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Facing ‘Gruesome’ Housing Shortages, Some Gulf Islanders Call for the Empty Homes Tax

Certain communities remain exempted from the tax, which increases rental availability. Time for change?

Andrew MacLeod 10 Feb 2021TheTyee.ca

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria and the author of All Together Healthy (Douglas & McIntyre, 2018). Find him on Twitter or reach him at .

Blake Brown has seen the housing crisis on Salt Spring Island from both sides. And it’s clearly desperate.

That’s why he thinks the provincial government should do more to help, starting with revisiting its decision to exempt Salt Spring from the speculation and vacancy tax. The province has said the tax has succeeded in getting more owners to offer empty homes for rent where it was applied.

“If the speculation tax can help, then I’m for it,” Brown said. “When the speculation tax came up over here, most people I talked to over here were for it.”

Brown and his husband moved to Salt Spring four years ago when his husband’s employer, a grocery chain, transferred him to a management position at their island store.

The couple had a house to sell in Langford on Vancouver Island, but couldn’t find anything to buy on Salt Spring in their price range that wouldn’t have been a teardown. Nor could they find anything to rent, a search made more difficult because they have a cat.

For three weeks Brown’s husband commuted from Langford to Salt Spring, a trip of more than 90 minutes each way by car and ferry.

Eventually the employer paid for a temporary vacation rental. Once living on the island, the couple finally found a property they could afford to buy that came with a house and a cabin. “If it wasn’t for Sobey’s, we would have been pretty out of luck,” Brown said.

Now with the cabin to rent out, the couple is seeing the housing crisis as owners. Recently they looked for tenants and had 40 applicants to choose from.

“They were so desperate,” Brown said. “They were bidding against each other.... It was really sad to hear some of their stories. I wish I could have rented to all of them.”

With a population of about 10,600 in 2016, Salt Spring faces housing issues that Brown says are a microcosm of the situation elsewhere in the province. There are people desperate for rentals, but also a large number of houses that are empty much of the time, hundreds of places offered as short-term vacation rentals amid rising homelessness.

A November CRD Housing Needs Assessment report said a quarter of islanders rent, but few dedicated rental units are available. “Evidence suggests that demand for secondary rental market units far exceeds supply, with rents increasing in recent years.”

The average rental on Salt Spring in 2019 would have required a household to have an annual income of $66,000 for the unit to be considered affordable. “Affordability gaps analyses suggest that the homeownership and secondary rental market are unaffordable for all housing types,” the assessment found.

It would seem to be exactly the kind of situation that the province’s speculation and vacancy tax was designed to address when the government introduced it in 2018 as part of a 30-point housing affordability plan.

Owners could avoid paying the annual tax — two per cent of the assessed value for properties owned by non-Canadians, but less for Canadian and British Columbian owners — by renting out their property for at least six months of the calendar year for periods of at least 30 days.

The tax applies in Metro Vancouver, the Fraser Valley, the Capital and Nanaimo regional districts, Kelowna and West Kelowna.

But under political pressure the province exempted the southern Gulf Islands, Parksville, Qualicum and Whistler.

Where it’s applied, it has helped. A technical briefing released in December said the tax had helped moderate the housing market by reducing speculation and encouraging existing units to be offered for rent.

It cited Canada Mortgage and Housing Corporation data that found 8,824 condos in Metro Vancouver were converted to long-term rentals in 2019.

The tax has, however, been politically controversial. In some cases — such as Kelowna, West Kelowna and Central Saanich — the province put it in place despite the opposition of municipal councils.

Adam Olsen, the Green MLA for Saanich North and the Islands, pressed the then-minority NDP government to exempt the Gulf Islands, arguing the tax didn’t make sense for rural areas.

The southern Gulf Islands have a long history of people keeping cabins that they use seasonally, Olsen said in an interview. “I was worried about what the immediate impact was going to be on the economy.”

Now that the NDP has a majority in the legislature, the government should revisit the decision, said Zeb King, the New Democrat who ran against Olsen and lost in the fall provincial election.

King is a municipal councillor in Central Saanich where the tax does apply. During the election campaign he heard from lots of people living on the islands who are experiencing the housing crisis and see the case for taxing empty homes, he said.

