Vancouver's Empty Homes Tax

Summary

The Empty Homes Tax (EHT), also called the Vacancy Tax, is a City of Vancouver levy on residential properties left empty or under-utilized. Enacted in 2017, it was the first municipal tax of its kind in North America and predates the province's broader Speculation and Vacancy Tax (SVT, 2018) by a year. Unlike Vancouver's pre-1984 land-only tax (see Vancouver), the EHT is not a land value tax: it is a punitive holding cost on idle dwellings, levied on the property's total assessed value only when the home sits vacant. Its logic is the speculative-vacancy rationale in its purest municipal form — make it expensive to warehouse housing in a supply-starved city.

The EHT is a useful real-world test of whether a vacancy tax returns homes to use. The honest answer, weighing the City's own reporting against the one independent evaluation found: it measurably reduced vacancy, by a real but modest amount, and did nothing for rents. The City's self-reported figures are larger than the independently identified causal effect, and should be read as program monitoring, not evaluation.

Design & Rates

Vancouver homeowners must file an annual property-status declaration; a home declared, determined, or deemed (for non-filers) vacant — occupied as neither a principal residence nor a tenancy for at least six months of the year, and not otherwise exempt — is taxed on its assessed value. The verified rate schedule, by vacancy reference year, is:

A widely repeated "1% → 3% → 5%" progression is wrong on the final step. The previous City Council (under Mayor Kennedy Stewart) approved raising the rate to 5% for the 2023 reference year, but the incoming ABC-majority Council reversed it before it took effect: on 10 May 2023, following a staff report and Ernst & Young advice, Council voted 7–3 to keep the rate at 3% for 2023 and created a new exemption for unsold newly built homes — refunding roughly $3.8 million already levied on developers. The EHT rate has therefore never exceeded 3%, and 5% was never levied.[1][2][3]

Outcomes

Graded by evidential weight. The distinction between the City's own program data and independent evaluation is the whole ballgame here: self-reported city data is not an independent evaluation, and the two disagree in magnitude.

Self-reported (City of Vancouver EHT Annual Reports) — weak as causal evidence

The City's Empty Homes Tax Annual Report for the 2022 reference year states: "There is strong evidence that the Empty Homes Tax is reducing the number of vacant residential properties in Vancouver. From the 2017 to 2022 reference years, the number of vacant properties decreased by 54% based on data collected by the City under the EHT program."[4] (The commonly cited "~50% reduction since 2017" is real but slightly understates the City's own headline of 54%.) Supporting figures from the same report:

• Vacant properties fell from 1,755 (2020) to 1,398 (2021) to 1,156 (2022) — 0.58% of the ~199,000 properties required to declare in 2022.[4]
• Point-in-time conversion: "Of the 1,398 vacant properties in 2021, 52% were occupied in 2022 (27% principal residences, 25% tenanted)."[4]
• Revenue (tax levy, period ending Nov 1): $26.0M (2021), $67.0M (2022), $45.5M (2023); amounts collected were $20.8M, $32.5M, $32.0M respectively. Since inception, more than $142 million in net revenue has been allocated to affordable-housing initiatives.[4]
• CMHC (external, cited by the City): an increase of 5,920 condominium units in Vancouver's long-term rental stock from 2018 to 2019 following the EHT and SVT, and 1,631 more units added to the condo rental universe from 2021 to 2022.[4]

The 54% headline is a raw before/after decline in a self-selected program metric. It has no counterfactual: Vancouver's housing market moved for many reasons over 2017–2022 (pandemic, interest rates, immigration, the coincident provincial SVT and federal UHT), and the City report itself concedes "isolating the effect of a single policy like the EHT in Vancouver's dynamic housing market is challenging." It is program monitoring, not evaluation, and should not be quoted as the tax's causal effect.

Independent evaluation (C.D. Howe Institute, 2024) — moderate causal evidence

The one independent quantitative evaluation located is Gherardo Caracciolo & Enrico Miglino (2024), "Ripple Effects: The Impact of an Empty-Homes Tax on the Housing Market" (C.D. Howe Institute E-Brief). Using a difference-in-differences design on census dissemination-area data — comparing taxed to untaxed areas before and after 2017 — it finds:[5]

• The tax reduced the vacancy rate by 1.5 percentage points. Against an average 7% vacancy rate in taxed areas in 2016, that is a ~21% decrease — "out of the 1,078 empty homes in these areas in 2016, approximately 226 homes became occupied as a result of the tax."
• No significant effect on average rent, and no effect on new construction — "while the tax effectively reduced the number of empty homes, it did not influence rental prices or the incentives to construct new homes."

The authors' read: the EHT "improved housing availability" but "did not address affordability." This is the honest bottom line. The independently identified effect (~21%) is well below the City's raw 54%, and — crucially — the tax did not lower rents, which the authors attribute to Vancouver's "superstar city" equilibrium (landlords confident of eventually renting at market) and to landlords pre-emptively passing potential future tax costs to current tenants. This mirrors Segú's France result — a real, modest, one-off stock release, not a supply policy.

