(Adds economist comment)
By Nicole Mordant
VANCOUVER, June 22 (Reuters) - Vancouver will find a way to
tax its vacant homes, possibly by treating them as business
investments, to ease the Canadian city's housing affordability
crisis, Mayor Gregor Robertson said on Wednesday.
If implemented, the tax could drive up costs for many
foreign investors who have helped make the west coast city
Canada's most expensive property market and send new investments
to other housing markets.
Robertson said the city would give the British Columbia
government until Aug. 1 to respond to its plan to tax nearly
11,000 empty homes in Vancouver.
If Vancouver fails to win provincial backing, Robertson
said, the city would begin drafting its own regulations to
create a business tax on empty homes that are held as
investments.
"We are going to make sure that those who treat housing as a
business are treated and taxed accordingly for that use,"
Robertson told reporters.
A tax rate has not been decided, but it needs to be high
enough that there is an incentive for owners to rent their
homes, Robertson said, adding that vacancy rates in Vancouver
are close to zero.
Robertson said the city's preferred option was to work with
the province, which already has data on whether properties are
vacant. If it goes it alone, the city would also have to enact a
new business tax by-law, something that could take time and be
expensive to administer and enforce.
In a tweet, British Columbia Premier Christy Clark said the
province was reviewing the city's report and would respond
quickly.
If high enough, the tax could make housing markets elsewhere
in the world more attractive for foreign investors and cool
blistering demand for Vancouver real estate, said CIBC economist
Benjamin Tal.
"It might make the difference between Sydney and Vancouver,"
he said.
More than 90 percent of detached homes in Vancouver are
worth more than C$1 million ($780,000), compared with 19 percent
a decade ago, according to a study released last week.
In the Greater Vancouver region, home prices have risen 46.9
percent in the last five years. Despite this rise, the province
has hesitated to intervene, and only recently took small steps
to start tracking foreign buyers and to slow aggressive flipping
activity.
($1 = 1.2797 Canadian dollars)