> There are already enough houses and condos in the city with no lights on because no one actually lives in them.
To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
This is normally done via a "Homestead" tax exemption, where if your vacation home is assessed at $100K, you get taxed on all $100K, but if you live on it, you only get taxed on $100,000-N, where N is the exemption. This is meant to encourage owners occupying their homes, which is a great thing. I don't know if they have it in Vancouver.
In California, the exemption is a measly $7000. Which is essentially nothing, given home prices in the Bay Area. What they need to do is increase that number 10-20X or make it a percentage of the home's value. This would greatly help solve the problem of foreign "investors" buying up all the housing, leaving it vacant, and essentially just treating homes like bars of gold in a safe.
And don't even get me started on Prop 13, which is essentially mechanism to transfer wealth from younger, newer residents to older residents.
I'd like to just see a return to homesteading period. If a property goes unused / unoccupied for a year, anyone can move in. No more land squatting to drive up real estate prices and use it as a store of wealth.
Yes, this kills real estate as a long term investment. No, that is a good thing, we should collectively much rather see capital invested in the stock market rather than being thrown into precious metals or property as a store of value.
Except I'm not - there already exist squatters rights to occupy someones elses property and eventually claim it their own if they can avoid detection long enough.
All that takes is the minimum effort to police the property you own to insure nobody is squatting. What I'm saying is that unconditionally whether or not someone is illegally occupying your property you only have a fixed amount of time to make use of it before it effectively becomes unclaimed land again.
My recollection of squatter's rights is that the owner has to know you are there, and do nothing for <X> years. If you are hiding, you can't lay claim.
"Land Registry will decide if your application is valid and will let the property owner know. The owner has 65 days to object - your application will usually be automatically rejected if they do."
So basically you'll only get to stay if the property is effectively abandoned.
And how much do your 'Occupancy Police' cost to administer such a system ? If it relies on a property owner filling in a form, they're just going to lie to avoid the cost and without someone going round to every single house and monitoring it for weeks and months of the year, you have no way to detect people avoiding the tax.
Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Scotland implements a 'second home' variant of their 'council tax' [a weird name for property tax]. Depending on area, it's a locally chosen multiple of the standard tax. But that's based on whether people declare another property and there's a lot of overhead in policing it. I doubt if it actually raises any extra net income.
But what if your empty property is actually from a relative who recently died and the estate is being finalized? Does that get hit too?
It always sounds simple to just slap extra taxes on rich people (who always happen to be defined as someone other than yourself), but that often leads to unfairness to decidedly non-rich people.
Rich people always find a way round these things - they pay lawyers and accountants to make sure they can. No public policy will ever fix that.
I used to live in Florida and amazingly enough the homestead exemption works pretty well. I'm sure there are some people abusing it, but it's effective overall. You can only have it on one home and it doesn't apply to businesses so the only real fraud angle would be to live out of state and take the exemption on a single Florida property. You have to be a citizen or permanent alien resident which weeds out foreign buyers looking to park money. You'll also need to be able to access its mailbox, be registered to vote at the address, etc etc. A lot of potential legal trouble for a $50,000 valuation haircut on your tax bill.
The fact that Florida has no state income tax is an even bigger incentive to actually reside in Florida if you have a lot of passive income coming your way.
You can purchase Canadian permanent residency for $800,000 through Quebec's Immigrant Investor Program. This has a big impact on Canadian tax policy because there is no way you can discriminate between foreign and domestic ownership - foreign investors can simply buy a PR card and avoid punitive taxation of foreigners. There are still foreigners in the normative sense of the word, as in they don't and have never lived in Canada, but in the eyes of the law, they are the same as an permanent immigrant.
You can require presence in the country to a homestead exemption. If you aren't in the country for a large amount of time (say, 180 days) you don't get your exemption. Between that and having it only apply to a single property the incentives to park cash in an empty Vancouver apartment are diminished.
> Super high property tax when I'm not there? Simple, employ a cleaner on some minimal wage and let them stay there when I'm not in town. When I'm in town, put them up in a hotel. I'll probably still save money on the property tax and I can claim to be a caring employer, helping with employment in town. The city council are evil job destroyers by sticking me with huge taxes.
Doesn't that kind of help the problem though? Because now someone who would have to rent an expensive apartment is now basically living rent-free in a home. If enough people did this, it would help alleviate the issue.
I agree with your point though, and know people who do this. They are "caretakers" who basically live rent-free to make sure the place doesn't fall apart. The occupancy idea sounds good, but it seems like a logistical, administrative pain to enforce.
Why would you? Tax is a very effective mechanism to control economy. And don't have to think on extremes even! Very wealthy people are buying condos there just because it's the best (passive) investment for their cash. If you increase tax for vacant property it will incentivize selling over time,or at least renting.. more offer with less cost.
In a macro economical sense Canada already profited from getting foreign $ invested in buying those properties anyway, time to make Vancouver livable.
What you're describing is similar to the approach south Florida takes - assume many purchasers are non-residents, and therefore rely on property taxes rather than income taxes to fill the coffer
I would be careful here. Laws like this are close to demonstrating a lack of respect for property rights and that is not a good direction for any democracy.
We have always had areas where the cost of housing was too high but the reactionary idea of taxing it to death is in effect the idea of that some property rights are important but others are not.
