[techxit]

This is great (although it's not enough) and more cities should do it. It's an effective use of public policy and a powerful statement and I'm thrilled to see it.

This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1% instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials).

I wish that our recent display of nationalism in the US had not been one of the disgusting kind.

[matwood]

> This is great (although it's not enough) and more cities should do it.

Something similar is common in the US, and is typically framed as a homestead exemption. Basically, set a high property tax rate and if people prove their house is owner occupied give them a rather large discount. My property taxes are ~$1500/year because I live in my house. People who rent out or do not live there pay $6000-$8000/year in my neighborhood.

[tuna-piano]

There are two types of residents - owners and renters. The renter is just renting from a property owner, who will just pass on the tax. In this example, assume the mortgage payment is $1k / month.

1. If you own the home, you will pay $13,500 ($12k mortgage + $1500 taxes) per year.

2. If you own the home, and want to rent it to a tenant, you must charge the tenant at least $18,000 ($12k mortgage + $6k taxes) to break even.

Renters are in generally less wealthy than owners. Why have this extremely regressive tax? Why should the poor renter subsidize the rich homeowner?

[avn2109]

The point is to incentivize the populace to take on stable obligations, the proverbial two kids and a mortgage.

A stable, indebted population is a governable and docile population. Somewhere there's a great quote about how "any man with a cottage of his own and a yard will never be a revolutionary, he's too busy" but I can't find it right now.

[humanrebar]

Home ownership can also tie people down to a location when they should be considering relocating to places with more demands for their skills.

[aminok]

This is a typical unintended consequence of top-down economic planning. It turns out cookie cutter solutions imposed by fiat reduce people's welfare.

[tdaltonc]

A man always has two reasons for doing anything: a good reason and the real reason.

That's a good reason to have the mortgage interest deduction. The real reason is that home owners vote, and promising them money is a good way to get them to vote for you.

[digi_owl]

More succinctly, homeowners do not riot.

Picked it up from a talk by David Harvey, but not sure where he got it from.

[tomjakubowski]

The Vancouver tax wouldn't affect properties rented under "long-term" (> 30 day) leases.

from TFA: "Principal homes, as well as properties that are rented for at least six months of the year on 30-day minimum leases, won’t be taxed."

I would be very surprised to learn that Vancouver renters who typically live in units with < 30-day leases turn out to be poor.

[sprocket]

I believe that the requirement for > 30 day leases is also an attempt to block the proliferation of AirBnB rentals, which the city doesn't look favourably upon.

ie) You can't claim your house has been occupied for 6 months because you've had 30 one-week AirBnB listings in there over a year.

[matwood]

You're completely ignoring the demand side. This tax, at least in my area, is a tax on the wealthy land owners. They could drop the tax to 0 tomorrow and rents will still go up.

[mmanfrin]

Because if you own the home and want to rent it out, that implies you own another home that you are paying those taxes on, or are otherwise renting yourself.

[TheSpiceIsLife]

How is that an argument for charging renters $6000 a year?

[stana]

"... property owner, who will just pass on the tax"

Rental market is more of a market than say, buying a house. It is very much determine by salaries people make in the area. Unlike buying a property, which also has the element of credit availability and willingness of people to borrow, you cannot borrow to pay rent. The point being, owner can TRY to price tax into the rent, but if this prices property too high it will not rent out.

(Edited: typo)

[abecedarius]

All of the landlords must pay the tax. This means a constant displacement of the supply curve from the untaxed state. The demand curve is unchanged. The new equilibrium depends on elasticity, but I'd be surprised if it doesn't end up with most of the cost passed on to the renter.

[emp]

You are thinking logically. It's not applied in Vancouver. I rent for just over 2k. If my place was put up for sale, it would be for just over 1 million. Factor in $300 a month strata fees, another $200 for insurance, if they owner has a typical long term mortgage they are renting for a loss. However they bought it 10 years ago, they have done well with the crazy appreciation.

[roel_v]

"Why should the poor renter subsidize the rich homeowner?"

He's not subsidizing, is he? The tax just goes to the government. Essentially it's an extra tax on renting.

[ianferrel]

If the renter pays a higher tax rate than the owner, and they both have the same right to government services, that could be seen as a subsidy.

