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By Steve Lafleur
and Josef Filipowicz
The Fraser Institute

Vancouver city council needs a multi-faceted approach to encouraging growth in the supply of housing in the city. It’s latest strategy falls far short.

Council recently approved an annual one percent tax on the value of vacant homes. The move was made to encourage owners of these homes to rent them out and boost the city’s housing supply and rental vacancy rate, which is consistently below one percent.

Steve Lafleur


Beyond potential issues of enforceability, it’s unclear how much the tax will increase the supply of rental units in Vancouver, especially in the longer run.

According to the city, the housing units unoccupied year-round is estimated at just under five percent. While that number might seem big, there are plenty of legitimate reasons why a unit might not be occupied at any given time. This is why exemptions will be granted for situations ranging from snowbirds claiming principal residence in homes they don’t spend all year in, to condos where strata rules restrict rentals.

But even if a reasonable number of those units find their way onto the rental market, it would only be a one-time boost rather than a lasting solution.

Highly desirable cities such as Vancouver will always attract newcomers, from vacationers to job-seekers to investors. This isn’t likely to change, so demand for housing will continue to grow.

Josef Filipowicz

Josef Filipowicz

Rather than trying to dissuade this demand, the city would benefit from ensuring an adequate supply of new housing units. It’s a simple equation. When the number of new homes doesn’t keep up with demand, more potential buyers or renters will bid for a dwindling pool of listings, pushing prices up and pushing some people out.

Expanding the housing supply in a geographically-constrained city such as Vancouver will ultimately require the city to permit more density. This means reducing the regulatory barriers and costs to building more apartments, laneway units, townhomes and other alternatives to single-dwelling houses.

When compared to its neighbours, Vancouver creates an inordinate amount of red tape. According to Fraser Institute research, long and uncertain timelines for building permit approvals from city staff can significantly slow the pace at which new housing enters the market. In this regard, Vancouver ranks worse than almost any other city in the Lower Mainland, averaging more than 15 months to get a permit to build a new housing unit.

To encourage the construction of new homes, Vancouver can look to its neighbours for best practices. Timelines for permit approval are five months shorter, on average, in Burnaby, where per-unit costs – another important factor – to comply with local regulation are half what they are in Vancouver. (Uncertainty in building permit approval timelines is lowest in Abbotsford, Port Moody and Pitt Meadows.)

Vancouver is one of the world’s most attractive cities, so strong demand for housing will likely persist. Vacant homes, like foreign ownership, are a convenient scapegoat for declining affordability in Vancouver. But it distracts from the underlying problem of supply not keeping up with demand.

As the province and the city attempt to address demand for housing in Vancouver, they should not lose sight of homegrown barriers to the construction of new housing.

Steve Lafleur and Josef Filipowicz are analysts at the Fraser Institute.

Steve and Josef are Troy Media contributors. Why aren’t you?

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