Vancouver plans to tax empty properties 1% of their assessed value
bloomberg.com
bloomberg.com
Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.
Anyone see any reason why it shouldn't be?
If I rent out a house, is it not enough to pay taxes on the income I get from rent ?
> Should I really have to pay taxes on it to keep it out of the public domain?
Yes. If you build a house with your own two hands, should you not pay property tax on it ?
The reason we have property taxes is because maintaining the environment around the house costs money. There's no roads and sewers and schools for books.
Also, a patent takes space by disallowing me to use the same kind of invention (even if I came up with it independently). And a copyright sometimes stops me from being able to use a "cultural common". They most definitely take space. And real estate property taxes are often supplemented by "road maintenance levies". They don't directly support the property's infrastructure when you really look into it.
Now when it comes to copyright enforcement, 99.99% of the copyrighted material out there is never formally published. It's source code, it's email, it's creative works produced and shared but never curated or packaged. How can you possibly tax all of that?
If only want to use the tax as a way to make sure orphaned works can be shared, and patent trolls become unprofitable. I believe that an IP tax can help both. I think it is essential to force proper valuation of IP, and I think tying it to recovery (upside) and taxes (downside) is likely to give a proper evaluation.
It is not my intention to try to tax your own painting on your living room. I assume, by default, anything not listed, is valued at $0 for that year.
Do you understand that, regardless for copyrights or patents, your IP is not enforceable unless you can afford the court action?
There's a solution to orphaned works: Reduce copyright to something like 25-50 years (plus life of creator?) and allow for one renewal, which requires a filing fee, for another 25-50 years. That's it. Suddenly all these orphaned works are liberated because it's not worth it for people to file.
Taxing based on valuation is absolutely, monstrously ridiculous. Many people write short fiction they publish online. Are you going to suggest they need to get an appraisal on their book, and then pay taxes on it? How many millions of people are going to review this and ensure that everything's tallied up correctly.
Orphaned works are a problem, but taxing them is not a solution.
I keep repeating (and you keep ignoring) that I want no such thing, except when they expect damages for copyright infringement.
Taxing based on valuation is what is effectively done for every kind of property. If IP is property, there is no reason it should be exempt. And if it isn't property, it's about time we stop treating it as such.
The implication is that if someone decides to copy it, your claim for damages in court is based on that $0. But if your intent is to keep a private copy in your living room without the willingness to share with the public who gave you the privilege of copyright in the first place, perhaps that still remains fair.
If you own a unused property, in comparison, shows you have significant funds
I propose that the value of IP for tax purposes is owner assigned. If you have no money to pay the tax, just declare $1. The catch is, that would make you ineligible to recover much more than that in the case of infringement.
As far as poor people, it changes little to none. But it grounds patent valuation, which are now arbitrary.
For example I invent and patent the widget and assign a $1B valuation to the invention. Apple violated my patent, manufactures the widget and sells $100M. Should I sue, my potential damages have nothing to do with the $1B valuation I made up but with the damages I suffered as a result of Apple violating my patent.
Alternatively I write a book and slap $1 valuation, because I assume there is no market for my writing or to avoid the big tax until I make it big. JK Rowling Violated my copyright and slaps her name on my book and sells millions of copies, again my damages have zero relation to the valuation I created for the IP.
The other part, about damages, is a grey area today. It is up to the jury/judge to decide how much value to assign to the infringement, but they start from arbitrary statements - which is why Oracle can claim 9 lines are worth $5B even though they've been giving them away for free for a long time.
If you break through - then you'll have proof of value, be able to pay the tax, and sue/recover accordingly.
Today, someone thinks of an idea, patents it and estimates its worth at $100M. Someone else develops the same idea and assigns a value of $20K. That's the error bar TODAY.
Inventor has no incentive for realistic estimate - they will always overestimate (no penalty for that). An infringer has no incentive for a realistic estimate (no additional penalty for that if he loses in court).
An ip tax will decrease the error bars by forcing the patent owner to pay for overestimates.
If your property has value, then you should pay property tax. If it has no value, you cannot claim damages if someone 'steals' said property since it wasn't worth anything. You can't have your cake and eat it. If you start taxing imaginary property, this will force IP owners to consider wether their IP has actual value or not and act accordingly.
Edit: to bring the concept to perspective, imagine having to assign a valuation to new borns so in the instance they die as a result of negligence the damages are capped at the assigned valuation of the deceased at their birth.
At the moment, patents are cheap compared to the value they have as an offensive weapon, and this is what I hope to address with my proposal.
As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.
> Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero
How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.
This would force the patent troll to set the value to something balances so that they can afford the taxes while still recouping enough infringement damages.
I want YOU to value that patent (and the tax just make sure it is not arbitrarily high). When you sue for damages, you must have that estimate. I just want to force that to happen in a way that discourages over estimation.
> How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.
Court cases take years to start (and resolve). The patent troll's leverage is "if you don't license, I'll sue". If they have to pay $10,000 for every $1M patent, they will not be able to afford their current business model - they will not be able to sue for more than they paid taxes for. (The lawsuit is likely - and perhaps should legally be required - to be filed only after tax is paid).
If you can declare $0 and not pay taxes on the IP you are basically coming full circle to existing taxation based on the income generated by the IP. However, the more important issue with your proposal is an IP holder might not want to declare $0, despite no current revenue, because your proposal would then tie that $0 valuation to potential damages in the instance of an infringement case.
>As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.
As both a small business owner and consumer I have always been on the other side of the Disney argument. Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?
As a business owner, if my company creates some form of IP, say a cartoon mouse whom I copyright/trademark to various degrees (name, logo, color(s), etc...),the company invests capital to create a movie starring the mouse and the market votes with their wallets, which the company pays taxes on, and like Steve Jobs I am fanatical about Quality Control and just keep reinvesting in the IP, creating products with the Mouse that the market love and keep paying taxes. Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse? As a consumer, I currently know Disney for its high quality productions and there is a lot of goodwill with the brand that has been established over a lifetime, now with the floodgates opened and everyone able to profit off Disney IP there will be confusion in the marketplace leading toward loss of goodwill with the brand.
Copyright is willingly extended by the public to private interests for the purpose of fostering innovation and creativity.
The question isn't how do we benefit by Disney losing IP protections, the question is how do we benefit by maintaining what we have graciously given them? What return on investment, if you will, is the public getting for Mickey not being in the public domain?
For that year (alone), and I proposed you set it when you pay your taxes - that is, at the end of the year, in retrospect. In this case, there is never a reason for you to file anything other than $0 unless someone else is making money of it (if you are, then you're already being taxed on it).
> Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?
It's supposed to be the other way around. We have granted Disney limited monopoly in return for wide availability. "Steamboat Willy" was released with the understanding that it will become public domain within 50 years. The question is, why on earth did we retroactively give another 100 years of that monopoly for free?
And even if it wasn't retroactive - the current 100+ years doesn't seem reasonable to me at all.
> Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse?
The only reason they currently have these protections is that they bought them from Congress.
Why do you, as an employer, stop paying your employees a couple of months after you fire them / they quit? IP is not the same as work-for-hire, but it doesn't deserve the eternal protection it currently has. I am not aware of anyone who did NOT publish in 1930 because "I only get 50 years of copyright protection".
And ... you are arguing a strawman. I did not argue that IP should be abolished. Just introduce an economic cost to the unlimited monopoly, which is currently free.
Trademark is different. That rewards not the act of creation, but the ongoing investment in a brand. Do I want a huge quantity of something for above average quality and below average price? Buy Kirkland Signature. Do I want outdoor gear that will be covered no matter what happens? LLBean has me covered.
Disney almost surely makes almost no profit off of Steamboat Willy as a film, and in fact according to the copyright laws of the time, it wouldn't be covered today, so Walt probably didn't factor in the 21st century when amortizing his costs. Is there some teenager out there who could create some truly inspiring film by remashing clips from Steamboat Willy? I have no idea, but would love to find out. But a Mickey Mouse mug is more about trademark, and Disney should get to profit off that as long as people want to buy them. And if the teenagers film hurts the trademark, then that's something that could be resolved without an indefinite extension of copyright terms.
So, rather, it would probably discourage patenting these things (in favour of keeping them deeply confidential) until their value has actually been proven, which goes against the purpose of the patent system in the first place, to encourage the disclosure of inventions in exchange for a monopoly on exploiting it.
Yes. At full value PER ONE YEAR. (Property taxes are per year, and the liability limit I propose is "per infringer per year" (or "per infringement per year" if infringement is defined in a macroscopic enough sense).
An invention and subsequent patent is only the beginning of a pretty risky endeavour. There are significant risks in bringing a new product to market, such as in funding, timing, marketing, industrial production, and so on.
Overall they will average out. Some patents will be more successful than expected, and some will bomb. Large companies will be able to make a guess, pay the tax, and overall they'll make a profit. The risk on a higher value and paying the tax isn't such a big deal for them.
Small time inventors will be unable to take the risk and be forced to undervalue their own invention lest it bomb. They'll be exploited by large companies that will just pay the limited damages and then exploit their invention.
All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.
I hate patent trolls as much as the next HNer, but I don't think this idea will work, sorry.
I'm a small time inventor with one patent filed, but I didn't pay the maintenance fees (I had to publish but didn't want to spend thousands more making it final) because it didn't make enough money so it's now in the public domain. A large company could take my work. If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.
> All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.
On the contrary. IBM and MS have tens to hundreds of thousands of patents. Keeping them all "Ready to sue" would cost them billions. And .. a small inventor who can't afford $100K in court fees does not have patent protection even if they have a patent.
> If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.
So ... if you had paid $0, then a company made money of it, increase the value that year to $1M (pay the $10K tax) and have them license or sue them. You're better off under my proposed system.
https://en.wikipedia.org/wiki/Maintenance_fee_(patent) https://www.uspto.gov/learning-and-resources/fees-and-paymen...
The problem with liability being < assessed values is then what's the incentive to work for a licensing deal? Why pay for a license when, worst case, you'll be taken to court to pay the same amount?
First of all: I'm not a lawyer and this is not legal advice.