If any such idea was pushed then be sure that protection is applied to citizens of the country involved. Even this is dangerous as it tells foreigners that their money is welcome but their rights are subject to the whims of the times.
The real solution is, build more places to live. What is preventing the building of affordable housing? Find that and fix that. The response is far more proper and rewarding than trying to force someone out of their property because you think they don't deserve to own it if they don't live in a set amount of time
It became vital back when economies first started to specialize.
If you take the net the fisherman wants to use and string it up as a hammock, you're going to eat fewer fish later. If you take the blacksmith's tongs and use them to crack walnuts, you're not going to get that handful of nails that you wanted to build your house.
Property rights alleviate the tragedy of the commons, by taking resources with multiple possible uses out of the commons and dedicating them to uses other than just the one with the highest immediate value.
It should be obvious that you can't plant a field on the same land footprint as the foundation of your house. You can't build a road over it at the same time that it's under an apartment building. Property rights are part of our system for resolving the conflicts behind multiple competing exclusive uses for any particular thing.
They are not absolutely essential to democracy, but they are the best solution we have yet tried for resource allocation in a specialized economy, and democracies tend to fare better when there is enough prosperity to spread around to everyone.
In all your examples, you're talking about tools that would be finding direct use. How do you reconcile your allegories with empty houses purchased solely as stable investment vehicles instead of actually housing people?
That's just like the fishing net used as a hammock instead of catching fish. A house used for housing is a productive purpose. It is generating value to the economy every minute that it is being used as shelter for humans. That value diffuses out to more people through trade. When used for speculation, it is not producing value, but simply storing it for later use. Meanwhile, those who would otherwise produce value from it are producing less value in aggregate because they are denied access to at least one house.
If you put gold in a vault, it retains its value. But it cannot be used productively. If you instead loan the same gold out, you can charge interest, and some of the value generated by the gold performing its productive function as money will diffuse back to you via trade.
As a whole, the entire economy would prefer that all tools be put to productive use 24 hours a day. But the individual Nash equilibrium strategy is to selectively employ or withhold the use of those tools for greater personal benefit to the tool owner.
In the government's role as cartel enforcer, it would be in the interest of the whole cartel for the enforcer to levy a vacancy tax on investment properties. That reduces the personal benefit of idling the productive tool, but the enforcer then also has the burden of returning that value to the economy in a productive way.
It's perhaps a small step in a direction away from the pure capitalist conception of how property rights should be structured, but such a movement is no more a sign of lack of respect for property rights than the move to the capitalist model of such rights from prior models was.
It's not like God handed down the capitalist model of property rights carved on stone tablets...that model is just one stage in the continuous historical evolution of the concept of property rights.
>To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Because of the strong disincentive to move, there's now going to be fewer units on the market than would otherwise be expected. House prices go up, not down, and the moving tax is likely to be regressive.
>It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.
In this case it will exacerbate it, just like Prop 13. It's really a moving tax disguised as a property tax.
There is, however, a tax that will punish absentee owners but also not create distortions: a land value tax.
It's similar to a normal property tax, except it's on the value of the land only, not land and improvements or improvements only. A single family home on a particular lot is taxed the same as a skyscraper or an empty lot sitting on that same lot.
This punishes land speculators and NIMBY types, cannot be passed on in rent (normally taxes decrease the supply somewhat, so some of the tax can be passed on, but land is fixed in value and a tax cannot reduce its supply), and does not punish building like a standard property tax does. It allows cities to capture value from infrastructure improvements, such as running a new transit line.
The practical concerns are similar to a standard property tax: how do we do assessments? The great thing about it is that land is easier to compare than buildings are.
> This punishes newcomers and rewards staying in the same property, just like California Prop 13. Have a kid and need a new place with more space? Prepare to pay punishing property taxes for that luxury. You grew up in the area and it's time to move out? Enjoy your tax! Moving from the countryside for better employment opportunities? Tax please!
Can you explain why this would be a moving tax?
Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
I suppose that would be an issue, but I assume for most people, that's a relatively small fraction of time. It's not like there aren't already lots of other expenses associated with moving.
>Obvious, property taxes only apply to the fraction of the year that you own a place. Are you worried about the overlapping period where you have the house on the market but haven't sold it yet?
The proposal was to create a property tax that phases out once the owner has lived there for X period of time. Naturally, every time you sell and move you then reset this clock, so you'd pay the property tax only if you keep moving. The most monetarily rational strategy is to buy and hold forever if at all possible.
In short, the only way to trigger this tax is to move.
Trouble with a land value tax is that most cities have severe restrictions on redeveloping properties at a higher density, so you have to design all sorts of exceptions or end up with the family living in the poky little flat in a historic building on the edge of the city centre paying more in tax than the property speculators who've bought the penthouse suite in that new multistorey apartment in the exclusive riverfront district.
To me, there seems to be a pretty obvious public policy response. Institute a very high property tax, which is abated on some kind of curve according to the amount of time the owner or tenants spend living in a property, with no tax being due if the property is legitimately occupied for more than, say, ten months.
It might not solve the problem entirely, but at least you would reduce the effect of a diminution of housing supply that is driven by these kinds of absentee owners, and that must be driving up rents, at least.