[woofyman]

Landlords get their own subsidies. All maintenance and improvements are tax deductions. Plus they get to depreciate the property.

[WalterBright]

Suppose a business buys goods at $80 and sells them for $100. You're suggesting that his profit is $100 and he should be taxed on $100 income?

[tikhonj]

The part about higher taxes for people renting property out seems to amount to yet another subsidy for home ownership over renting—which is not obviously a good thing. A tax just on properties that are unused (ie not owner-occupied or rented) makes more sense to me.

[pbhjpbhj]

How about "rented by a local landlord with a small number of properties" to get a similar discount? This would also seem to attack the problems of limited property supply allowing the bourgeoisie to profit without work and of a lot of local money moving away because of property ownership by distant entities. Reasonable?

[kbenson]

Or allow deductions from this tax for landlords paying for maintenance or improvements, and an exemption if you can show that all maintenance requests were acted on within 30 days and resolved within 90 days (for those that keep their rentals in good shape). I think that might aim it more squarely at slumlords.

[toomanybeersies]

Is there no requirement for timely repairs in the USA (or at least in some states)?

Here in New Zealand, I can hand my landlord a 14 day notice to remedy, and if they don't fix the problem within 14 days (or at least start remedying, if it's a larger problem), then I can take them to the Tenancy Tribunal, where they can be ordered to, and sometimes even get fined punitive damages.

The same works the other way. If I leave the house in an unsatisfactory condition (e.g. not cleaning the property, not keeping the garden under control), then I can be given notice to remedy and taken to the tribunal if I don't fix it.

It's a win-win system, both parties can take action against the other for problems. The tribunal is not meant to be biased towards the landlord or the tenant (although in practice they tend to side with the tenant a bit more), and is a neutral third party. They usually try mediation first, before actually ordering people to do anything.

[TheSpiceIsLife]

A step further here in Australia, or at least in South Australia where I used to live - not sure about the other states...

If an essential service breaks (toilet, hot water system, plumbing, gas leak) and the landlord doesn't have it remedied in reasonable time frame, you can pay for the remedy and issue an invoice to the landlord (in practice you can withhold the same amount from rent).

Worded thusly: organise to have urgent problems fixed and give the landlord an invoice from an authorised repairer. A licensed professional must do the repairs and provide a report that states the cause of the problem and the work carried out.

A landlord may be breaking the conditions of an agreement if they learn of a problem and don't repair it within a reasonable time.[1]

I firmly believe this is how it should be, and that any reasonable person would agree this is fare.

1. https://www.sa.gov.au/topics/housing/renting-and-letting/ren...

[nommm-nommm]

No there is strong requirements for timely repairs in the US. They are all just local laws so they are varied by location. Landlord tenant laws are usually in favor of the tenant. In some places you can withhold rent until repairs are made. Enforcement can be an issue though and tenants may not know their rights. Not sure.of any state has a Tenancy Tribunal equivalent.

Anyway I am not aware of anywhere in the US where being a slumlord is actually legal or even being a semi-slumlord.

30 days for a maintenance request is absurd, well depending on the request, I guess.

[rhino369]

Homestead exemptions punish renters, which there isn't a compelling policy reason for.

[matwood]

No, it takes money from the owners of the property. Rents are market based more than anything else. I don't care if the tax is 0 or 100k, the owner can only rent for what he can find people to pay. In my area (a vacation spot and college town), they could drop the property taxes to $0 tomorrow and rents will still go up. A high tax does not even really set a price floor since the owner would rather get something than nothing.

[gozur88]

>No, it takes money from the owners of the property. Rents are market based more than anything else. I don't care if the tax is 0 or 100k, the owner can only rent for what he can find people to pay.

The subtlety you're missing here is the reduction in supply of rental units.

[nickff]

British Columbia punishes renters, as it taxes 'passive income' (i.e. rent), which discourages owners from renting out existing properties or building-to-rent.

[shawnee_]

> * British Columbia punishes renters, as it taxes 'passive income' (i.e. rent), which discourages owners from renting out existing properties or building-to-rent.*

There are so many incorrect statements in this sentence, I don't even know where to begin.

