom rate in Vancouver can be found in the statistics available in <a href="http://www.scribd.com/doc/215857341/CMHC-Rental-Market-Report-Vancouver-... target="_blank">CMHC's Rental Market Survey</a> published this past autumn, part of which addresses rental, and rental vacancy, rates in Vancouver (page 14 on down).

      You'll be surprised to learn that even the NPA has given serious consideration to proposals not unlike those under consideration by the Islington London borough, or COPE. The only municipal party in Vancouver that is NOT concerned with implementing a truly affordable housing programme strategy is the current municipal party in power, Vision Vancouver.

      Glissando Remmy

      Apr 1, 2014 at 10:35pm

      Thought of The Night

      "One word: Outsourcing."

      Remember that cashmere sweater Made in China that you bought from Banana Republic for a bargain, or that pair of cheap leather shoes from ALDO Made in Portugal, or your affordable 42in screen LCD HDTV Made in Singapore?
      Well, if you didn't know it yet, you are paying for all these 'bargains' through the nose in speculative "appreciation" of local Real Estate!
      Why?
      Because the money is no longer with you. It's been transferred overseas. Same as with your buying power. By the big corporations. Doesn't matter where it comes back from. Is it from the most lucrative place on Earth like China? Or from "oligarch breeding" countries like Russia? Doesn't matter. It's not coming from your own pockets. Not any more.
      ALL "SOFT" HOUSING AFFORDABILITY SCHEMES ARE GOING TO FAIL! Why? Because there's too many unaccounted for $ Billions floating around in the underground economies of above countries and too little RE product. The "Islington" paradox (keep in mind that 20 years ago the British started to sell off Council units for profit) is a start, weak, but a start. $100,000 in fines you say?
      Pfff. When in dire need to hide 1$ Million what's to pay a 10% premium? As one very well remunerated gal, Penny Ballem would say: "A drop in a bucket."
      Short of a Housing Revolution, for most Canadians and surely for most Vancouverites the "Real Estate Elvis" has left the building.

      Enjoy the great outdoors and the mountain views. At least you'll have your health if not your private roof. Till next time...

      We live in Vancouver and this keeps us busy.

      Chanks

      Apr 2, 2014 at 7:07am

      We should be taxing the shit out of these owners. Without someone living in these places there is one less body shopping locally, and paying taxes locally. Seriously I think there should be a 50k unocupancy tax given to our city for every unoccupied residence.

      Bruce

      Apr 2, 2014 at 9:31am

      @MoreAffordableHousing

      COPE is proposing measures that add up at most a 1% tax on "investment" properties. Islington is actually enacting a tax that is closer to 10-20% tax on unoccupied properties. Weak Tea.

      And I'd note that many of the policy proposals from COPE members were very defensive about "homeowner" tax rates.

      What COPE is proposing is detailed intervention in housing, with the city becoming a large scale housing provider. That carries with it a huge burden of responsibility for competent management by government. Enough said.

      Whereas coming down hard on the unethical practice of holding "investment" housing off the rental market could put 10's of thousands of units onto the rental market, with no detailed management required other than annual inspections at most. It could also have positive knock-on effects by discouraging speculation.

      alby

      Apr 2, 2014 at 3:40pm

      Hey Charlie, thanks for bringing this up. This would help slow down the sick real estate market that is Vancouver (and shake out investors bringing very little to our city). Of course, it will be interest rates rising in 2015/2016 that will put the stake through the heart of the market.

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      Oleg Losev

      Apr 2, 2014 at 4:04pm

      If you work as a real estate agent or you're a real estate developer focused on selling houses/condo's/land and making money/profit is the bottom line, would you still care if the buyer buys for investment purposes or for flipping purposes or leaves the building unoccupied?

      Probably not!

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      Donald

      Apr 2, 2014 at 5:33pm

      Affordable housing is a waste of time. It doesn't even try to fix the problem (people buying houses with no intention of living in them, which makes it harder for anyone to live in the city) and instead helps the very few people who are lucky enough to win the affordable housing lottery and leaves everyone else who already can't afford a Vancouver house with an even bigger tax bill.

      Also the measure in the article is awful. That isn't going to stop any of them. 100k can be made back through housing appreciation. If they want to stop it and bring the market back to reasonable levels, make the no-living tax the house price. House is $900,000? Make them pay $1.8M. Nobody would EVER use it as an investment in that situation. They'd actually live in it.

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      James M James

      Apr 2, 2014 at 10:33pm

      In my experience, people who own property pay city property tax. If they do not live in the building they do not get the Home Owner Grant.
      I am renting out property I still own in Vancouver (I thought my family might want to return to Vancouver and realised I would never be able to afford to buy property again). ALL the profit I earn goes to pay for my Canadian mortgage, property tax, house insurance and maintenance costs - what would be left over I have to pay to the CRA in income tax.
      I know that "rich people" may buy property in Vancouver and not live there; but that is not the situation for everyone. I may not live there but all my rental income is spent in Canada, everything but income tax is spent right in Vancouver!