Over 400 empty homes in London unlikely to face a vacancy tax despite local housing crisis

A consultant’s study has poured cold water on London city council’s idea to charge an additional tax on vacant homes.

On Wednesday, the Corporate Services Committee (CSC) discussed a report that recommends council not charge an additional tax on houses left empty by their owners for more than six months.

The goal was to discourage land speculators from letting otherwise viable homes sit empty during the housing crisis, but the study determined that a 3 per cent residential vacancy tax would be cost prohibitive for London City Hall to inspect and administer—requiring 17 to 18 years to recoup its costs.

Coun. Corrine Rahman expressed her disappointment to colleagues on the committee, “It doesn't help us to address the issue at hand, which is that we have vacant residential properties.”

Researchers used water usage data collected by the city to estimate the number of homes that were vacant for more than half of the year.

The report reads, “the total number of eligible units for 2023 is estimated at 408 which represents 0.3% of the total housing supply in London.”

The initial investment to establish a vacant home tax is estimated to total $2.6 million in London, largely driven by software-related costs.

Operating costs would be approximately $1.9 million each year, primarily consisting of audit-related costs to ensure compliance by property owners.

“It just doesn't show viability in terms of a strategy to create (a greater) supply of housing, and that's really ultimately the goal,” Rahman told CTV News after the meeting.

The mandatory declaration model used in some other municipalities has also become problematic.

Toronto’s vacant home tax requires that homeowners confirm each year that their property is occupied for at least six months—or else they receive a bill in the mail.

In April, the delivery of tax bills to homes where people forgot to complete the form caused chaos at Toronto City Hall and led to more than 60,000 complaints.

However, instituting a vacant home tax in London may not be dead—only delayed.

The City of Windsor recently launched a different model, which relies on neighbours notifying the municipality of addresses that they suspect are vacant so that inspectors can investigate.

London will be closely monitoring the experience in Windsor.

“We'll follow along to see whether or not they are able to see some revenue, but also to increase (housing) supply based on their approach, and see whether that's an option for us,” added Rahman.

Council will consider the report that recommends against implementing a vacant home tax on July 23.