Vacancy tax?
Frank de Jong
How many condos are sitting empty in Toronto? One man investigated — and what he found surprised him
From the fifth floor of his College and Dovercourt two-bedroom apartment, Jaco Joubert has a spectacular view of the glittering lights of Toronto’s downtown condos.
He’s often wondered why so many people struggle to find a decent place to live, with so many shiny new towers and cranes in the sky.
That curiosity led him to do his own investigation, training his camera on those very lights. What he found surprised him.
“It’s hard to explain why things are the way they are,” said Joubert, a designer, software developer, entrepreneur and city-building enthusiast, who’d heard stories of investors snapping up condos and leaving them empty.
“I basically wanted to answer that question.”
As a side project on his own time, Joubert set up a camera to watch more than a thousand units in 15 buildings at night, taking photos every five minutes from sunset to sunrise over a week, then repeating the process a few months later. Using heat maps and a custom filter, he overlaid images to get a snapshot of light patterns that he believes are a good measure of whether anyone lives in the unit.
His results suggest 5.6 per cent of the units he watched are unoccupied, in the middle of a housing crisis. In West Harbour City, a 36-storey condo tower just west of Bathurst Street, he found 13.5 per cent of units were vacant.
It’s analysis that, given the number of condo units in Toronto, could mean that thousands of potential homes are just sitting empty in the sky, as the city continues to study whether a vacant homes tax might incentivize landlords to rent them out.
“I think it’s an unreasonable state of affairs, to be honest,” said Joubert of his results.
“Some people have such excess that they can have empty units while at the same time our shelter system is overflowing.”
Buildings that have been known to have more Airbnb listings, such as the Ice condos, had fewer empty units (only 1.5 and 1.8 per cent), which he thinks is because of regular Airbnb bookings. But overall the empty rate was “much higher” than he anticipated.
He wanted to do a more extensive sample, he said, but had trouble convincing some condo associations to let him put cameras up. One ghosted him after finding out he wasn’t affiliated with a university. In the end, he used only the images he could get from his own apartment, and one friend who let him put a camera in his unit at the Picasso condos on Richmond Street West.
“I wish I could put cameras on the CN Tower, then I would have so much data with such consistency,” added the 35-year-old. But he also thinks it’s the kind of data the city should be collecting.
“Because it’s key to policy making, the lack of data means people speculate and that doesn’t lead to good policy.”
Jaco Joubert, who wanted to find out how many condos were sitting empty, did his own experiment.Joubert is not against investors leaving units empty, but thinks the practice should be tied to overall vacancy rates in the city, “such that if a vacancy rate becomes too low than you simply are not allowed to do it and punitive taxes kick in.”
Toronto’s vacancy rate, a measure of how many purpose-built rental units are available on the market, was only 1.5 per cent in the second quarter of 2019, according to market research firm Urbanation. And that high demand is driving up rent, $2,262 on average for a one-bedroom condo in the third quarter of this year.
In Vancouver, where council voted in 2016 to become the first in the country to collect an empty homes tax, the city says the number of vacant properties has fallen by 15 per cent in one year.
Statistics reported by the Star’s Vancouver bureau in February show 922 properties were listed as vacant in 2018, compared with 1,085 in 2017, the first year the tax kicked in.
That city charges one per cent of a home’s assessed value if the owners are not living in it or are renting it out for less than six months.
Paul Kershaw, a University of British Columbia professor and founder of the Generation Squeeze advocacy group, called Joubert’s data “a helpful contribution to a conversation that needs to be rejuvenated in the GTA.”
Doug Anderson
The analysis of empty apartments in Toronto is interesting, but
the problem in smaller and suburban communities is empty houses,
particularly in older core areas. Houses are bough by speculators
and frequently left to rot until their condition is such that they
can justify demolition. I know of several empty houses near me.
I have long felt that the solution to vacant properties would be to change the property standards by-laws to require owners to maintain their properties in the appearance of 'lived in condition'. That would mean: not boarded up, no broken windows, reasonably tidy, grass cut, walks shoveled, curtains in the window, no newspapers or mail piled up at the door, etc. The easiest way to achieve a lived in appearance would be to have someone living in it and doing the maintenance. Even if the owner had to cut rents to the bone, any rental income would be better than having to pay for the maintenance. The overall result would be: reduced neighbourhood blight from empty buildings, increased housing stock including low rent accommodation, probably overall downward pressure on rents, and probably reduced homelessness.
To prevent owners from simply demolishing their buildings I would require that demolition permits not be issued until the replacement building has been approved with a timeline for construction. Over time that would reduce the number of empty lots.
Doug AndersonWhitby
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Erich Jacoby-Hawkins
I don't think such measures would be sufficient to do much about the issue.
For one thing, such bylaws already largely exist - certainly the ones as per windows, lawn care, sidewalk clearing. There is a house near me that has been vacant for many years but the owner mows the lawn and you otherwise wouldn't know the house is vacant unless you live in the area and notice the Trans-Am in the driveway never moves. (Well, it didn't for many years until recently it was taken away on a trailer).
But the other problem is with vacant condo units or apartment buildings, which wouldn't have as much of a need for activity to make them look "lived in".
The key to making vacancy cost is to put a flat tax on the land value - or at least the vacant land value. Then speculators can't dance around the tax with minor cosmetic activities. Because if they can get out of it with minor effort, rest assured they will.
Erich.
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