Is the tax on empty housing effective for the market: the opinion of experts
In Canada, late last year, a fee for empty housing was introduced as a way to influence the overheated real estate market. However, the results of this innovation were not what was originally intended. The fact is that property owners decided to get rid of the property instead of paying the new fee. Initially, the tax was introduced in Vancouver, and then it was approved by the authorities of Toronto.
According to the survey among owners, more than 40% of investors in Toronto plan to sell their properties. These figures are 6% higher than the results of past studies. And supply in the market has been increasing since the pandemic, and has now intensified with renewed vigour.
Among condominium investors, the percentage of those who want to get rid of real estate is about 60%. In this case, the reason is not only the tax on vacant housing, but also the restrictions imposed by the service Airbnb. 28% of the total number of respondents intend in the near future to rent out their properties for the long term. About 30% of investors are not anxious about the tax.
Experts have asked the Canadian government to revise the terms of the levy on vacant housing. They want the tax to not apply to all property owners, and be divided by categories of owners. For example, investors who own properties in border areas should be exempt from paying the fee. The same applies to US citizens who own property in Canada.
Moreover, the experts who have appealed to the government note that in general they are not against the action of the tax on empty housing. However, such changes have not yet shown positive results. The real estate market has not become more accessible, the options that have appeared are not inferior in price to those already existing. In addition, while previously a number of investors preferred to rent apartments, now the owners are planning to sell their homes. This situation contributes to the increase of supply on the market, which leads to imbalance.
Another innovation from the authorities of Canada is a tax on the purchase of residential real estate by non-residents of the country. The decision is due to the desire to make home buying more affordable for the local population. However, analysts point out that this innovation will bring a positive result only if the rules for unoccupied housing are changed. According to experts, real estate should be taxed on the purchase of which attracted the funds of foreign citizens, and households should be exempt from paying fees.
The real estate market remains one of the most expensive in the world, and the government has repeatedly resorted to various solutions to minimize the upside risk.