Vancouver is surrounded on one side by ocean and the other by mountain, right beside a world class university. Whistler, dubbed as the best ski resort in North America, is only 2 hours away from downtown Vancouver.
Instead of dwelling on the tourist hotspots of Vancouver, let's look instead at the numerous abandoned, tear-down houses in Vancouver. These houses often have unmowed lawns, overgrown bushes, and boarded-up windows. They are often subject to vandalism and crime, scarring an otherwise normal neighborhood. That is not the important problem of Vancouver, however. Every neighborhood has one of those derelict houses. To try to solve them would be pointless. The real problem is in the houses’ price tag: 2.2 million dollars.
The blasted housing situation in Vancouver has prompted 2 new taxes purposed to lower foreign demand for Vancouver housing and coerce homeowners to rent their vacant homes. One of them, the Empty Homes Tax, charges homeowners 1% of the value of the house for having empty homes (uninhabited for 180 days per year). The only way out? To rent the property.
It seems this new tax is the perfect solution to the housing crisis, directly up new rental supply to relieve demand. This, I fear, is the wrong solution.
If I was the mayor of Vancouver, I would opt for a more indirect solution that targets the multitude of factors culminating to the current housing market.
While income tax in BC is relatively low amongst the other provinces, it limits locals’ abilities to garner enough money to afford a house in Vancouver. Of course, we would have to raise the property tax accordingly to match the budget. Lowering the income tax, particularly among the middle-class tax brackets, and raising the property tax, will make it easier for people who work in Vancouver find a home. As to foreigners, the 15% Foreign Buyers tax coupled with this property tax raise will discourage foreign money from competing with local buyers.
Raising the property tax serves 2 purposes: to capitalize upon rampant foreign demand, and to lower that foreign demand. The surplus from that tax raise will then compensate for an income tax decrease, which benefits people who work and want to live in Vancouver. Income tax decreases will happen the most from the low to middle tax brackets, and be non-existent in the top brackets.
This solution might seem similar to the already implemented Empty Homes Tax. They both try to cash in on foreign demand and in turn, lower it. However, the Empty Homes tax depends on self-reporting and is much more complicated. Lying about vacancy status is easy, and unless we want to recreate Orwell’s 1984 and pit neighbors against each other, there would be no viable way to enforce the tax.
The current housing market is not just a result of a simple mismatch of supply of houses and demand. Shady tactics, negligible fines, and tax evasion are also destroying the housing market. One such tactic is double-ending, in which one realtor represents both the seller and the buyer. The common practice is 2 realtors, one representing the buyer and the other representing the seller, to contact directly with each other, and represent their clients. Realtors double-end because they get all the commission, as opposed to getting only half of the commission if there is another realtor. An unethical agent might manipulate the deal to garner the most commission when they double-end, as they can influence the conflicting interests of the buyer and the seller. The fine? A measly $1500, when compared to the double commission they earn in the tens of thousands. When the fine is this small, realtors may just view it as a fee to doing business.
Making real estate fines correlate with the harm they cause is my solution. Instead of just $1500 in fines when realtors earn 30,000+ in commission for committing these practices, I, as the mayor of Vancouver, would raise the fines according to their damage.
While Vancouver is a beautiful city, with parks and lakes and recreation sites, the housing problem must be the mayor’s top priority. These endless recreation centres and fancy parks are useless if our citizens don’t have a place to live. The mayor has shown some concern on this issue, most notably by creating the Empty Homes Tax, but this solution is flawed. If I were the mayor of Vancouver, I would raise fines, rework the tax system, and clear the real estate industry of corruption.