Don Johnson’s Thoughts on Andrea Horwath’s Vacant Property Tax

Hamilton is looking to pass a vacant property tax on homes and condos that are not lived in – of course this ties into the new federal increase in capital gains taxes and a new vacant land tax on land that is developable which is another subject.

Based on my 38 years of realty sales experience in Waterdown/Flamborough and Hamilton area, I would consider myself knowledgeable in property issues.

The concept that this tax will make more units available for non owners and tenants to buy /rent is not factual.

The problem comes in that this tax has not worked to provide any measurable increase in affordable rental or purchasable homes in places it was imposed- indeed it has actually hurt in that it has reduced amount of investment purchasing of “to be built” homes.

Real estate is driven by free market private investment. I believe roughly 85% of rental properties are created and owned by private investors, which means 15% is government. Anything that increases the cost and risk of said investments risks driving investors away and negatively affecting building of additional properties –

Simply put, any policy that affects the 85% can have significant positive or negative ramifications.

Imposing a vacant unit special tax is another negative, not positive policy.  Yes it might generate a bit of positive press with the general population but the reality is that private equity investors (which are a significant portion of those who really fund and create new homes) will add this potential negative cost reason into their investment return calculations (which determines their investment decisions).

The real problem is the massive growth in demand from the population increase – that is good for realtors but has created massive inflation – the goal to increase and build another extra 1.5 million additional homes by 2030 requires investors to want to buy and build additional housing stocks -not drive them out.

If the goal is to remove private ownership and have housing brought under full government control you simply need to visit Cuba, Venezuela, Russia, Zimbabwe or even just go to Toronto and study its social housing disaster.

Almost all housing in Canada was built by private enterprises and investors  – history shows we need to be unleashing the private sector not adding additional restraints and uncertainty costs. Yes, they are profit driven, but in a free enterprise market economy you get economies of scale and allocation of resources that results in significant increases in supply that equalizes out the ability to overcharge. Indeed, with the amount of taxation generated on profits govt revenues are actually better off.

I encourage you to not support this new policy.