You don't pay the full price of the intellectual property when licencing it, do you? The value of the intellectual property should be based on it's market value which would, in a perfect world be based on the expected benefit from that property. Also, paying for the damages for unlicensed usage does not mean you can keep using it unlicensed further on.
Wut ? “assessed value” ≠ “licence fee” ! The value of Windows for Microsoft is not the same thing that the value of one licence of Windows for your company ...
The proposed mecanism would just prevent Intellectual Vulture & co to gather a lot of worthless patents and then claim millions un court for patent infrigment.
> The problem with liability being < assessed values is then what's the incentive to work for a licensing deal?
If you upload a song you like, and tax has been paid for it as worth $100,000 that year, (which would be $1000/year), and you can license it for $1, then - yes, you have an incentive to license it for $1, because you are otherwise liable for as much as $100,000 (but not more[0]).
Think this is stupid? Because under the current law, you are liable for $150,000. That's what the law says, anyway.
[0] Except for e.g. willful infringement laws, which would make you pay 3x as much potentially - another answer to your "what's the incentive".
This is the case already.
And no - there is no reason to tax IP at 1% of it's valuation.
Remember that patents eventually run out, in which case they are 'taxed at 100%'. :)
> Remember that patents eventually run out, in which case they are 'taxed at 100%'. :)
First of all, so what if they run out? Other kinds of property also depreciate and we still tax them.
Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP.
People don't live in intellectual property. They live in homes.
There's a crisis of affordable housing in Vancouver. There is not a crisis of affordable intellectual property.
And actually, there IS a crisis of intellectual property. It is not a question of affordability, but rather of frivolousness, overreach and submarining. A tax is likely to solve some aspects of that.
Intellectual property is such a vast, ethereal concept that even pinning it down is damned near impossible.
That picture your kid drew that's on your fridge, do you pay tax on that? What if you put it on Instagram? What if your picture goes viral? What if it's co-opted by Wal-Mart and put on a bag, so you file a cease and desist? What if you make your own merchandise? There's such a slippery scale here that to tax everything, unilaterally, is absurd, and pinning down when something is impractical.
Because there is an acute supply problem in Vancouver real estate. Making them pay 1% for empty homes incents people to rent them out.
The same arguments do not apply at all to IP.
"First of all, so what if they run out? Other kinds of property also depreciate and we still tax them."
'Depreciation' and 'expiration of patents' are not the same thing at all.
A 'patent' is the exclusive right to own a piece of IP for a period of time, after which it's public domain. It's basically pointless to add on a 'wealth tax' to a patent - there is already a tax on royalties and that makes sense.
When you buy your property, it does not become 'public domain' after 10 years - it's a completely different economic vehicle.
"Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP."
Copyright and patents are totally different things.
Someone who created a unique song, has the right to protect it for quite some time. Moreover - it was 'made famous' by them, i.e. it's a brand that is invested in.
Disney should be able to 'own' Mickey Mouse forever - they created it, and they back it. They spend billions supporting 'Mickey' and there's no reason someone else should be able to rip them off by selling clones. In much the same way fashion brands are protected.
Drugs, algorithms, other kinds of solutions, there is definitely a 'public good' in those things being public after some time, so it's fair that IP protections run out.
Disney should be able to own Mickey trademarks for as long as they maintain them - but they shouldn't be able to tell me not to copy or remix Steamboat Willy. They got 50 years of monopoly on it they were promised when they released it. It should be public domain now.
A lot of old books or music still under copyright will never generate another penny of income, but putting them in the public domain could let them be mixed or used as a foundation for new creative works.
This idea is absurd. Classic copyright term limits, and patents being reserved for only specific implementations of an idea would fix these problems without taxing the hell out of everyone.
You do realize everything you write is copyrighted? This means you're going to have to file with the IRS for all your Hacker News comments on an annual basis.
Which...is something else that can and probably should change. What purpose does this serve?
Do you really want to live in a world where someone, anyone, can take something you've done and give it away to other people without your permission, or commercialize it and leave you with zero recourse?
Most people think copyright protection is for important, significant creative works like a book or a song, but it's equally important for less visible things. For example: A single method in your code that someone else appropriates.
If you had to register copyright for every line of code you wrote, you'd never get anything done.
I don't see any reason, however, that I need that protection for every single thing that I create. What purpose does _automatic_ copyright serve?
I stick a copyright notice in every software project already, but when I don't want the copyright I also have to explicitly disavow it. Why shouldn't the model be flipped to claiming copyright with a simple attached notice, instead of disavowing it?
> I don't see any reason, however, that I need that protection for every single thing that I create.
This is the social network problem. When the network starts to co-opt copyrights, demanding they're able to license the work you submit to them for any purpose, for any reason, without compensation, people understand that's a form of property theft and fight back.
The problem with "intellectual property" is it comes in forms both inconsequential and profound, and in the middle is a very, very grey area. There's been flippant comments on Reddit that have turned into screenplays. There's been stuff posted on Instagram and Pinterest that turned into a line of merchandise. These things have a way of growing in importance when you're not even looking.
Like code, where a quick throw-away hack might actually turn out to be a big breakthrough and gain popularity. This is why we have license like GPL, MIT, and CC that describe how your work can be used.
You're talking about a pre 1970 world where copyrights had to be registered, and honestly, that sucks. Can you imagine having to get each and every revision of your code officially copyrighted? What about someone stealing your idea you write about on Medium, or ripping your content wholesale and publishing a book. It's not stealing if it's not copyrighted, but thankfully it is. Automatically.
Lines of code : Form a corporation, non profit entity or business, then pay a yearly copyright fee and transfer all code written to the business. The cost is proportional to the value of the copyright; if it's a small or unprofitable business the fee could be waived.
HN comments : the copyright is worthless anyway, people repost content all the time. To my knowledge no one has ever been sued over it.
Books and other publications : The publishers will pay for the copyright fee. Writers could be automatically covered for a grace period before publication with no fee, say one year.
These are all hypothetical,the point is you are immediately going to an extreme without considering what actual, plausible reform would entail.
Just like personal taxes: Don't work, just inherit money and invest in blue-chips.
EDITED + (with proper tenancy agreements which usually provide some balance of power between owner and tenant)
In most other countries the landlord has the right to cancel the agreement with certain notice.
I am not a solicitor. I am not your solicitor. If you need legal advice on any of these issues stop reading and find a solicitor.
+ (not as much as most people assume because most tenants don't know or enforce their rights - wrongly thinking that it would be difficult when in reality the landlord will usually fold after a couple of letters long before things go to court.)
Scotland and England have differing private landlord tenancy laws so it's worthwhile checking the fine details in this respect. Scotland has a similar agreement to the Assured Shorthold and Assured tenancy:
1. Short Assured Tenancy where [0]:
a) the tenant is entitled to remain in the property for at least six months provided they abide by the conditions of their lease. A landlord can only evict if there are reasonable grounds [1]
b) after the six months is up the landlord can then give notice to quit and the tenant has to leave [2]
In both cases these provide reasonable and fair conditions for both landlord and tenant.
[0]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...
[1]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...
[2]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...
2. Assured tenancies [3]
a) a tenant can more or less remain in the property for an unlimited period of time provided they aren't in breach of their tenancy agreement
b) the landlord has a much harder time evicting tenants unless there are "grounds" for eviction [4]
In this case the tenancy is skewed to be more favourable to the tenant and the landlord has to do a lot more work to secure an eviction [5[
[3]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...
[4]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...
[5]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...
In many cases now, most properties are let as Short Assured Tenancies. Anecdotally, my past three tenancy agreements have been Short Assured Tenancy agreements.
In Scotland:
Tenant deposits are no longer permitted to be held by landlords or agencies and should be deposited into one of three tenancy deposit schemes within 30 days of the beginning of the tenancy [6].
Landlords and agencies are no longer permitted to charge for additional "costs" such as credit checks and "administration fees" on top of a tenants deposit and first month's rent. In England this obnoxious behaviour is still a plague on tenants seeking to rent [7].
Most landlords are now required to register with the Landlord registration scheme run by the Scottish government [8]
[6]: http://scotland.shelter.org.uk/get_advice/advice_topics/payi... deposits schemes
[7]: http://scotland.shelter.org.uk/get_advice/advice_topics/find...
[8]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...
If you want additional security you can always contract in for a longer minimum lease, for example twelve months. Alternatively hunt around for a property letting company who's long term business is just letting.
At the end of the day, nothing is permanent if the landlord stops paying their mortgage or other loan secured on the property you're renting.
There is also the social housing sector - Council Housing, Housing Association and Housing Co-op's. These can provide much longer term rentals, however they can be a bit harder to obtain due to lower monthly rents which can cause waiting lists. There tends to be less flexibility on property size and type, i.e. you'll get to rent what is deemed legally and healthwise necessary for your circumstances; for example if you're single don't expect to get a three bedroom home, those will be allocated to families.
In Germany, selling the house makes no nevermind to the tenants. Considering how many people rent here, it just makes sense to encourage long-term tenancies, they lead to better communities.
No, tenants have pretty strong rights in Ontario.
It's very difficult to evict someone who does not want to go.
The question is whether the house is a principal residence or an secondary residence/investment.
I mean, I guess you could base your business on helping people break laws, like selling dummys for getting commuters the passenger lane, but your customers are no less guilty than they already were.
That said, I wouldd pay you 0.5%/y to live in (ie rent out) your property -- that works out to 400/month on a 1M property
Why pay for your service (assuming it's not tongue-in-cheek) when you can pay for a property manager (lets be generous and say 10%) and also get rental income to offset the investment?
Ultimately, that's why the city is doing this; Whether the property is rented or owner-occupied, there will be a consumer who is adding to the economy.
UK/London really has a problem with non-occupance - they should definitely follow suit.
assuming it's not tongue-in-cheek
Would you care if you purchased a $1m home cash to flip it in a few years for $1.4m?
1. Pick a hot up and coming city.
2. Buy 5 properties at $1m each.
3. Sell in 2-4 years for double the value, preferably paying no tax on the capital gain at all if you (somehow) can.
Rinse and repeat. It's what happened in London in 2008-2014, etc.
