After a year of campaigning, Toronto City Council voted in favour of a Vacant Homes Tax in December 2020. Now they will be voting in the coming days on the rate of the Vacant Homes Tax.

We are calling for a 3% tax rate to ensure it will be effective but the City is proposing a 1% tax. Based on Vancouver’s experience, we know this is too low to incentivize property owners to rent out empty units. The revenue generated from the tax must also be earmarked for affordable housing.

Use our tool to send a message to your local Councillor and the Mayor that houses are for living in, not financial speculation. Scroll down to find out more about the Vacant Homes Tax.

Why won’t a low tax rate be effective?

For far too long speculators have been allowed to buy up Toronto’s housing and leave it vacant, even as renters struggle more and more to find affordable homes. The City’s new vacant homes tax offers an important opportunity to address this problem by pressuring speculators to turn their vacant units into homes. 

Currently, City Staff is proposing a 1% vacant homes tax but there’s reason to be concerned that 1% is nowhere near high enough to act as a significant disincentive to holding properties vacant. In many areas of Toronto, house prices have doubled over the past five years alone. It’s clear that the tax on vacant units needs to be significantly higher than 1% per year if the City wants to achieve more than simply taking a cut of speculators’ windfalls.

This is a lesson that Vancouver has learned the hard way. When Vancouver introduced their vacant homes tax in 2018 it was set at 1%, but the city quickly came to the conclusion this was far too low. Though the policy has generated over $60 million - all of which was dedicated to funding more affordable housing - the majority of units vacant in 2018 remain vacant. That’s why in 2020 the city decided to increase the tax to 3%. As Vancouver’s Mayor Kennedy Stewart explained: “This groundbreaking tool has helped move thousands of homes back onto the rental market to help house our neighbours, but there are still too many homes that remain empty.” 

Toronto should follow Vancouver and tax vacant homes at a firm 3% of their value. It’s time to send speculators a message they can’t ignore — houses are for living in, not financial speculation.

What is a Vacant Homes Tax and why does Toronto need it?

Toronto has had skyrocketing rents for years. In 2019, rents increased at the fastest rate in a decade. Unaffordable rents and worsening economic conditions during the pandemic have made it harder than ever to live in our city.

The Vacant Homes Tax is a small property tax on homes sitting empty. It’s one tool we need to use, alongside others, to help with our city’s housing crisis.

It encourages property owners to rent out their empty units (to avoid the tax) and helps renters have access to more housing options. 

While the main goal of the Vacant Homes Tax is to encourage owners to rent out empty units and increase Toronto’s supply of housing, it is also a source of revenue for the City - as Vancouver has proven.

If property owners choose not to rent their units, the City collects money (the Vacant Homes Tax) that it can put towards affordable housing. 

In 2018, the City of Vancouver collected almost $40 million from the tax. Toronto has about three times as many homes as Vancouver and so it’s estimated Toronto could collect upwards of $120 million a year from this tax that it could put towards affordable housing initiatives and other city services.

Success: Vancouver’s Vacant Homes Tax 

Vancouver implemented a Vacant Homes Tax in 2017, which they call the Empty Homes Tax.

In Vancouver, homes that are determined to be empty are subject to a tax of 1% of the property’s assessed taxable value. Many homes that may be unoccupied are excluded from the 1% tax, including homes that are lived in 6 months out of the year; homes rented for at least 6 months a year, and homes under construction.  You can find out more about Vancouver’s Empty Homes Tax here.

The City of Vancouver uses the revenue collected from the tax to fund affordable housing initiatives. In 2018, they raised almost $40 million from this tax. You can have a look at their annual report here [pdf].

Vancouver has used the funds to address housing supply and affordability, to improve availability and supports for renters and vulnerable people, and to deepen affordability of social housing for people experiencing homelessness, people on social assistance and disability and people on pensions.

Their 2019 annual report outlines how they were able to spend this revenue on acquiring land and resources for non profit and co-op housing, purchase a single room occupancy building to ensure it provided affordable housing, expand shelter capacity, help create renter advocacy services, and much more.

What’s the status of a Vacant Homes Tax in Toronto?

In 2017, Toronto City Council began exploring the possibility of bringing in a Vacant Homes Tax and the City conducted a public consultation throughout the fall of 2017. In 2018, with the results of the public consultation, they decided to investigate further. 

And now we are expecting them to be making a decision December 2020, when a final report will be brought to the Planning and Housing Committee and then City Council.

How would we determine if a property is vacant?

The City of Toronto has been studying how this could be done here. In Vancouver, they make it mandatory for property owners to submit a Status Declaration on an annual basis and there are penalties for failing to file the declaration. They also conduct random audits and of course have a dispute resolution process available to property owners.

How many vacant homes are there in Toronto? 

There’s a big range for the number of vacant units in Toronto. The lower end estimates from the City are 15,000 and the upper end, when using Statistics Canada data from the 2016 Census, are 66,000. 

In November 2019, the CBC produced several stories on the Vacant Homes Tax and described the work of Jaco Joubert, a Toronto designer and software developer. Check out one CBC’s stories here.

Jaco monitored 15 downtown condo towers over the course of a year. His camera took photos of the condos every 5 minutes between sunset and sunrise. Using heat maps and a custom filter, Jaco created a cumulative image illustrating which units were unoccupied.

From this, and as reported by CBC, Jaco determined that 5.6% of the units were vacant. A vacancy rate he thinks could extend to many other buildings across Toronto.

People could be housed in those vacant units. And with the Vacant Homes Tax, even if they remain unoccupied the City could get much needed money for affordable housing.

How much does it cost to collect the Vacant Homes Tax?

There are one-time implementation costs and ongoing annual costs for collecting the Vacant Homes Tax. Vancouver has shown that the revenue collected far exceeds the cost of collecting the tax. 

Vancouver’s one time implementation costs were $7.5 million and their annual operating costs are $2.5 million. They are generating close $40 million a year from the Vacant Homes Tax. It’s outlined on page 6 of their annual report here [pdf].