The discussion around a Toronto vacancy tax is based primarily on numbers: Statistics Canada’s 2016 census numbers, to be specific, where 65,000 Toronto homes were listed in the category of “unoccupied by usual residents” while 100,000 people move to the Toronto area every year.
It’s important to break that number down. While it’s simple to picture tens of thousands of neglected units locking their doors to desperate new Torontonians, Statistics Canada’s definition of usual residents is more about who considers a space their primary residence and lives there year-round or close to it, not whether a space is housing anyone at all. With the census conducted in the summer, unoccupied by usual residents can mean anything from a student rental that will fill up again in September to a space that’s been sublet while the usual resident travels or visits family in another country. Mayor John Tory’s office isn’t troubled by that distinction, saying to the Toronto Star that if even half those units were unaffected by a vacancy tax, the gap the other half represented is still “worrying”.
The decision to bring in a vacancy tax does rest with the City of Toronto specifically, and City Hall has proven much warmer to the idea than they have a foreign buyers’ tax—at least so far. Efforts are already underway to use Toronto Hydro and Water data to winnow down those 65,000 units to a more realistic picture of vacancies, and turn that data into a feasibility report.
In the meantime, Ontario’s Finance Minister, Charles Sousa, has hinted that this year’s provincial budget is going to bring in cooling measures for the Toronto real estate market. With the budget being unveiled at the end of April, it’s not too long a wait to see which conditions will be on the table for landlords and tenants.
All in all, the impact, if a similar vacancy tax were put through in Toronto, could be significant to smaller investment owners. Vancouver’s 1% tax rate would likely be used as a model—legislation is much more easily drawn up when there’s a working model in the country—and even if a Toronto vacancy tax had its differences, it’s not a bad model to use when making your own decisions.
In Toronto, where home prices have skyrocketed a record 33% in just one year, the average condo price hit $550,299 last month with no real signs of stopping—which puts Toronto condo owners in an even tighter situation than Vancouver’s in the event of a vacancy tax. Paired with other proposals such as increasing the rent control guidelines to buildings built post-1991 and discussions around heavily regulating AirBnB in Toronto, it’s plausible that renting investment property in Toronto could quickly become an environment where making smart, deliberate choices really matters—and attention to property management becomes the core of your small rental business.
Consider why your property is empty—and make a plan
Less than 35% of rental units is comprised of condo units; with 20,000 coming on stream annually.
Why would I hesitate renting?
Loosen the Rules on Owner Occupied Properties with rental potential. [owner] has a complete basement apartment that i have never rented - and NEVER WILL RENT - under the current legislation. I would not be able to restrict people smoking in my home or restrict what pets they could have.
In fact, I could not restrict them from growing pot as long as they had a legal license to do so, despite the fact that by doing so, my home has suddenly become a "grow op" and my property value could (would) be greatly diminished and could make it impossible for me to get insurance or a mortgage for.
I believe that these ideas could be implemented and would serve to reduce demand and slowly raise supply, which is largely the real cause of the rapidly escalating price of housing in the GTA without causing a major crash.