You just, as an investor, need to be aware it's a bubble.
Having both a clear exit price and timeframe in mind when buying is probably a good way to do it. Even if a property bubble starts to collapse, there is usually still sufficient time to get out.
Yeah, that worked really well for me in 2004 – 2009.
Prices today 3 times what they were in 2004. Well above inflation.
Rest of the country, that doesn't attract the "need to hide my money from a foreign tax man" crowd, not so much.
If you believe property to be (significantly) overvalued, then you should rent instead of buy. If you're at the end of a "boom", then it's not unreasonable to wait it out and see how prices progress. Low interest rates also tend to push residential prices higher, because people can pay off more principal monthly vs less if rates are higher. When buying property it's almost always better to buy when rates are high and refinance later than to buy when rates are low.
Buying high and selling low is also definitely a thing. That doesn't necessarily mean you can't find a good deal somewhere (you can), but it'll be much harder.
Tldr: Unlike what most people believe, property is not a "sure thing" investment.
Its about having more money than you know what to do with.
No, the city is doing this to increase housing supply. We do in fact have a housing crisis in Vancouver, this isn't just political rhetoric. When I was looking for an apartment about a year and a half ago, it was impossible to find one on the open market. Every open house had dozens of people showing up. I was eventually able to get a place through a personal connection; 10000 more units on the market would have made the process a whole lot easier.
He's literally made reverse Airbnb.
This can be a very good option if you need temporary housing. My brother did this for half a year to save on rent while his new house was being built.
It's also surprisingly egalitarian, or at least against conspicuous inequality; you can accumulate a fortune in a Swiss bank, but you can't build a mansion that annoys your neighbors.
One nit to pick: even with imputed rent, without a land rent tax the property market would continue to distort incentives and mis-allocate capital. Meaning we will continue to see 'investors' chasing capital gains instead of yields (the literal definition of 'speculating'), funded almost exclusively with bank debt. Unless our political leaders grow a spine (and, in many cases, a brain), we'll continue to lurch from one financial crisis to the next as a consequence...
The next one is shaping up to be epic. Like, "it's time for WWIII" epic...
If you own sports equipment, should you be taxed on the imputed income you could have gotten from renting it out?
If you're married ...
Vancouver real estate prices jumped 20% in 2015 -- a $200k gain on a $1M house. If pricing trends continue along that trajectory then Vancouver real estate still looks like a great investment even if you just eat the entire tax.
Still, I'm impressed by how quickly Vancouver is moving forward with these measures (going into effect Jan 1st!). They're sorely needed, and it's great that they don't have to sit in limbo for years before being enacted.
As per the article: They didn't, it's 1% of the property value. The title is misleading.
That's the goal with this tax.
The earlier tax by the province is to discourage investors.
My intuition, as well as pretty much everybody else's, is that prices will fall, when things start moving again. But it's far from certain yet, because that hasn't happened yet.
http://www.theglobeandmail.com/real-estate/the-market/vancou...
[0]http://www.rebgv.org/sites/default/files/9.%20REBGV%20Stats%...
Too much information is lost, in the "average selling price" statistic that graph is using, to be able to use it to definitively claim anything like "an equivalent house is selling for less than it would have before".
For example, that graph could just as well be caused by fewer high-end houses being sold, but the houses that are being sold going for the same amount they would have before.
Again, I think it's very likely bordering on totally inevitable that prices will drop, and that that graph is probably showing that. But it's not enough information by itself to make that claim.
> If pricing trends continue along that trajectory
It will not. That is a bubble.
The problem at stake is that Chinese buyers are not buying property in Vancouver for speculative investment purposes only.
They see these properties as safe stores of value in order to diversify their risk profile in case the situation in Mainland China or their own financial situation goes down the gutter,
and / or to support their future potential effort to gain Canadian residency / citizenship for themselves or their kids,
and / or to vacation outside of mainland china once in a while.
Sure, this tax will hurt some of them, but the number of Mainland Chinese people with the means to write off such an amount as the cost of security is massive.
Source: lived in Mainland China for a few years, worked for this specific demographic.
Contributing to the Vancouver economy and rental market? This demographic could not care less, this does not factor in their decisions.
(I have only empirical evidence of this mindset, but I would be willing to expand on what I base my reasoning on.)
To get around it you will need a business license for each unit, which is also taxed. Business license #'s must be displayed on the temporary rentals website under the listing. Business licenses can only be obtained with permission from your strata. They think they can free up another 2000+ rentals this way as well.
AirBNB is running an insane ad campaign here that mostly pisses off every Vancouverite I know in my echo chamber of EVERYONE UNDER 35.
I work at one of the big Universities here. It is crazy biking in the summer through affluent ghost neighborhoods. Lots of the older big houses that were tore down were rentals to like 6-8 students at a time, or had basement suites. Now they are empty boxy white McMansions.
> When you're throwing two million dollars at a house,
> sight-unseen, that you then let stand empty for years,
It sucks, you'd rather keep your $20k, of course. But it's not worth risking cheating it...
Policies over large numbers aren't about %100 enforcement, a general behavior modification is considered a success usually.
That being said I'm happy to be proven wrong, but can we expect any sort of data to support a hypothesis? I'm not sure as I'm unfamiliar with Canada's policies on access to public data.
Yep. You can see that with wealth taxes. Most countries that have wealth taxes (e.g. France) make close to nothing from them, because it's inefficient to verify and collect all the data to properly levy the tax, and you need a lot of civil servants for that.
There may be some question with privacy (e.g. proof of leases/lessee), corporate-owned residences, etc. but I'm sure they've factored that into things. The big deterrent to lying about it is probably the magnitude of the penalty for doing that - it's kind of like Martha Stewart: she didn't do time for insider trading, she did time for lying to the FBI (about insider trading).
EDIT: and the goal isn't to make revenue, it's to free up rental stock. If all the money collected goes towards enforcing the system and 20,000 vacant units end up in the rental market, then the policy is a total success.
About 5% of Melbourne's housing stock was recently found to be unoccupied, using water usage data. It was closer to 19% for investment properties.
http://www.abc.net.au/news/2016-04-18/call-for-vacancy-tax-o...
This is a big difference between the west and a country like the PRC where strong rule of law isn't a given. In the west, they will simply ask, with the caveat that perjury is a serious crime if you are found out. In China, they will figure out another way since trust isn't assumed and lying is considered a much weaker offense. Completely different systems.
(The PRC is trying to go in a trust direction with income self reporting, but it doesn't affect the taxes you pay, oddly enough.)
http://www.calgaryherald.com/vancouver+slaps+year+empty+home...
(Vancouver slaps $10,000 a year tax on empty homes. Lie about it and it’s $10,000 a day)
"Why didn't you use any power?!?!" "I have solar"
"Can you give an alibi!?!?" "I was home alone"
"Not good enough, pay up!"
Yes, it can be enforced.
For example, in the US. Housing associations have staff that run around in cars taking photos of literally everything. Grass too long - Fine. Bins out outside of trash date - Fine.
This happens daily. I know because I used to live at an HOA.
My point being, hire individuals with cars to keep track of houses. Have photos of non-residency and then impose heavy fine to recoup costs.
At least Vancouver is trending in a positive direction.
And I'd assume that if you're declaring it as your principal residence but you're registered elsewhere for little things like voting it may trigger investigation that could get Very Expensive if you are determined to be lying.
I don't understand - what if it's neither ?
What if you are a plain old canadian who has a home in Vancouver and (for instance) a home in Golden ?
It's not at all unreasonable to have a home that:
a) is not your primary residence
b) you live in for 2-3 months of the year
c) you have no intention of renting out because you go there regularly or sporadically
What does one do in that circumstance ?
It is proposed that doing so imposes a negative externality.
That proposal is not without counterpoints, however.
Specifically: that the owners of those homes not only pay their full property taxes already, but they impose fewer costs on the infrastructure of the city while not being present. They don't drive on the roads or walk on the trails or use the public restrooms, etc.
Look, I proposed a hypothetical situation[1] that has nothing at all to do with Chinese speculators buying up housing assets in a safe haven market. I proposed an unintended consequence on an otherwise innocent, well meaning actor. It's very interesting to note that the response is, basically, "too bad for them".
[1] I don't live in Canada.
I think you're right there is probably isn't a loonie cost to the city that can be recouped with this vacancy tax. But I also think your counter-point is moot. Vancouver isn't trying to keep revenues up, it's trying to encourage a certain behaviour, namely more housing and rentals on the market.
While I do think this vacancy tax is a good idea that could help out affordability in Vancouver, I agree with you that it's far from the best that Vancouver could do and is really only addressing the symptoms rather than the cause.
I'm a skier :)
They could declare the condo their principle residence, but then they would encounter complications regarding their vehicles, which are typically not used in the city. (They prefer transit, and trucks don't fit into condo parking spots well)
They aren't participating in property speculation and have owned the condo for around 5 years now.
So, I think they are a good example of innocent, well meaning actors who are being unfairly taxed by a law that is well-intentioned but not quite properly formulated.
Or AB&B the house all the time you're not there. Would that count as renting?
> you're privileged white male in IT
You got me there.
Real case: the parents family houses are in the mountains, parents moved to city, children (adult now) live in another city. They'll eventually inherit the 3 houses and they won't use them. The city house can be sold or rented. The other ones, not a chance. If taxes on them would be too high (they aren't now) they could rather destroy those two houses. I don't think this is what we want.
There is always the way out of renouncing the heredity. Then you still get an empty house that nobody wants and nobody maintains.
It's interesting how people circumvent incentive-laws.
The overhead wasn't 0 before, it was the opportunity cost of not renting out the house. Now the opportunity cost has increased significantly.
My guesstimates were not far from what the city hall counted in 2015.
B.T.W. I'm no longer living in Vancouver
I imagine an investor keeping his or her $30M mansion just as a hedge against RMB depreciation and keeping it empty will think nothing of the $10,000 fine.
http://vancouver.ca/news-calendar/vancouver-introduces-empty...
> The empty-home tax will take effect by Jan. 1 and will be calculated at 1 percent of the property’s assessed value.
