Vacancy tax is pointless, say Vancouver sales agents

Empty abodes in Vancouver will be slapped with a vacancy tax, that one sales agent says amounts to little more than a slap on the wrist.

While the hope is that the tax could free up as many as 25,000 empty units for rent in a city suffering from a rental supply shortage, the 1% vacancy tax likely won’t dissuade owners willing to forgo rental revenue, says Marilou J. Appleby of Dexter Associates Realty.

Homeowners must declare their property’s status annually, however, properties for which no declaration is filed by February 2 will be considered vacant and, in addition to being subjected to the tax, will be fined $250.
An amount Appleby believes is palty.

Moreover, she says it’s affecting Vancouverites who spend part of the year away and don’t want to rent their homes out to strangers.

“Owners are not thrilled about it,” said Appleby. “A lot of people in Vancouver spend winters down south and they have to have their places rented. In my opinion, it’s not going to solve any problems. Really, who it will hurt again are Vancouverites who are living a very normal life, who want to have the opportunity to spend winter in a warmer climate.

“I live in downtown Vancouver and people talk about dark buildings, but I don’t see that. There’s a very vibrant downtown community.”

She also said that if a homeowner can afford to leave the place vacant, taxing them 1% practically amounts to asking them for their pocket change.

“One percent could be substantial to some people, but if you’re allowing your place to stay vacant then you’re losing revenue anyway, so what’s 1%?” she said. “That’s why it’s a useless tax.”

Mahmoud Ahmed, managing broker of Nu Stream Realty, agrees with Appleby.

“The vacancy tax won’t do anything,” he said. “There’s a lot of money in the city, so 1% won’t make a lot of difference. If they don’t need the rent, that’s why it’s sitting empty anyway. It’s not going to be the solution for affordable housing.

“Most homes that are vacant are not entry-level homes, they’re mansions. It won’t make an impact on the rental market because most people don’t have $10,000 a month to spend on rent.”

As for how the tax will affect the market, Ahmed says it’s far too early to tell. But he says the 15% foreign buyer tax only managed to cool down the market temporarily, therefore, a 1% tax probably won’t even make a dent.

“Fifteen percent is a big hit, but 1% won’t do damage,” he said.

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Association announces executive appointments

The BC real estate has announced the appointment of Deanna Horn as its president.

“As BCREA President, I look forward to helping communicate the value of working with a Realtor, said Deanna Horn, an associate broker with RE/MAX Treeland Realty in Langley. “Realtors are dedicated professionals who play an important role in helping British Columbians realize the dream of home ownership.”

Horn joins President-Elect Jim Stewart of 560 Realty in Nanaimo; past president Scott Russell of Sutton Group Seafair Realty in Richmond; and Chief Executive Officer Robert Laing as officer of the association.

The association also announced directors Brenda Jackman, Gisela Janzen. As well as Public Director – Diane Dou.

“To demonstrate the profession’s commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods,” the association said in a release.

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The homes now dominating top-tier markets

While the $1 million home may have once reigned supreme, Sotheby Canada reports that $4 million-plus homes have since taken center stage – or at least they have in the country’s pricy metro areas.

The realtor found that $4 million-plus properties are in such high demand in Vancouver and the Greater Toronto Area (GTA), they now represent the fastest growing sector in both cities’ housing markets.

In particular, Vancouver experienced a 65% rise in sales of $4 million-plus detached single family homes in 2015, compared with a 45% increase in the $2-4 million bracket and 36% in the 1-2 million one, according to Sotheby’s biannual Top Tier Real Estate Report.

Similarly, the GTA saw sales of $4 million-plus detached single family homes jump by 67% in 2015, compared with a 42% spike in the $2-4 million range and a 49% increase in the $1-2 million one.

Among all properties – condominiums, attached and single family residences – Vancouver saw sales of $4 million-plus homes rise by 67%, while Toronto saw a 71% increase.

Sotheby’s International Realty Canada credits a number of factors for the escalated demand of high-end properties, including low interest rates, sustained immigration and tightened supply in the luxury home markets. In addition, it believes that the weak Canadian dollar may be encouraging interest from foreign buyers.

“We had a lot of buyers who were very eager to enter the market, and they were bidding on a limited number of homes, particularly in premier neighbourhoods,” Elaine Hung, vice president of marketing, Sotheby’s International Realty Canada told The Canadian Press.

And while Montreal saw growth in sales of homes worth over $1 million, Calgary’s high-end housing sales plunged. There, the sales of $1 million-plus homes fell by 41% in 2015.

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