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Would a vacancy tax work in Whistler? It depends who you ask

As Vancouver sees drop in empty homes, other B.C. communities say similar tax hasn’t had intended effect 
N-Vacancy-Tax-29.25-WEB_PHOTO-BY-JAMES-LEYNSE-GETTY-IMAGES
An aerial view of suburban housing just outside of Vancouver, where an Empty Homes Tax has been in place since 2017.

One of the more eyebrow-raising stats found in Whistler’s trove of 2016 Census data was that a whopping 61 per cent of privately owned dwellings in the community sit empty or at least temporarily occupied for a good chunk of the year. 

For a town that has been wrestling with ways to combat a rental housing shortage for years now, it is this lever that would seem the most obvious to pull on. Compared to just four per cent in Squamish, and nine per cent B.C.-wide, Whistler’s vacancy rate sticks out like a sore thumb. And while we unfortunately don’t yet have an updated 2021 vacancy rate from Statistics Canada, we do know from a local housing survey done last year that just 10 per cent of all market residential properties in town are rented on a long-term basis to residents (although that number rises to 75 per cent when looking at secondary suites). 

With the right incentive, could even a fraction of those homes that remain empty for the better part of the year be offered to local renters? Well, it depends who you ask. 

Since 2018, the B.C. Government has had its Speculation and Vacancy Tax in place “to help root out speculation and discourage empty homes in the province’s largest urban centres,” wrote B.C. finance minister Selina Robinson in a statement to Pique last week. 

Whistler, as we all know, is not an urban centre, but a recreational resort with a large proportion of second homeowners and part-time residents, many of whom prefer to keep their space available year-round for their own use. An important cog in Whistler’s economic engine, it is safe to say the impetus to slap a provincial tax on the resort’s second-homeowners isn’t quite the same as in other B.C. hotspots. 

“Whistler is a resort municipality, not a major urban centre, and we have worked with our partners to bring in measures that respond to this particular region,” Robinson said.

Those include an agreement with Airbnb to ensure it collects both PST and the Municipal and Regional District Tax (MRDT) on all its accommodations, as well as expanding the allowable use of MRDT to include housing affordability initiatives. 

 “We are open to continuing to have conversations with municipalities about the various tools available to create moderation in their housing markets, while also being sure we consider the effects that varying taxes and measures at different levels of government will have on homeowners and the housing market,” Robinson said. 

Mixed reviews

There are nine regions in B.C. with the Speculation and Vacancy Tax (SVT) in place, and opinion remains divided as to whether the tax—0.5 per cent of the assessed value of a home for Canadian citizens and permanent residents, and two per cent for foreign buyers and satellite families—is having its intended effect. 

“Targeting specific areas is not good planning policy and it’s not working,” said Nanaimo Mayor Leonard Krog, who believes the tax is simply encouraging real estate investment outside the city where the tax doesn’t apply.

“For the end that it is aimed at providing, which is to encourage people to rent their premises, I don’t think it’s been that successful,” he added. “The whole point of the tax is not just to raise taxes, it’s to encourage more supply in the market by ensuring that the vacant homes enter the rental market. This is not going to do it.” 

The City of West Kelowna has pushed back against the provincial tax as well. Earlier this year, the province rejected the City’s second request to be exempt from the speculation tax, with elected officials arguing the levy is mostly paid by Canadians, not foreigners. 

According to provincial data, for the third straight year, more than 99 per cent of British Columbians are exempt from paying the tax and 93 per cent of the revenue collected has come from non-B.C. residents. 

In West Kelowna, data showed that foreigners and satellite families paid just 30 per cent of the $1.4 million in speculation tax collected for 2019, while B.C. residents and other Canadians accounted for nearly 70 per cent of the total. 

“We have, on many occasions, demonstrated to the provincial government the reasons why the Speculation and Vacancy Tax should be eliminated in our City and our position remains unchanged,” read a statement provided to Pique from the City of West Kelowna. “The significant negative, demonstrable impacts of the inequitably applied SVT outweigh any marginal and unquantified gains that may or may not materialize in West Kelowna in future.”

In its evaluations, the City said the province’s statistics “clearly indicated that the SVT has continually failed to align with the provincial objectives,” specifically when applied to West Kelowna. 

“In some instances, the vacancy rates here are even better than places where there is no SVT,” the statement went on. “Furthermore, funds collected from the SVT, which were meant to be reinvested in attainable housing in West Kelowna, are not being equitably reinvested directly within the City’s housing market; however, investments are occurring in many municipalities where the SVT is not applied.”

Whatever the case may be in each of the respective communities the SVT applies to, it’s hard to argue with the B.C.-wide numbers. Between 2018 and ’20, the province raised $231 million in revenue from the SVT and housing analysts estimate it helped add about 20,000 housing units to B.C.’s long-term rental market in that period. 

Over time, the number of property owners paying the SVT has dropped, either because owners have rented their properties out, have sold the property or claimed it as their principal residence. In 2018, the tax applied to 8,920 properties. By 2020, that number had fallen to 6,556.

‘Proof is in the pudding’

Before the SVT, there was the City of Vancouver’s Empty Homes Tax, a council-led initiative first introduced in 2017 to rein in the city’s rampant vacancy rates and foreign speculation. 

City Councillor Adriane Carr has been a fan of the tax since Day 1 for two main reasons. 

“One, it has ended up returning empty homes to the market that are actually being lived in,” she said. “The second is, for those who still don’t return the homes to the rental market, we’re getting revenue, and it’s around $30 million or so a year. We have been using that to actually acquire rental housing, so it’s a win that way, too.” 

Set at three per cent for 2021 and 2022, the mayor’s office stated that the rate is estimated to have doubled revenues last year, with the issuance of more than $32 million in taxes and penalties on the number of homes declared vacant. Between 2017 and the end of 2021, the tax generated a total of $106 million for the city. 

The number of reported empty homes has fallen steadily as well: 2,193 homes in the first year of the policy, 2,036 in 2018, 1,769 in 2019, and 1,627 in 2020. 

While the City doesn’t drill down into specific reasons a homeowner may choose to no longer leave their property empty, Carr said as long as the trend is moving in the right direction, she’s satisfied. 

“It has worked,” she said. “So if the goal of Whistler is to see the occupancy of homes increase … the proof is in the pudding. We were the first jurisdiction to take it on and it’s delivered what we hoped.” 

In April, Vancouver officials greenlit raising the tax to five per cent, beginning in 2023. There was some worry at the council table over the potential for diminishing returns with the rate rising, coupled with the SVT in other areas of the province. Carr doesn’t share that concern. 

“Nope, I don’t, and the reason I don’t is because there’s an attractiveness to Vancouver, just as there is an attractiveness to Whistler because of the unique qualities of our cities,” she said. “They’re both beautiful places with incredible advantages in terms of the natural environment and the recreational opportunities, fabulous restaurants and outdoors and wilderness trails. They are pretty special places so I think there will always be people who want to live in Whistler. There will always be people who want to live in Vancouver.”