The problem with a supply only solution is that supply takes time to create, and there are limits to the rate of supply creation (ie. how many trades are available). Even if city government really made a push to increase the pace of supply, they only be able to move the needle slightly, and it'll take years for that supply to appear. If the speculative demand is overwhelming it might not have a noticeable affect. I would say this has been the case for the last several years where Vancouver housing starts climbed to the highest it has ever been and yet prices climbed ever higher.
If you want to solve the problem quickly, you need to not only increase supply, but also have a look at curbing speculative demand.
Vancouver itself is attractive to investors because it has a very mild climate, is close to Seattle and the rest of the U.S. West Coast is a short flight, and it's much closer to Asia than the rest of Canada is.
It's also a very beautiful place with lots of amenities for those living there rather than overseas investors or occasional business travelers.
Vancouver also welcomed multiculturalism which helped a lot.
The city has since moved on (like all cities with time and technology) but I think many people still want that feeling of what it was like in the 90s. It was just a extremely nice place to start a family.
Ouch!
I think you should have to live in your home at least six months of the year (sounds weird!) that would also appease snowbirds.
If the owner can't be there for six months of the year then require the owner to rent or lease it.
http://www.reuters.com/article/canada-china-court-idUSL1N19K03DIt's also somewhat common to fine owners of unused urban houses because they attract "transients" and cause other assorted problems.
Every developer thinks that one day there will be a naive Chindonesian/Eastern European nouveau riche that will buy it no matter the cost. And yes, such people were coming in great numbers
http://nltimes.nl/2016/09/29/amsterdam-fine-vacant-buildings...
Attempting to rent the house for a shorter time is simply going to restrict the target market to transient residents who plan to move away shortly (e.g. students), which is rather orthogonal to being rich or poor.
Owners need to seek a balance between not renting at all, or renting very cheaply, and accepting longer-term contracts; it's never a unilateral decision.
On top of the property taxes, the homeowner also pays insurance (home + hazard + flood) and the mortgage (principal + interest). If the home is part of an HOA, monthly fees to the HOA are also due. At all times the homeowner is responsible for the full upkeep of house. For example, tree trimming, fence repair, lawn maintenance, etc.
If troublemakers identify a house that remains empty most of the year, be prepared for them to move in secretly and indulge in nefarious activities (like setting up a marijuana grow operation in a state where that is illegal).
All in all, an empty property is a headache to maintain. A professional property manager helps, at which point you may as well rent the damn thing out.
How could speculative empty homes be distinguished?
This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1% instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials).
I wish that our recent display of nationalism in the US had not been one of the disgusting kind.
Based on this doc, I believe Vancouver (or "Vancouver A", as distinguished from the greater metro area) has about 200k units.
http://www.metrovancouver.org/services/regional-planning/Pla...
It appears zoning rules, which prevent Vancouver from building up to Brooklyn levels of density (approx 3x as high), is keeping 400k units off the market.
In contrast, unoccupied housing is keeping only 10k units off the market.
But I'm sure the rich Chinese people are secretly to blame for this too.
Increasing density in response to rising populations is great. Increasing density in response to rising investor demand is what we've done already, and it's why we have incredibly lonely, dead neighbourhoods like Coal Harbour.
Creating more supply results in more units that can potentially be purchased as an investment and left empty.
If you legalized the production of housing that would no longer be true.
The problem is that adding supply takes time, there are physical limits to the rate at which supply can be added, and the level of demand is unknown.
This means it's hard to know when a supply only solution will result in decreased prices and it can take a long time. (Vancouver is not SF, it adds plenty of supply and yet there is still housing shortages and high prices)
If you want to fix the problem quickly, policies that increase supply and limit speculative demand will achieve results faster.
The inability to a) provide for yourself reasonable living accommodations, and b) the surprisingly huge spike in prices of homes due to the lack of homes that are required.
This is what a libertarian believes (disclosure: I'm a libertarian).
1) Acquiesce to high-density development, and receive zero compensation, or
2) Fight high-density development, and probably get zoning laws imposed at minimal personal cost.
You can see why this setup incentivizes people to push hard for "static neighbourhood" zoning law.
Being near a satellite nexus area of such a city, you should expect medium density development around the nexus of civic infrastructure.
Japan got how to do urban planning correct.
There are plenty of exceptions, I'm only talking about the most probable outcome.
This also doesn't address industrial building or other nuisance construction.
3) Agree to high-density rezoning, endure the construction noises and shadows and whatnot for a couple of years, then sell your house to a condo developer for a massive profit and never have to work again.
This isn't a hypothetical, I saw it happen on the street I lived on in college. The detached houses fell like dominos and were all replaced by high-rises until there were none left.
If the local city manages it, then it's a long drawn-out process of lobbying for zoning controls that apply city-wide. And offering the citizens money to vote for it might be illegal in some jurisdictions. Even if Walmart and the local citizens are okay with it, a couple hold-outs or people from other neighborhoods can delay the entire process by complaining to the zoning board.
Then I wouldn't sign those contracts or I would not move into their properties. I'd move to the outskirts of their neighborhood and build there.
Governments have a perceives authority to enforce their regulations on everyone. No one perceives Joe-blow as having the same power. It is because of this that society can keep people in check when these situations arise but no one can control the government as they are presumed to have abilities ordained allowing them to (unfairly) arbitrate these situations.
Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way. It decreases demand and absolute prices, sure, but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now. Our local GDP is largely based on real estate. It's not great.
As a libertarian I feel that protections of any free trade are the cause of most of these problems so no, I do feel that housing is meant to be an "empty investment" as you put it. I don't believe in government protectionism.
To me it looks like you are saying "I want more people to be able to afford houses" then following up with "oh that person? No they're too poor, they don't deserve a house" as that is where this sort of "necessities-as-an-investment" thinking leads. A house should only be worth what a house is worth, nothing inflated by a restriction on the homes created.
> we should regulate uses of housing that don't actually put roofs over heads
Do you think that anyone would buy a home that doesn't have a roof? I could actually see a few situations for doing this (installing your own roof after purchasing is one). I don't think government should mandate safety scissors. This is again another protectionist mentality that ruins freedoms of decisions.
In my ideal world I'd go to a reputable inspector, have them inspect one of the thousands of new homes in a development, then based on their comments buy or not buy the home. No one should tell me I have to live in this home. What if I want to use it as an office for a doctors clinic that's built in the center of the town? No one should be able to tell me that isn't allowed other then the person selling me the home. Government involvement in this is a) just to increase price and b) just red tape that keeps "those people" out of "my" neighborhood.
> Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way
I don't see how wanting someone to be allowed to build a home for themselves, or allow someone to build homes for the poor/homeless as a charitable prospect, on land that isn't currently developed requires government regulation.
> but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now.
Again, I don't think a property is an investment. Then again I also don't believe in bailouts or other protectionist viewpoints. It would be beneficial to you to read up on libertarian viewpoints as your characterizations aren't correct in these cases. I don't believe any investment should be protected as every investment is to be a compensation for the risk that was taken in making it.
To a libertarian this looks like a ruling elite class oppressing the poor minority in an attempt to make themselves rich.
> Our local GDP is largely based on real estate. It's not great.
I don't see why property sale being a large percent of GDP is bad. If a country was made of 90% diamonds selling the land to diamond mines would be very profitable and as such a large percentage of the GDP would be from land sales. This isn't a necessarily bad thing. It just depends on who it's benefiting. Currently this benefits the ultra-rich and the government and that's just doesn't fit in my world view.
The thing, too, is that I agree that zoning is usually the problem with housing prices. San Francisco and the Bay Area have decided to opt out of building enough places for many decades, to the point where some communities there prefer to push jobs and businesses out and away in favour of getting higher housing prices.
But we aren't San Francisco, because we have no underlying economic engine that's driving in-migration and pushing up housing prices. We're just chilling here, broke as ever, wondering how on earth even a small condo could have gotten so out of reach.
Then there is no way that these prices are natural. These must be forced.
As far as I can tell, the idea that it is a supply problem is just an assumption, assumed simply because neither neoclassical nor Austrian economics appear to have an understanding of credit and money creation by banks (through lending, which creates deposits) that lines up with how modern banks and the real-world monetary system works.
Some of the post-Keynesian models seem to match the real-world situation a lot more. The house prices seem to be so strongly distorted by speculation based on easy access to credit that the price statistics don't correlate almost at all with the supply surveys, but does strongly correlate to the amount of money created by lending. This explains pretty well what we're seeing, including how lowering interest rates will inflate asset prices instead of stimulating the real economy. But many people refuse to believe the data and the conclusions it leads to just on principal, because the idea of market prices not being set by supply and demand is blasphemy!
This is also coupled with how great of a place Australia is to live to create a pretty high bar in housing prices. To be honest, if some things where changed about Australia I'd move there. It's got low crime, great politics so far, and a lot of things I like. It's just too focused on a select few areas and too pricey.
But if you're a "let's use the market and data to solve problems efficiently" kind of libertarian, then this is a nice solution.
People are doing what they want and it's being argued that it's hurting others.
That said, I've never seen a libertarian push for anything other than leaving it up to the market, even in the face of negative externalities.
No, Libertarians would not support this. The reason why there are empty properties is that there are capital controls so severe that it's more lucrative to buy a house (and not rent it) as a store of value than a currency/stock/precious asset (gold,bitcoin etc). A law -- which didn't account for the second-order detriments -- created this perversion in the market. Adding another law -- which again won't account for the second-order detriments -- is not going to fix it. Less is more, when it comes to economic law.
I know the article is about empty properties, but it's actually a lot more common to send your 18-year-old kid to study in Canada and wire him $1 million to buy a primary residence in his own name.
But it's true you can't get quite as much leverage and the dividends and capital gains are not tax deductible like they are for your primary residence.
I don't know enough about Canada to say why they have restrictive zoning laws. In the US, it's mostly government-backed mortgage programs and covert racism.
I don't care how rich the Chinese are; those properties would be demolished, rebuilt as apartments, and rented if it were allowed. Because the value of the property is directly proportional to its expected profit. It's only when the government disconnects the two that you ignore the rental profit. The Chinese government's currency controls probably don't help, either: The Chinese are willing to lose money as long as it's free from their government's currency controls.