The Three-Layer Stack (EHT + SVT + UHT)

Vancouver is unusual in that a single vacant dwelling can sit under three separate vacancy/speculation taxes at three levels of government simultaneously:

For the 2022, 2023 and 2024 calendar years, a vacant Vancouver condo owned by a foreign non-resident could be exposed to all three at once — plausibly 4%+ of assessed value per year in combined vacancy taxation (3% EHT + 0.5–2% SVT + 1% UHT), on top of ordinary property tax. The layering is real but partly historical: the federal Underused Housing Tax (UHTA, in force 1 January 2022) was effectively wound down by Budget 2025 — Bill C-15 (royal assent 26 March 2026) makes no UHT payable for 2025 and later years, though returns and tax still apply for 2022–2024.[6] The provincial SVT and municipal EHT continue. The stack illustrates a coordination problem more than a design: three governments independently reached for the same instrument on the same tax base, with overlapping exemptions and separate declaration regimes. For the provincial layer see British Columbia; for the city context see Vancouver.

What It Supports / Cuts Against

Supports: the claim that land underuse and speculative vacancy persist in high-demand cities and respond to holding costs. Vancouver — among Canada's tightest housing markets — carried a persistent stock of thousands of empty homes, and an independent quasi-experimental study confirms the stock shrank when idleness was taxed. This is a second, North American instance of the Segú (France) finding, and complements Prosper's Melbourne water-meter counts. It is direct evidence for the LVT-adjacent mechanism that a carrying cost changes owner behaviour.

Cuts against / honest limits:

• Modest magnitude. The credible causal effect is ~1.5pp / ~21%, not the City's raw 54%. A vacancy tax is a one-off stock release, not a supply engine — the C.D. Howe study finds no effect on new construction in either direction.
• No affordability gain. Rents did not fall. Returning empty units to use improved availability but not price — a caution against overselling vacancy taxes as a cure for housing costs.
• Not a land value tax. The EHT taxes buildings-plus-land, and only when vacant; it does nothing about under-used (not vacant) or speculatively land-banked parcels, which a general LVT reaches and a vacancy tax does not.
• Attribution. Because the EHT, SVT and UHT arrived within a few years of each other, even a clean DID struggles to attribute the vacancy decline to the EHT alone rather than the combined stack.

See Also

• Land underuse and speculative vacancy persist in high-demand cities — the outcome page this supports
• Vancouver · British Columbia — the city and provincial context, and the SVT
• Segú, taxing vacancy in France · Prosper Australia, Speculative Vacancies 11 — the comparative vacancy-tax evidence
• Speculative Vacancy · LVT dampens land speculation

Sources

1. City of Vancouver, "Empty Homes Tax rate will remain at three per cent for 2023" (news release) and "Empty Homes Tax" program page. vancouver.ca/eht — used for the program design and the confirmation that the rate stayed at 3% for
2. vancouver.ca blocks automated requests (HTTP 403); page text retrieved via Exa index, accessed 2026-07-11.
3. City of Vancouver, "REPORT BACK – Increasing the Empty Homes Tax to Five Percent and Improving Compliance (Members' Motion B.3)," Standing Committee on City Finance and Services, Report Date 1 May 2023, Meeting Date 10 May 2023 (RTS 15175). council.vancouver.ca PDF — the staff report whose Recommendation A is "THAT Council approve a reduction in the Empty Homes Tax rate of 5% to 3% for the 2023 vacancy reference year"; used for the 5%→3% reversal and the unsold-new-home exemption. Retrieved via Exa index (host 403s to automated requests), accessed 2026-07-11.
4. Justin McElroy, "Vancouver council votes to stop plan to increase empty homes tax from 3% to 5%," CBC News, 11 May 2023 (cbc.ca); "Vancouver council reverses planned increase to empty homes tax," Vancouver Sun (vancouversun.com); "Vancouver's Empty Homes Tax to stay at 3%," Daily Hive (dailyhive.com) — independent press confirmation of the 7–3 vote, the full 1%/1.25%/3%/(cancelled 5%) rate history, and the $3.8M developer refund. Accessed 2026-07-11.
5. City of Vancouver, Empty Homes Tax Annual Report — 2022 Vacancy Reference Year (activity to 1 November 2023). vancouver.ca PDF — the City's own program report; source for the "54% decrease in vacant properties, 2017–2022" headline (p. 1), the vacant-property counts and 52% conversion figure (Appendix 1), the revenue table and $142M cumulative allocation (pp. 4, 6), and the CMHC long-term-rental figures (p. 1). Read in full via the Internet Archive copy (snapshot 2025-12-03; vancouver.ca blocks direct automated requests), accessed 2026-07-11. Self-reported program monitoring, not an independent evaluation.
6. Gherardo Caracciolo & Enrico Miglino (2024), Ripple Effects: The Impact of an Empty-Homes Tax on the Housing Market, C.D. Howe Institute E-Brief (1 August 2024). cdhowe.org — the one independent difference-in-differences evaluation located; source for the 1.5pp / ~21% vacancy reduction, the ~226-homes figure, and the null results on rent and new construction, all quoted verbatim from the report body. Directly fetched and read, accessed 2026-07-11.
7. Government of Canada, Underused Housing Tax Act (assented 9 June 2022; in force 1 January 2022) and CRA "Underused Housing Tax (UHT)" program pages. laws-lois.justice.gc.ca · canada.ca — used for the federal 1% UHT on non-resident, non-Canadian-owned vacant/underused housing, and for its wind-down: Bill C-15 (Budget 2025 Implementation Act; royal assent 26 March 2026) makes no UHT payable for 2025 and subsequent years, while 2022–2024 obligations remain. Accessed 2026-07-11. BC SVT rates in the stack table are documented on the British Columbia page.