A couple of city councillors say an empty homes tax in Hamilton could discourage land speculators from buying up property they don’t intend to use or rent out.
The idea was floated at a city council committee on Monday night with the prospect of charging some sort of fee to free up apparent investment properties bought up by speculators and left empty.
“Every time there’s a there’s a rental unit or a single-family home, a townhouse or an apartment unit that’s left vacant, there are implications for those people who are in the residential market and they’re negative,” Ward 5 Coun. Chad Collins told Global News on Tuesday.
Collin says the fear is that the city’s real estate market will begin steering in the same direction as Vancouver and Toronto’s, in which investors buy up stock, limit supply, create high demand and inflates prices.
“So we’ve seen that in other communities where they’ve purchased from an investment standpoint and they remain vacant,” Collins said. “And I believe the report that was requested yesterday is asking our staff to come back with a snapshot in terms of where Hamilton sits.”
The request for a study came from Ward 3 Coun. Nrinder Nann with the idea of imposing a charge to discourage the purchase of homes with the intent of keeping them uninhabited.
“We have to ensure that we don’t end up like other cities facing the same crisis where units and houses are sitting empty and so that they can increase in value while more and more people are displaced and unable to find an affordable place to live,” Nann told Global News.
Nann says numbers from the recent Rental Landscape report produced by the Social Planning and Research Council were motivation for the push toward a vacant home tax.
The report’s author, Sara Mayo, told Global News that rents are going up well beyond the current rate of inflation due to increasing rents in existing units and newer higher-priced units coming onto the market.
Meanwhile, numbers from a Canadian Centre for Policy Alternatives (CCPA) study revealed that more than 26 per cent of Hamilton renters spend more than 30 per cent of their income on housing.
Nann says the potential tax model for Hamilton would be something similar to the one per cent empty homes tax now in effect for Vancouver. Since its implementation in late 2016, not only has Vancouver seen a number of properties coming back on to market, but it’s also been a revenue generator, collecting close to $40 million per year in both 2017 and 2018, according to a city study.
“So they were able to address the issue in two-fold by making sure that the vacant property owners, to avoid the one per cent tax, put the house back on the market, whether for purchase or for renting,” said Nann.
“And then for those who said, ‘You know what? I can afford to pay that one per cent tax because I’m more interested in the profit that I’m going to make when I sell this property,’ those funds were able to be allocated to affordable housing projects.”
The Ward 3 councillor is hoping to get the tax into the 2021 budget deliberation process with a motion to proceed in the third quarter of 2020.