Does Canada offer government-backed loans that are available to foreigners?
But what happens if you just chop down SFH and rebuild with higher density, and you don't also put restrictions on investing in the new units? You just end up with the problem we have now. We're building tons. Our local GDP is largely based around real estate. Not that we don't have a NIMBY problem — but there's only so much building you can do before you look around and feel like you just built more empty houses for people who don't live here.
Though, it seems like a condominium complex that is 50% empty would give you a greater density of neighbors than a SFH suburb that is 50% empty. And you can get the Chinese to pay for your new roof, to boot.
Somehow I doubt even the Chinese have enough money to turn a high-density city into a scene from 28 Days Later, though.
http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-...
I did some calculations a few months ago; if every wealthy person in NYC bought 10 homes, that would have the same (negligible) impact on the housing supply as building another NYU.
https://news.ycombinator.com/item?id=12022235#12022920
This is not an effective use of public policy. It's just an attempt to find a scapegoat while ignoring the real problems - exclusionary zoning, low density and bad local regulations.
Whether or not zoning and high density would bring housing prices down (it almost certainly would), you gotta ask: if Vancouverites can't afford these places right now, who can? People who have a lot of money.
http://business.financialpost.com/personal-finance/mortgages...
I lived in Vancouver for a while, and though people were totally on board with the idea that increases in demand for housing would push up prices, they were highly skeptical of the idea that increased supply could decrease prices.
Except you just screwed existing home owners, which is why this will probably never fly.
Are the Chinese causing home prices to go up in Vancouver? Probably a little. The much bigger problem are the Canadians over extending themselves by speculating on home values.
Do you have evidence that it is true in large numbers?
Secondly, even if the money is legitimate, Canada does not tax capital gains on residences that are your primary residence.
So if one wants to buy 5 homes, one could buy 1 yourself, and find stand-ins for the other 4. Or if one doesn't plan on living in any, 5 stand-ins.
If other people keep doing that in their lifecycle (move further out when deciding to have kids), you end up with many homes as investments where the home owners have no intention to combat high housing prices, as that only leads to higher rents and more profits.
In any case, suppose you are right. Why not keep building homes and selling them to those dirty chinamen? They want to throw money at Canada, why not take as much of it as possible?
Oh right, exclusionary zoning. Which I'm sure is also somehow the fault of evil foreign scapegoats rather than nice white middle class Canadians.
Maybe you guys should build a wall, and make the Chinese pay for it. Make Canada Great Again!
China has 1M+ millionaires. Assume 10% have enough disposable cash and motivation to go shopping for foreign real estate. It doesn't take much effort to look across the Pacific and home in on the politically easiest place to escape to. If 10% of those people choose Vancouver that's 10K units locked away from local residents.
If all these evil Chinese folks are going primarily to Vancouver, what's the cause of SF, NYC, Boston, Mumbai, Delhi, Bangalore and London's high housing prices?
And why is Houston somehow immune to this global phenomenon?
This is nothing to do with evil. It's just business/common sense. If I had a lot of money and I was living in China where there's a large risk and I was looking to make a similar investment I'd probably go the same route. A lot of wealth was created in a short time and those wealthy people like any normal person are concerned about preservation of that capital and some sort of safety net.
But why is the inventory not high enough? Certainly we could easily build more.
Oh yeah, exclusionary zoning in NYC and SF. FAR limits of 1.33 in Mumbai. Mumbai and Delhi have half the density of Brooklyn, Vancouver about a third - there's plenty of room for more inventory. Even in Manhattan we could fit a lot more inventory in.
We don't do this because the middle class don't want it.
Canada isn't densely populated so why should the Vancouver people need to squeeze into apartments while houses are sitting empty? So you're right. The middle class doesn't want it.
It's true that not everyone can have the "American Dream" house/garage/car any more but at the same time having a bunch of expensive houses sit empty is worse than them having someone live in them.
I think part of the solution might be building new cities, something that doesn't seem to be happening.
When the market prices are high, and land is expensive, and you have the slow zoning/permitting process of Boston, developers are going to only build luxury housing, until the city changes the permitting/zoning process and requires them to build more affordable housing units.
See this detailed article [1]
[1] http://www.bostonmagazine.com/property/article/2016/02/21/bo...
There are also a good number of wealthy Russians and Middle Easterners paying cash in the cities listed. If you've followed NY or London real estate news for the past decade, you would know that what's happening in Vancouver has been happening in other cities as well.
"We don't like yer kind 'round here."
China owns $1.25 trillion of US debt. I think this gives a window into the amount of money sitting there. That's a million $1M houses. Vancouver has 47K houses...
[1] Boston Residential Exemption https://www.boston.gov/departments/assessing/how-file-reside...
But when did the global elite become our new scapegoat? Must we always blame difficulties on an ill-defined enemy who shifts conveniently with the speaker until everyone or no-one is to blame?
To me this global elite sounds just like all those other labels you claim this shadowy cabal are trying to fool us with (no doubt they plot to raise house prices once a year at Davos or Bilderberg or wherever). It's a cheap trick we invent to fool ourselves into thinking someone other than us is to blame for our messy predicament.
Find solutions, not a scapegoat.
If someone is buying real estate and leaving the property empty just to park funds... It makes me wonder if these are funds that can't be straight up invested in an ETF and are actually being laundered in some way.
Also, can foreign children just move into Canada without any paperwork? I guess student visas?
5.06% on the first $38,210 of taxable income, + 7.7% on the next $38,211, + 10.5% on the next $11,320, + 12.29% on the next $18,802, + 14.7% on the amount over $106,543
Generally, the ones who come over here would fit in that top tax bracket. They immigrate into the country based on a loophole in the immigrant investor program into Quebec, but then end up living here in Vancouver. As soon as they get their citizenship, the husband goes back to China and the wife and children stay here and no income is declared.
Property taxes are municipal, which does not contribute to healthcare and education. They may not be paying nothing into the system, but they certainly take more out of the system than they put in.
What makes this the most egregious is that many of them claim additional low income benefits, like discounted pharma drugs and even collect welfare once they've received citizenship.
There's also several pregnant mainland Chinese women coming into the country before they show, and having their babies here so that they get Canadian citizenship and all the benefits that entails.
Yes, it's fairly easy to get a student visa in Canada. There are tons of ESL (English as a second language) schools around downtown, with tons of latin american, middle eastern, Japanese, Korean, and mainland Chinese young people. Some of those schools are designed so that they don't actually have to show up, but still show up as enrolled for student visa requirements.
I'm sure there are some wealthy Chinese people who have bought property in major cities as a way to park money. I'm just a little skeptical that it's in any way a significant driver of higher housing prices. I would be willing to bet that there are far more Canadians looking to buy housing in Vancouver than there are foreigners looking to do so.
The fundamental problem seems to be that there are more people who want to move to Vancouver than there are people who want to leave. It would be incredible if there were so many foreigners looking to buy places to park money that reducing their numbers would somehow change this fact.
It's rainy, depressing, very expensive, and unlike SF there aren't isn't any major industry paying fat salaries to make it worth it.
What are the places you've found your fellow Canadians tend to move to?
CS classmates: overwhelmingly San Francisco, with NYC and Seattle in second place.
Business graduates: Toronto, Chicago, New York
A few go to remote areas to work in mining etc.
But yeah, never heard of anyone moving to Vancouver unless they were originally from there and were moving back.
Rain is preferable to freezing snow in most other parts of the country, and true Vancouverites don't mind it because it means fresh powder on the mountains for skiing/snowboarding, conveniently located 30 minutes from downtown and open at night with artificial lighting. And there's no place better in the summer, when there's no rain, extreme heat, humidity, or mosquitoes. Just lush green surroundings, and ocean and mountain views everywhere
I'd say the effects are overestimated by locals, but they are definitely around and easily observable by those who live here, and since they buy housing at the top end of the market, they skew the average home sales prices significantly upward. Realtors also espouse a "buy now or be priced out forever" which scares locals into borrowing way beyond their means, and banks in Canada are happy to loan them the money when taxpayers cover the mortgage for them (but not the home owners) through CMHC. Household debt in Canada is at record highs, worse than the US in 2008, and Vancouver is by far the most extreme example especially given that our average incomes are significantly lower than the other major Canadian cities.
When people found out that they pay less tax and have offshore accounts.
That's the problem with this sort of term; it is inflated with so many contradictory meanings by so many people it becomes meaningless.
That's what's dangerous about terms like global elite - they lead you away from specific problems and into vicious blaming of some dehumanised other who becomes the scapegoat for all the world's ills.
Many homes are being bought out by the Chinese elite. They are desperately trying to get their money out of China before the Yuan devalues or recession strikes.
The same is happening in Hong Kong, Australia and New Zealand.
The horror!
They're investing their money legally in the hopes of protecting or even (gasp!) growing their wealth.
Yes, there are some downsides to that investment, but there are also upsides, and it's unclear to me why they have the primary responsibility for ensuring that every dollar they invest minimizes harm.
I invest in index funds and I'm sure those dollars do some harm in the world (not net, I hope). Am I a monster?
It's reasonable for governments to take actions like this to protect their citizens. It's their job, in fact.
But it seems profoundly unreasonable to me to get angry at the chinese elites for investing their money legally in order to protect their wealth. Understandable, but unreasonable.
If you're angry at someone for being unfair to you, then their wealth level is irrelevant.
If you're angry at them because they invested or spent their money in a way that way down the line has some tiny effect on your life that's negative [1], then that's too high a standard. There is literally no one on earth whose actions don't have some negative effect on someone, somewhere.
1. I mean that that individual's actions have a small effect on you, not that the aggregate effect isn't large and meaningful.
We'll believe it or not, that's what Trump supporters think they were doing:
For instance, I don't have the right to set up a nightclub without permission from the city, and (if I'm not being an asshole) neighbours and other nearby residents/businesses that would be affected.
These limits come into existence because there was a problem that residents of the city felt needed action on. Leaving large numbers of properties empty is the extreme opposite end of everyone running nightclubs.
