Vacancy Rates and Speculation taxes?
Vacancy Rates and Speculation taxes?
With the current rental market conditions what happens if landlords are unable to locate tenants? Current market conditions are resulting in lengthy vacancy times.
The Province has the speculation tax and the City of Vancouver has the empty homes tax. Both of these have stipulations that the property must be rented for a period of time equal to six months during the year or the unit becomes subject to these taxes.
The speculation tax for 2026 is a sfollows:
For 2026 and subsequent years, the tax rate is:
3% for foreign owners and untaxed worldwide earners
1% for Canadian citizens or permanent residents of Canada who are not untaxed worldwide earners
The Vancouver empty homes tax is as follows:
“Properties deemed, determined, or declared empty in the 2025 reference year will be subject to a tax of 3% of the property’s 2025 assessed taxable value.”
How will this affect landlords?.
We are experiencing longer time frames to find tenants for our vacant properties. If it is taking longer than six months to find a tenant, will landlords make poor decisions on renting their properties to avoid these two taxes. Tenant selection is a very important part of selecting tenants and failing to perform your due diligence often results in a negative tenancy. In slower economic times we see more questionable tenants try to move and find a landlord who doesn’t want their unit to be vacant for multiple months. In these times it is extra important for landlords to ensure they are not missing any steps in the selection process.
Another key part of tenant selection is pricing the product correctly. In the rental market tenants want to pay a little as possible and landlords want to earn as much rent as they can. In today’s market it is imperative to ensure your product is priced at a level that will attract potential tenants. This is not the time to hold out for the highest price because you think your property is worth that amount. A unit can become vacant for six months really quickly. Today most tenants are in a tenancy where they must give notice to move. This means in the month they come to view your property they are not looking to move in the next month but the one after that. It only takes a three month vacancy to see the property approaching the six month time frame of the vacancy taxes.
If a large number of landlords find themselves needing to pay these taxes will they choose to sell their property removing these products from the rental market. Is it time the BC Government and City of Vancouver review the need for these taxes if landlords are being forced to pay the taxes because they are not able to rent or sell the property.
Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com
