Vacant homes tax ‘lever’ to tackle Hamilton’s ‘skyrocketing’ rent: councillor

The city will prepare a new tax on vacant Hamilton homes designed to discourage speculators and coax empty units into use amid a housing crunch.

It's about taking vacant homes and opening them up for occupancy rather than continuing to have them used to drive up property value," Coun. Nrinder Nann said Wednesday.

The tax is another lever" the city can pull to help ground skyrocketing rent and unaffordability" in Hamilton, added Nann, who has pushed for the tool since 2019.

So far, Vancouver is the only city in Canada to implement a vacant homes tax, but Ottawa and Toronto are pursuing similar policies.

In early May, the provincial government gave the city its approval to create a tax in Hamilton.

Staff don't know exactly how many properties in Hamilton would fall under the tax, which would target homes that are vacant for six months or more.

There are to be exemptions, including properties under renovation; vacancies due to deaths or hospital stays; vacancies that result from court orders; and homes that are for sale.

But if Hamilton mirrors Vancouver's trends, staff estimate roughly 1,135 properties would be taxed in the first year.

At one per cent, that would generate $4.3 million based on the latest average residential assessment, which is $381,000 - a marker that doesn't reflect current local sales with homes going for $1 million.

Preparing the program is expected to cost $2.6 million, while its annual operation carries an expense of roughly $2.2 million, a staff report notes. When it's fully developed, 16 full-time staff are to be dedicated to the file, but over six years, a net revenue of $3.3 million is forecast.

That's based on the Vancouver scenario.

But the 2016 census showed Hamilton's population had a lower percentage of non-Canadians and non-residents than Vancouver, which means 880 properties falling under the tax is also possible, the report noted. If that's the case, the program would end up with a deficit of $532,427 as more properties become occupied over six years.

Councillors voted 7-2 at Wednesday's general issues committee to direct staff to prepare the tax program.

The vacant home tax shouldn't be seen as a panacea" to Hamilton's affordability crisis, but it's well worth our effort to see how it works," Coun. Brad Clark said.

In a letter to the city, the West End Home Builders' Association noted that it's not opposed" to a vacant homes tax but added it doesn't believe the number of local empty homes in Hamilton is significantly impacting the supply of affordable housing in Hamilton."

The province has approved the tax for Hamilton but also invited staff to join a working group" on the same theme, finance manager Mike Zegarac told councillors.

That presents some uncertainty" for some details, including the rate of taxation and how revenues can be applied, Zegarac noted.

Staff anticipate presenting a framework to council in January. The implementing bylaw is to be passed in November and eligible property owners would make declarations in 2024.

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com