I would not oppose having a quantitative measure of how empty homes ultimately harm Vancouver's economy in the long term. I think that would be a much more constructive argument to implement measures to curb this trend.
We've kind of decided on using a democratic process, which indeed is a form of mob rule.
As for the danger of this approach....so multi-millionaires have one less global city they can buy property in completely hassle free....I think they'll find a way to survive.
"Ochlocracy ("rule of the general populace") is democracy ("rule of the people") spoiled by demagoguery, "tyranny of the majority", and the rule of passion over reason, just as oligarchy ("rule of a few") is aristocracy ("rule of the best") spoiled by corruption, and tyranny is monarchy spoiled by lack of virtue. Ochlocracy is synonymous in meaning and usage to the modern, informal term "mobocracy", which arose in the 18th century as a colloquial neologism."
About the only thing the government can't force you to do (in the United States) is quarter soldiers during peacetime.
Like the sibling comment said, you live in a society so we all have to play nice with each other.
[1] most cities forbid a large number of unrelated people from living together.
The city is for living in, else it's a dying city. This step taken by the city of Vancouver isn't reactive, the problem has been propagating for 15+ years and has started to have a very large negative impact on the people who want to live there.
I myself, and many others that I know, have moved away from Vancouver or are planning to exit because they can't find or can't afford accommodation. It's not like SF where huge salary and booming business jacks up the prices. Vancouver is just a regular city.
I remain very unconvinced on how this is a good thing, but i can see how easy it is to sell to capture more tax.
Why would you sit on prime investment property and not rent it? Because when it comes time to sell, you may end up with a tenant who's not paying rent and whom you cannot evict. The cost may just be large enough to forego the income of having a renter. Laws meant to protect bad renters end up hurting everyone.
Or we could slap more bad laws on top of more bad laws.
More liberal building permits? Have you seen downtown Vancouver? There are towers everywhere. Infrastructure already cannot keep up with the pace of development in the city and surrounding it.
The city should have had a much better long term plan and not grabbed easy cash when it was available. Chinese investment was good for cleaning up Yaletown but it's gutted the city as far as I am concerned. Vancouver is a beautiful place but it's like a vapid supermodel. Nice to look at, but not something I could live with.
Empty homes attract crime, necessitating more policing resources, empty homes do not support local businesses but drive up prices, making the area less affordable for residents and less lucrative for businesses.
The 'payment' for living in an urban environment goes beyond just the normal local taxes, it involves a participation because the resident who lives in a home in that environment contributes to the environment.
No house is an island in an urban environment (except maybe in Venice).
Talk to someone living in San Jose or San Francisco about their daily commute on 85 or 101. They somehow don't profess as much love for densely populated urban environments.
I still get annoyed by traffic, as I can remember when there was barely any back in the 90's. But then every time I drive down to Seattle, I realize how good we have it in comparison.
Private property is not some sovereign nation. It's still subject to law.
Maybe there's a justification for an empty home tax, but I don't see it in your argument.
> You don't own the market and the extent to which you have a right to influence it is limited to whatever influence your own offers, bids, purchases and sales have.
...and to the extent that the government can influence it with taxes and tariffs, which is a perfectly acceptable form of market intervention.
All resources are limited. That doesn't justify robbing people of their property rights, by dictating how they shall use their own resources.
The only justification I can see for such a tax is that it involves the usage of land, and the moral arguments for absolute ownership of land being much weaker than for other types of property.
>...and to the extent that the government can influence it with taxes and tariffs, which is a perfectly acceptable form of market intervention.
Politically acceptable, morally totally unacceptable. A tax on private transactions is just extortion that has the support of the majority. Something doesn't stop being authoritarian just because it gets the stamp of political approval or majority support.
Yes, it does, if the voters decide it does. Republic beats market.
> morally totally unacceptable
Ah, yes, beating the "taxes are rape" drum. Since when is the market "moral?!" Also, this isn't a private transaction, it's a property tax. You are paying the government a fee for the protection of your property from bandits, raiders, fire, invading armies, and other malicious actors as well as gaining access to electricity, roads, water, waste management, etc.
If you don't like it, sell your luxury $3M house that you don't live in and buy a house in some other rich coastal town that values property rights. Let the market decide.
EDIT:
A thought experiment: is it within your property rights to dump toxic industrial waste chemicals on your own property? Let's say it is. What about when your chemicals that you have every right to dump on your own property start leaking onto your neighbor's property? Is it still within your property rights when it starts adversely affecting the people around you? Is it still your own personal decision to do what you want on your property even though it is now affecting the people around you?
Having an empty $3M house sitting around invites theft. It invites disrepair. It affects the market value of the homes around it. If your neighbor's house is affecting the market value of your house, is that neighbor within their property rights?
Where do you draw the line?
No it doesn't. People's rights are inalienable. Rights would be meaningless if they're merely created at the whim of the majority.
>Ah, yes, beating the "taxes are rape" drum.
The prisons you send tax evaders to have a problem with rape. You're endorsing doing this to people who don't pay a share of the currency they receive in private trade.
>Also, this isn't a private transaction, it's a property tax.
I was referring to your comment that tariffs and the like are justifiable.
> Is it still within your property rights when it starts adversely affecting the people around you?
No of course it isn't within your rights. At this point you're engaging in an action that is causing toxic chemicals to violate the property of your neighbours.
The governing bodies that enforce these so-called inalienable rights are the ones that grant them as well, and it is up to them, and in many cases the people who comprise them, which rights are granted. Rights are not some absolute concept defined by Ayn Rand. They are an artifact of civilized society.
The property rights you describe are not as binary as you wish them to be.
Such a definition of rights would render the term meaningless.
Long answer: New York City has historically had a policy that NYC is for New Yorkers. There are several aspects to this. One is the cooperative ("coop") structure that came about as rent control was (largely) unwound. Coops are typically owner-occupied and coops tend to have limits on renting out your property or even just not living in it that may require you to sell it. This is (IMHO) a good thing as condos, which don't tend to have the same restrictions, are often ghost buildings (the NYT has done pieces on this where occupancy rates can be 30% or lower).
This has meant that condos in the same area have tended to attract a premium of ~20% versus an equivalent coop. Condo buyers are dominated by foreign buyers paying all cash who are parking money in the US and/or buying an apartment they might occupy a few days a year.
This sort of thing is not good for the city as a whole. These residents aren't funding city services. Foreign buyers have I believe decimated neighbourhoods in other cities (eg I heard of this happening in Tel Aviv).
Now Bloomberg kinda went too far on this as he believe that you should attract the billionaires to the point that someone who owns a $100m condo (of which there are now several) pays only about 10-15x the property tax of a $1m condo. This is something that needs to be reformed.
I'm very much in favour of public policy that benefits residents be they owners or renters.
Now other commenters have pointed out one issue and that is you have to be careful you don't catch landlords in your net. Landlords provide a useful service in providing a rental stock for people to rent. There are various reasonable ways to handle this. Some options:
- Don't tax a property (extra) if it's occupied by somebody;
- Exempt landlords from the higher prices if they're a resident of the state (and paying state income taxes).
This can be a way of handling illegal hotels too. Have much higher taxes for non-active properties and reporting AirBnB type income can trigger whatever housing regulations apply so illegal hoteliers are faced with a choice of paying higher property tax if nothing else.
And it's not even an onerous requirement on the owners. They will just have to rent them out, now. And they can hire companies that will fully manage it all for them, and still make a profit, marginal as it may be. So it's actually better for them as well.
The people who sold that house for $1.25M also enjoy free healthcare in Canada. I have to pay 40% of my income to foot that. The average cost of our healthcare system is about $3500/citizen, but the high end of the average is typically found with older people in their 70's. Why should I have to pay 40% of my income to pay for the medical costs incurred by that old guy who sold his house for $1.25M to a Chinese investor who will pay almost nothing in Canadian income taxes?
Then, we can talk about the fact that Vancouver is mostly zoned for detached homes. We can say that if a property developer buys a bunch of detached homes and then wants to consolidate the properties to build townhouses, that it's "profoundly unfair" to try to prevent that, but that's exactly what detached home owners have done over and over again, both by lobbying and supporting those restrictive zoning laws and by speaking out against developers at city council meetings. That's why almost all new townhouse and apartment developments in Vancouver are in reclaimed commercial zones.
Let's address the whole problem all at once. Right now people who own houses are having it both ways.
Which he won't pay taxes on because it is his primary residence.
Those who happened to get shut out of the property market simply for being born on the wrong place at the wrong time are paying a much larger portion of the tax bill than those who were "lucky" enough before everything went parabolic. It's actually the opposite of a progressive tax, which Canadians claim to love so much (but the real reason they love it is because they think they're sticking it to someone else.....try and take their capital gains tax exemption away and watch their principles on taxation do a 180).
Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.
Don't know how much you know about Vancouver's geography, but there's not much of this kind of land.
> Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.
An influx of foreign capital (excess demand) and zoning (not enough supply fast enough) are the biggest drivers of this in Vancouver.
Something similar is common in the US, and is typically framed as a homestead exemption. Basically, set a high property tax rate and if people prove their house is owner occupied give them a rather large discount. My property taxes are ~$1500/year because I live in my house. People who rent out or do not live there pay $6000-$8000/year in my neighborhood.
i.e if I earn $100 by working at a job, and $100 through renting out a property, shouldn't I be taxed the same as if I earn $200 through my job instead?
Even if you were to take the unwise, for both legal and tax reason, choice to not use a hold co, income from rent is FUNDAMENTALLY different from regular income. In that, if you make a loss, you can claim it. That's just not possible with regular income. I.e., if you rental unit is unprofitable, it reduces your taxes in general -- potentially applied in future years. This is not the with "active" income.
I'm actually really curious about the law now. Stock dividends must be considered passive income. So would interest from your local bank savings account. So would a SaaS app that you set up and basically runs itself with minimal maintenance.
The bigger part of the problem is the tendency to pass on the tax on passive income to the tenant.
They'll offload it to a property manager/real estate agent to do all that work.
There are so many incorrect statements in this sentence, I don't even know where to begin.