More focus needs to be put on the way the tax encourages more rentals, King said. While it might be hard for politicians to promote what’s seen as an added “tax,” everyone needs to keep in mind that it’s easy for owners to avoid paying it, he said. “If everybody rented, there wouldn’t be any tax revenue.”

It doesn’t make sense to exempt communities like Whistler or the islands where there’s clearly a lack of affordable housing, he said. “It’s frustrating we would make that kind of exemption in a place where there’s a need.”

Olsen agreed housing is a huge issue on the islands and continues to be a crisis. The increase in people working from home during the pandemic, and discovering they can work from anywhere, is adding to the pressure, he said.

While various solutions are needed, including making it easier to develop multi-family housing, it may be time to revisit the speculation and vacancy tax exemption, Olsen said. “I’m open to the conversation,” he said, adding he would raise the issue with Finance Minister Selina Robinson.

Another person who thinks it’s time to take another look is Gary Holman, a former NDP MLA who is now the electoral area director representing Salt Spring on the Capital Regional District board.

“I do think it should be reconsidered, let’s put it that way,” Holman said. “I haven’t taken it up as a cause, but I have publicly stated I think we should review it.”

Holman described the housing situation on Salt Spring as “gruesome” and said there are all kinds of stories of RCMP officers, nurses and others with well-paying jobs having to commute from Vancouver Island. “It’s an obstacle to having staff here.”

The speculation and vacancy tax would likely make an incremental difference, he said, adding that taking any money raised through the tax and reinvesting it in local affordable housing projects would help make it more palatable. “Nothing’s a panacea. There’s a whole bunch of things we need to be doing.”

Robinson was unavailable for an interview.

A ministry spokesperson provided a prepared statement saying the government has heard from a few communities that would either like to be included in the speculation and vacancy tax or have the ability to apply their own empty homes tax like Vancouver does.

At the same time, it wants to avoid contributing to a confusing patchwork of measures and is mindful that the federal government is also considering taxing foreign owners, they said.

“We are open to continuing to have conversations with municipalities about the various tools available to create moderation in their housing markets, while also being sure we take into consideration the impacts that varying taxes at different levels of government will have on homeowners and the housing market,” they said.

Not everyone is convinced extending the speculation and vacancy tax is a good idea.

The chair of the Islands Trust Council, Peter Luckham, said it would be necessary to analyze the likely effects of the tax very carefully before introducing it.

The housing situation is “grim” and is getting worse during the pandemic, he said.

“A significant portion of the working population end up living off-island and commuting to work.” On Thetis Island where he lives, prices have doubled in the last couple years. “People are departing the high population centres... and moving out into places they perceive as being safer havens.”

But a significant population of property owners would oppose extending the tax to the islands, he said. Many properties are owned by people and families who have held them for many years and have a long-time relationship with the place, a model that has long been part of the culture of the islands.

Some already voluntarily rent out their homes or make them available to caretakers, at times for free, but others choose not to, Luckham said. “Not everyone wants somebody to live in their home, or what they consider to be their island home.”

When the tax was first introduced, the council opposed having the islands included and were “fortunate” the government agreed, he said.

Housing initiatives are needed, but they need to be consistent with the Islands Trust mandate to preserve and protect the islands from rapid development, he said.

The council is also in the middle of a broader public engagement process to envision what the islands will be like in 2050, one that takes into account priorities like addressing climate change, conservation and reconciliation with Indigenous peoples.

A homeowner on Salt Spring Island for more than 45 years, Frances Havelaar says that while opponents of the speculation and vacancy tax have been vocal, there’s more quiet support for introducing it to the islands and encouraging rentals than many politicians think.

“It was bizarre they didn’t do the speculation tax for Salt Spring,” said Havelaar, whose three children grew up on the island but now can’t afford to live there. “I think most people would be happy if there were more rentals opening up.”

Having looked after vacant houses for people, she said she knows firsthand that the housing shortage is happening despite the availability of many spaces that could be rented. “There’s a lot of expensive houses that are empty,” she said.

It would be “awesome” if more of those houses were available to rent, she said, adding she believes the speculation and vacancy tax would help make that happen.  [Tyee]

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