While landlords are figuring out how to deal with the new situation, the owners of empty homes have a reason for concern as well. Toronto and other cities in Ontario were given free hands to introduce a vacant property tax. Such a tax would encompass all those who own a house or apartment where nobody lives. The aim is very clear: to make owners rent or sell their vacant places, especially in Toronto, where the housing availability problem is growing out of proportion.
Based on Toronto hydro data, it has been estimated that the number of empty homes lies between 15,000 and 28,000. Those are the homes where no electricity or water was used for an entire year. The numbers are believed to be even bigger and that the statistics on vacant homes is not accurate, as the number of homes off the hydro grid is still not known.
Legislators are considering to introduce a vacant home tax just like Vancouver did, but the city administration wants to draft a plan that would be more effective than the one introduced in Vancouver tackling the same matter.
The first challenge on the way is how to get realistic data on vacant homes. But one thing is clear; city officials reject the Vancouver model in the form of obligatory self-declaration by homeowners. Toronto wants to come up with a more efficient method which would either include relying on neighbors to report vacant units or homeowners who would voluntarily come forward and report vacant properties. These methods are still not good enough as they leave room for empty-home owners to avoid the tax since it will be hard to prove which housing unit is really not being used.
Even if Toronto rejects to use Vancouver’s reporting model, they will probably go along with taxing 1% of the entire value of an empty house, which is not little if the house is big and worth a lot.
Toronto citizens who own unoccupied properties are not happy at all with the governmental decision to look into that matter. Basically, their only options will be to rent out the place or to sell it, or yet, to pay the hefty tax.
Some people moved but kept their property which they occasionally visit. Many of these people may have valuable possessions, expensive furniture, an art collection, etc., and do not want others to dwell in their second homes.
Selling might also not be the ideal option for them since they may plan to live there in ten years or so or to leave the property to their children or grandchildren, but nevertheless, they will have to find a way to cope with the upcoming challenging legislation. It is still not known if owners in Toronto would be ready to pay the 1%, but many suggest, they wouldn’t.
This upcoming regulation will do its part with tackling houses solely kept for investment purposes and enable more rental space, just let’s hope that collateral damage will be kept to a minimum.