Taxing vacant properties does not punish renters. It "punishes" people who buy properties for speculation, or (as the AirBNB trend is going) attempt to control a piece of limited supply.
The purpose of taxing passive income (lazy landlords, rent collecting) more aggressively is because it is not actually work. It is technically wealth extraction. As a renter, 100 percent of your rent is a "tax" (it's not going to offset any of your long-term assets); and when you pay 70-90 percent of your income in rent as a tax (as many minimum wage workers do), it is massively difficult, if not impossible, to save enough to acquire any assets that help you build wealth. On the landlords' side, it's even easier to use all that extracted wealth (from poor people) to acquire assets that build wealth.
No, collecting rent is not work or a job. Even if you have a whole fleet of illegal immigrants scrubbing the toilets, throwing down cheap carpet, and painting the walls of your units every few years. The moment you enter the territory of needing to pay somebody else to manage your asset (even if it is "just" scrubbing the toilets after your AirBNB tenants or renters leave), you're entering passive income territory.
I rent, by choice. My landlord takes the risk of owning the property, and I pay a premium for that. Something breaks, I make a call and it's his responsibility. Just because some landlords are bad people doesn't mean landlords are bad people in general. I appreciate the benefits I get from renting (and, to be fair, from having a good landlord).
By your logic, owning a small company with some employees is passive income and "bad", because you have people doing work for you. Some small company owners are bad people but that doesn't mean all of them are (and, in fact, we tend to consider them fondly from what I've seen).
You pay a premium so your landlord can take risk to get the most lucrative profits? Why, you are a benevolent renter, aren't you?
By your logic, owning a small company with some employees is passive income and "bad",
That is not at all what I said; your reading comprehension needs work. Owning a company with employees[1] means you are responsible for allocating the income into business profits among your employees. Most people who scrub toilets and wash sheets for AirBNB rentals are NOT employees or the owners of the properties. Along the same lines: the right way to treat employees involves giving them part ownership of the company they are working for, and thus they are rightfully entitled to some of the income from business-generating assets. Landlords do not do this. They farm out the work required to manage or maintain the assets, and demand the lion's share of the profit.
[1] There is a definite legal definition of "employee", and you don't seem to understand what that is. See the IRS's definition. https://www.irs.gov/businesses/small-businesses-self-employe...
> Why, you are a benevolent renter, aren't you? To some extent yes. I believe my landlord charges me enough to cover what it costs him to pay for/maintain the place I live, plus some amount for the risk he takes on in owning it (major repairs, etc), plus some amount of profit that I find reasonable. Not all landlords set <some amount of profit> at unreasonable levels.
The only tax that discourages renting out is that the portion of your principal residence used for renting out no longer qualifies for tax-free capital gains.
Considering how almost nobody in BC ever declares this, and barely anything is done to curb it, it's kind of a moot point.
Making rentals more expensive pulls in more Federal money in low income property and encourages purchases by middle class families.
The subtlety you're missing here is the reduction in supply of rental units.
https://www.acgov.org/assessor/decreasetax/exemptions/homeow...
Here in New Zealand, I can hand my landlord a 14 day notice to remedy, and if they don't fix the problem within 14 days (or at least start remedying, if it's a larger problem), then I can take them to the Tenancy Tribunal, where they can be ordered to, and sometimes even get fined punitive damages.
The same works the other way. If I leave the house in an unsatisfactory condition (e.g. not cleaning the property, not keeping the garden under control), then I can be given notice to remedy and taken to the tribunal if I don't fix it.
It's a win-win system, both parties can take action against the other for problems. The tribunal is not meant to be biased towards the landlord or the tenant (although in practice they tend to side with the tenant a bit more), and is a neutral third party. They usually try mediation first, before actually ordering people to do anything.
Anyway I am not aware of anywhere in the US where being a slumlord is actually legal or even being a semi-slumlord.
30 days for a maintenance request is absurd, well depending on the request, I guess.
If an essential service breaks (toilet, hot water system, plumbing, gas leak) and the landlord doesn't have it remedied in reasonable time frame, you can pay for the remedy and issue an invoice to the landlord (in practice you can withhold the same amount from rent).
Worded thusly: organise to have urgent problems fixed and give the landlord an invoice from an authorised repairer. A licensed professional must do the repairs and provide a report that states the cause of the problem and the work carried out.
A landlord may be breaking the conditions of an agreement if they learn of a problem and don't repair it within a reasonable time.[1]
I firmly believe this is how it should be, and that any reasonable person would agree this is fare.
1. https://www.sa.gov.au/topics/housing/renting-and-letting/ren...
1. If you own the home, you will pay $13,500 ($12k mortgage + $1500 taxes) per year.
2. If you own the home, and want to rent it to a tenant, you must charge the tenant at least $18,000 ($12k mortgage + $6k taxes) to break even.
Renters are in generally less wealthy than owners. Why have this extremely regressive tax? Why should the poor renter subsidize the rich homeowner?
He's not subsidizing, is he? The tax just goes to the government. Essentially it's an extra tax on renting.
(Which suggests that the cost gets passed along and so it is a hit to the renter.)
Yes, which is why a VAT is much saner than a sales tax.
A stable, indebted population is a governable and docile population. Somewhere there's a great quote about how "any man with a cottage of his own and a yard will never be a revolutionary, he's too busy" but I can't find it right now.
Picked it up from a talk by David Harvey, but not sure where he got it from.
That's a good reason to have the mortgage interest deduction. The real reason is that home owners vote, and promising them money is a good way to get them to vote for you.
Rental market is more of a market than say, buying a house. It is very much determine by salaries people make in the area. Unlike buying a property, which also has the element of credit availability and willingness of people to borrow, you cannot borrow to pay rent. The point being, owner can TRY to price tax into the rent, but if this prices property too high it will not rent out.
(Edited: typo)
from TFA: "Principal homes, as well as properties that are rented for at least six months of the year on 30-day minimum leases, won’t be taxed."
I would be very surprised to learn that Vancouver renters who typically live in units with < 30-day leases turn out to be poor.
ie) You can't claim your house has been occupied for 6 months because you've had 30 one-week AirBnB listings in there over a year.
A property is by far the most expensive asset most people own. Usually "own" in this case means paying a small percentage of the total cost each year and financing the rest. Now there are a million reasons why you might need to leave your house for 6 months or longer where you cannot afford the cost and risk of moving out all your belongings and renting the place to a stranger. Vancouver is saying that they will fine you 1% the value of your house because of this?
Someone commented on the AirBnb thread about how "owning" a home in SF was really just a long-term lease you are very likely but not guaranteed to be able to renew. Policies like this make it crystal clear; you own nothing, even owners are renters, and circumstances be damned they will tell you what to do with your house, and heck probably even have a say in who you rent it to, before the day is done.
Many single family houses cannot realistically be rented for a true net profit if you really account for all depreciation and wear and tear. Oh, and remember, it's illegal in many jurisdictions to even dip into a security deposit based on "normal wear and tear".
Now if any given property had a vacancy budget of, let's say, 3 years, before this kicked in, then I could at least accept this isn't going to screw over legitimate vacancies.
But the idea of an "illegitimate vacancy" on a house I own that I'm paying property tax on... That is truly bizarre. A city should be happy to have the tax revenue with none of the burden.
A 1200sqft bungalow across the street from me sold for $2.8mm four months ago; it's now back on the market for $3.2mm. If you put 20% down, that'd be a monthly mortgage payment of $11,500. That's 1/6th of the average Vancouver family's annual income, per month!
I have a feeling that if you're paying $11,500 a month on your mortgage, you're not worried about 1% of the value of your house, and you're definitely not worried about renting it out at a profit. You're just hoping it keeps appreciating enough to pay for interest and this new piddly 1% tax.
That's who this tax is targeting. And I welcome it wholeheartedly.
Depending on how crazy the market it, prices may jump even higher short term to accommodate the added speculation loss.
In any case, hopefully Toronto doesn't reach that level of insanity.
That's incredibly frustrating, I get that. I'd love to live in the Bay Area again, but it's too expensive to be worth it to me.
What you're describing is a classic bubble. Speculation divorced from the underlying asset value. Presumably not enough Vancouverites would think that $3.2mm for a 1200 sg ft house is worth it to keep that value there. So it's temporary and will eventually pop. Bubbles hurt a lot of people while they run up and when they pop, but it's not clear that price controls do anything other than shift the pain elsewhere, usually while making it worse. I'd rather try and understand what's driving the underlying bubble and fix that if we can. The vacancy is a symptom, not a cause. That said, that's probably not something Vancouver can deal with directly, as it seems more tied to global macroeconomic conditions.
Foreign real estate investment? Driven by economic forces in foreign countries? I don't know if you can really "fix" that, but you can sure as hell tax it while it's happening. And 1% isn't bad at all if the houses are gaining that much in value over such a short period of time. Whoever's flipping these is certainly beating inflation still.
EDIT: Read some more comments, particularly emptybits':
> It's an experiment. Much like our recent 15% foreign buyers tax reported a few months ago. We're all watching the experiment. Perhaps our role is to serve as a lesson to other cities?
So it seems as though they are trying to curtail the bubble caused by foreign influence, and my comment about "fix"ing it was made in ignorance.
However, I still think it makes sense to tax both ends of the spectrum...the buyer tax limits new purchases, the "living here" tax limits houses already bought.
This sounds to me like real Vancouver residents who bought years ago have just won the lottery. Boohoo my house is worth 10x what I paid?! Tell me more about your problems!
Seriously, cash in the chips and enjoy life until the crash and then move back in a few years, own your house outright, and, continue to enjoy life.
I mean, I don't want to be rude but I'm having trouble wrapping my head around this...
Hey man, my house is worth like $4 million on Zillow.
Yeah, that totally sucks, how are relatable people supposed to move in next door?
Those Ferraris really have loud engines. It's a menace!
How are we going to *fix* this?!
We need the value of our homes to plummet back to equal or less than what we paid. I need noisy neighbors who can't afford landscaping, not just this eerie silence all up and down the street.
For sure.
