City urged to consider ’empty homes’ taxes

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This article was published 20/11/2021 (1754 days ago), so information in it may no longer be current.

The City of Winnipeg may soon attempt to determine how many investors are buying local homes they have no plans to occupy in an effort to later cash in on rising real estate prices.

Some critics would like to see new local fees and taxes created to deter the practice.

An advocate who has lobbied for more affordable housing in the city said there’s currently a lack of data to determine how many “non-resident” homebuyers are involved in the Winnipeg market. She expects there’s merit in the city studying the issue to find out.

“I think it would be good to look at it, because it would be important to maintain the affordability of housing here… To get ahead of it, I think is a good, proactive measure,” said Molly McCracken, Manitoba director of the Canadian Centre for Policy Alternatives.

McCracken said such a study should be part of a broader effort that also accelerates the creation of affordable housing units and deters the conversion of apartments into condos, which can jack up home prices.

She said there is concern Winnipeg housing prices are rising fast, with the effects trickling down throughout the entire supply.

“If there’s not a lot of housing available, then people who might want to rent at the mid-level might be occupying those lower-income units and they might not be able to move up (and free space for the lowest-income earners)… The real estate market is quite booming and I am concerned that’s going to price people out of ownership as well,” said McCracken.

Coun. Kevin Klein is calling for city staff to study the link between non-resident property ownership and rising housing prices. He’s also calling for the city to consider options for “empty homes” taxes, foreign buyer taxes and potential new fees to deter the practice, as well as possible restrictions on the number of properties owned per person.

The Charleswood-Tuxedo-Westwood councillor said he’s heard Winnipeg is at risk of enduring some of the same challenges plaguing larger Canadian cities within the next few years.

“Despite the increase in the number of homes and units being sold, we’re not seeing that same increase in mortgages. We’re seeing more condo units put under business names, more properties being bought, sight unseen,” said Klein.

In Vancouver, properties deemed empty now face a tax of three per cent on assessed value. The average home price in the B.C. city is now about $1.2 million.

While that price is far above what’s been seen in Winnipeg, Klein believes homes are already being bought due to speculation large price increases will produce a resale profit.

“I think we have to just put some rules in place, charge a little more for the property taxes… If we don’t address it today, in one to two years, I think… Winnipeg residents are going to have to move outside the city to find affordable homes,” said Klein.

However, a local real estate analyst says there’s a lack of research to determine if Winnipeg is now seeing a substantial increase in “non-resident” home purchases.

“Is there any evidence that shows that (foreign purchasers) are buying up property in Winnipeg and sitting on them and speculating? I’m not aware of that,” said Peter Squire, vice-president of external relations and market intelligence for the Winnipeg Regional Real Estate Board.

Unlike Toronto and Vancouver, the Manitoba capital’s home prices have been relatively stable for the last several years, despite the fact the average single-family home has risen to about $380,000.

“If you’re talking about investors thinking they’re going to make a lot of money off buying and sitting on homes, we haven’t been the market that they’re probably going to be looking at to do that,” said Squire.

He doesn’t support adding local taxes and fees to deter non-resident home purchases.

“We’re in that lower tier of price concerns… Certainly, that’s not a cause for government intervention, in my view,” said Squire.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga