A 1% vacant home tax got approval from Mayor John Tory’s executive committee last and will be considered by city council this week.
If approved, the new levy on vacant Toronto homes would start in January 2022.
We spoke with TRREB (Toronto Regional Real Estate Board) President Kevin Crigger to get his thoughts on the tax.
Is TRREB supporting this new tax?
TRREB’s always been really supportive of evidence-based approaches to
increasing housing supply. And, as such, we’ve been supportive of an evidence-based approach to this vacant home tax. It’s been implemented in other jurisdictions (including Vancouver starting in 2018 where it started at 1% and is now 3%), it encourages properties to enter the market for lease or for sale, both of which obviously, are in short supply in Toronto.
Any words of caution?
The city shouldn’t look as the tax as a revenue tool (city staff estimated if 1% of Toronto’s housing stock is vacant, the levy could yield between $55 million and $66 million annually) but more as a means to increase supply in the market. Ultimately, the lower the revenue secured from the vacant home tax, the more effective the tax will have been because the goal obviously is to bring properties to market. TREBB was actively consulted throughout the process, and we really appreciate the opportunity to provide advice from the grassroots and through the process we were able to highlight a number of required exemptions to ensure there were no unforseen consequences in the implementation of the vacant home tax.
What impact will the tax have on real estate prices in Toronto?
Toronto is very much a supply-starved market. We’ve seen that time and again and certainly the amount of time it takes to bring new product to market is lengthy and there’s a lot of red tape involved in the process, so this should fairly quickly bring some product to market. So any supply is more than welcome.
What’s the next step?
The broader conversation really goes to supply. Most of, if not all, of the sort of proposed changes over the last number of years have really been attempts to artificially suppress demand so looking at things that have come from the province (foreign buyer tax, land transfer tax), even some elements from the city (second land transfer tax), and nothing’s really been done, other than this as a first initiative, to bolster supply. So the one thing the last number of years should have taught politicians is that you can try to sort of artificially suppress demand, but unless someone takes a really wide-ranging approach to increase supply, we’re going to end up right back where we started.