Having property that no one lives in despite people wanting to seems like a poor allocation of land. (Mind you, it may not be a poor allocation of resources for the people investing)
Could you give a few examples? I know some rich middle-class (UK) people who have left their home for a couple of months whilst they've had renovations. And I know a few people, again pretty well off, that have travelled extensively abroad or lived abroad and rented out. Beyond that though?
I do think they should adjust to allow small-scale local-owner rental.
>Policies like this make it crystal clear; you own nothing, even owners are renters [...] //
I think they make it clear that peoples housing needs are being preferred over rich peoples right to profit from those same housing needs.
I might have a temporary overseas assignment.
I might have a military deployment. (Or UN or Peace Corps.)
Military deployment, seems reasonable, I wonder how many deployable military are living in these houses; also wouldn't the location remain your primary residence and so avoid the tax?
Wanting to live somewhere else? That's exactly what the tax is for - pay up or change your residence.
BTW, most of our overseas assignments are 2 years initially. 3 months seems more like a long business trip, not an overseas assignment to me.
It could be some sort of seasonal work transfer, or an unexpected work transfer that you are forced into until finding a new position back home. Or maybe you are taking a sabbatical. Or a stint in the peace corps (I think that's usually 18 months).
The issue you described doesn't really exist in Vancouver, where it has one of the lowest vancancy rate in the world (0.6 percent), it's a seller market and rent is high enough comparing to local income/maintenance cost.
BTW, Switzerland has the lowest house ownership in Europe according to [1]
1. http://qz.com/167887/germany-has-one-of-the-worlds-lowest-ho...
This is true. The city (actually province & city) receive the tax revenue.
Unfortunately, rental stocks are so low in Vancouver that it's very difficult to find a place to live among all the (apparently) empty condos and houses owned by people who don't live here. The average house price is $1.4 M. A small 2 bedroom condo will still set you back half that. Thus, the pressure is on the rental market and finding/encouraging a larger rental supply.
So while the government is fairly paid by absentee home owners, there is an argument that the government should be doing something for its resident citizens.
It's an experiment. Much like our recent 15% foreign buyers tax reported a few months ago. We're all watching the experiment. Perhaps our role is to serve as a lesson to other cities? :-)
For a city like Vancouver, that drives up the cost of living for everyone as it drives the price of real estate through the roof, which is exactly what those speculative investors want. They have a perverse incentive to buy up all the property and not rent it out.
A tax at a percent of the property value destroys the motive to do that, which is in the best interest of the city. There are exemptions for primary residencies and properties that are rented for at least 50% of the year by month are exempted.
If you have $1 million, you can buy a house and live in it "for free" or you can buy stocks/bonds/ETFs, maybe earn $50k a year in dividends and capital gains, rent a place for $30k a year, and pocket the difference.
So yes, buying a home does compete with a combination of (other investments + renting).
Why is this kind of us vs them against "the wealthy" acceptable to you? The upper class / 0.1% constitutes millions of people, some bad, most good. Just like every other group. Would you be comfortable putting any other words in your sentence above instead of upper class? Like men, women, the elderly, the poor, minorities, etc? Why is bigotry against the wealthy ok?
You're making my point. Presumably you wouldn't generalize "blacks as criminals", even though some are, but it's OK to generalize wealthy as greedy, even though not all are? Not saying you've generalized that way, but OP did.
Thanks for the lecture on respect and empathy, but I'm not trying to police language. I'm trying to understand why some people who are otherwise quite empathetic and respectful think it's OK to generalize and stereotype other groups of people.
Individually, each of these wealthy persons are just looking out for their own interests, as they should, but as a group they are causing harm, and as such are garnering ill-will from the locals. So the GP's words could have been better chosen as "defeat the global elite who are using our town as a get rich quick scheme" instead of using a blanket statement, but I honestly think that was kind of implied here.
Also, I don't really think an us vs them mentality is extraordinarily harmful at a time when wealth disparities are so astronomically high. In fact, I think ignoring the issue is what's causing us (and not "them") great harm.
[0] http://www.cbc.ca/beta/news/canada/british-columbia/vancouve...
(The race is on)
More broadly: the only sense in which one can "own" property is within the framework that society has created. If there was no society or government, your land title would mean nothing and anyone with more physical power than you would take your home as soon as they so desired. Fortunately, we live within a civilized society which enables ownership in a sense other than immediate possession. However, that framework of ownership has a caveat that allow property to be reclaimed if the public good demands it (cf. eminent domain). The framework could have been built without that escape hatch, but that would have caused its own problems.
This example isn't specifically eminent domain, but the same principle is at play: regulation of common goods by a collective. Any introductory class in game theory will provide half a dozen examples of why this is necessary.
This is a tax to gather funds, and the housing situation is a collateral.
This tax revenue is not going to be used towards any cause, let alone efficiently, to reduce the housing problem.
If this tax is levied, and then economists see that it is ineffectual to housing, or even makes it worse, but the tax does produce revenue, it will not be reversed.
If the housing situation improves in the future either because of this tax, or because of market conditions (like more dwelling units being built, or change in global trends of property) this tax will not be removed.
This extra tax revenue does not come with a reduction of taxes in other areas.(it is not a shift of the tax burden, its an increase).
A short list to at least question the intentions and effects of such policy:
1) There is an ill-shaped enemy that must pay (Rich foreigners) 2) It uses a justification that applies to many other use cases but its only applied here (we can decide to tax you on what you do with your property, and the only one we do right now is to you X group, because you do Y.) 3) It doesnt represent an understanding or a solution to the underlying problem.
You only have property rights because your taxes pay the government to enforce them.
Vancouver has a crippling detached housing shortage.
Imagine how much time and money you'd save.
> How can you be said to own anything if you are forced, basically 'extorted' by government, into occupying your own house or not? I guess it is whether you believe in property rights.
This is a tool to soften the impact of speculation on less-wealthy people trying to live in Vancouver.
I agree that it limits property rights, in the sense that it imposes a tax on a particular way of using something that you own. But rights aren't an on/off switch in this case. Freedom to do whatever you want gets balanced against the community's judgements for what should be protected.
Vancouver (or at least Vancouver's government) decided that they want to protect people from being tossed around by the forces of real estate speculation. That does not mean they've ditched property rights entirely. Thinking of it that way, without nuance, is sloppy.
I don't know how you can say it's "extortion". This is a tax aimed at wealthy people, who can afford to own homes they rarely use and are taking the space away from people who could use it.
I think taxing waste is generally a good example of socialism.
Given most of the owners are Canadian, and only a small percentage are foreigners, I find some of the related news on this xenophobic more than for the better of the community.
The essence of the problem is the low occupancy rate and rapid inflation of housing prices in Vancouver, fueled largely by foreign nationals buying Vancouver property as an investment rather than actually living there. This prices Canadians out of the market.
Generally the Canadian attitude to government focuses on asking it to solve these kinds of problems in an "interventionist/activist" model: intervene in the market to affect change.
In the US, I found people generally prefer the government to focus on "freedom-to": erring on the side of providing people with too much liberty to do as they please, rather than too little.
I think this is just a cultural difference and not so easy for Americans to understand. I hope this comment was helpful in conveying the Canadian perspective.
The majority of property is bought by Canadians. The last time I looked it was 15% foreign, 85% Canadian.
You're definitely right with the overall numbers: http://www.theglobeandmail.com/news/bc-government-releases-p...
However those numbers are for home sales overall, not a survey of who owns unoccupied homes. In addition, in many ways it's not much better if a house is foreign-owned or not if it's empty, since it still takes much-needed property supply off the market and artificially drives up housing prices.
I have lived overseas for 8 years, and in Montreal for a year. As a libertarian I do believe you should be free to do things, unless those things impinge on somebody else's freedoms.
Being priced out by foreign investment does not seem to be a reason to have government intervention. Empty houses en masse should lead to big drops in property values after the initial buying spree spike.
Keeping your home up to code and paying taxes is one thing, but enforcing occupancy is another. How about if you travel 6 months out of the year for work? Why should you be penalized/fined for not staying home?
What is the period of occupancy - 4 days a week; 1 week per month; 2 months per year? Who decides, and how to gauge it?
I always think of the following ab adsurdum-like argument: Most crimes occur at night. Government is responsible for everyone's safety. Curfew is mandated for your own good from sundown to sunrise. Just a thought.
You own the car, but not the roads they are driven on: they are public. You supposedly own your house.
There are a huge amount of things you can't do with your own property. You can't erect a 300m tall tower. You can't make loud noise at 4am. You can't operate a tannery in the middle of the city. And so forth. If society believes this tax is a bad idea they can protest and vote them out.
I am for paying taxes to have a standing army, so I don't have to protect my own border, but I guess the line between libertarianism and socialism is that I don't want government trying to legislate intelligence, or non-precedentedly passing prophylactic measures for "my own good"; I'd like to decide those things on my own.
I fail to see how policing occupancy is just in this case, but there are those who have decided their are limits to how much wealth you can have and how you can spend it. They know what's best for you.
So if the owner sells the $1 million dollar home, what a "poor" person can snatch it at $750k? I'd like to see the logical conclusion to this thinking.
Given these are 85% Canadian-owned, how is it a measure against the 15% foreign-owned properties? And isn't xenophobia part of that type of legislation?
One could argue that living somewhere is a fundamental freedom. In a situation like this, when there are no places to rent, trying to force the empty ones to be available for rent is a way to ensure that fundamental freedom. The government -- in normal places, we are not talking Trump here -- is carefully evaluating the limitation of rights vs the freedom of others and they found this a good idea. Once again: if the voters disagree, they can protest and vote.
Also, a 1% "I'm rich enough to buy property in a really expensive place and not live there" tax is fairly minuscule.
Meanwhile, Vancouver is extremely low density - 13k people/square mile, about 1/3 that of high-rise megacities like...Brooklyn.
Great work guys! Scapegoating a few rich Chinese people with second homes while ignoring the massive self-inflicted harm that locals do.
If you point out that you can only have two of these three things, you will not have any electoral success there.
This would make 4.3% of the housing unoccupied. 1% would certainly make a difference in housing price... but 4.3%? that's no small effect.