Taxing vacant properties does not punish renters. It "punishes" people who buy properties for speculation, or (as the AirBNB trend is going) attempt to control a piece of limited supply.

The purpose of taxing passive income (lazy landlords, rent collecting) more aggressively is because it is not actually work. It is technically wealth extraction. As a renter, 100 percent of your rent is a "tax" (it's not going to offset any of your long-term assets); and when you pay 70-90 percent of your income in rent as a tax (as many minimum wage workers do), it is massively difficult, if not impossible, to save enough to acquire any assets that help you build wealth. On the landlords' side, it's even easier to use all that extracted wealth (from poor people) to acquire assets that build wealth.

No, collecting rent is not work or a job. Even if you have a whole fleet of illegal immigrants scrubbing the toilets, throwing down cheap carpet, and painting the walls of your units every few years. The moment you enter the territory of needing to pay somebody else to manage your asset (even if it is "just" scrubbing the toilets after your AirBNB tenants or renters leave), you're entering passive income territory.

[RHSeeger]

> No, collecting rent is not work or a job.

I rent, by choice. My landlord takes the risk of owning the property, and I pay a premium for that. Something breaks, I make a call and it's his responsibility. Just because some landlords are bad people doesn't mean landlords are bad people in general. I appreciate the benefits I get from renting (and, to be fair, from having a good landlord).

By your logic, owning a small company with some employees is passive income and "bad", because you have people doing work for you. Some small company owners are bad people but that doesn't mean all of them are (and, in fact, we tend to consider them fondly from what I've seen).

[shawnee_]

My landlord takes the risk of owning the property, and I pay a premium for that.

You pay a premium so your landlord can take risk to get the most lucrative profits? Why, you are a benevolent renter, aren't you?

By your logic, owning a small company with some employees is passive income and "bad",

That is not at all what I said; your reading comprehension needs work. Owning a company with employees[1] means you are responsible for allocating the income into business profits among your employees. Most people who scrub toilets and wash sheets for AirBNB rentals are NOT employees or the owners of the properties. Along the same lines: the right way to treat employees involves giving them part ownership of the company they are working for, and thus they are rightfully entitled to some of the income from business-generating assets. Landlords do not do this. They farm out the work required to manage or maintain the assets, and demand the lion's share of the profit.

[1] There is a definite legal definition of "employee", and you don't seem to understand what that is. See the IRS's definition. https://www.irs.gov/businesses/small-businesses-self-employe...

[Joky]

If I own a house but I have a new job far away and I rent a house there and have a tenant in the one I own, that's a zero-sum game (assuming the rent I pay is equivalent to one I get from my tenant). The owner of the house I'm occupying could even be the tenant of my own house. How do you justify economically taxing the rented home more than if we occupied our own?

[will_hughes]

Maybe I misunderstand the taxation that BC is applying, but why should 'passive income' be taxed or treated any different to regular income for taxation purposes.

i.e if I earn $100 by working at a job, and $100 through renting out a property, shouldn't I be taxed the same as if I earn $200 through my job instead?

[TallGuyShort]

I'm also concerned about how arbitrary the line is between passive and active income. Let's say I rent out a lot of properties. I have legal obligations to maintain those properties. That might be a lot of work. A full-time job, even. Let's say I make a lot of money on investments. I might be ensuring the success of those investments by advising and doing research on / for the companies I'm investing in. Both of those things get called passive income, but they very well might not be in reality.

[skewart]

Me too. Distinguishing between passive and non-passive income seems in any kind of technical, legal seems incredibly difficult. It reminds me of the old "I know it when I see it" definifinition of pornography, which is a terrible definition for a law.

I'm actually really curious about the law now. Stock dividends must be considered passive income. So would interest from your local bank savings account. So would a SaaS app that you set up and basically runs itself with minimal maintenance.

[SilasX]

Very true! Given a sharp enough tax rate difference between two kinds of income (or two activities), you just generate a ton of socially-useless work aimed at blurring one into the other.

[sdenton4]

The term rent selling stats with 'rent' for a reason. The maintenance on any single property is miniscule compared with the rent extracted. Added over many properties, sure, might be a lot of work. But you're also getting a lot of rent.

The bigger part of the problem is the tendency to pass on the tax on passive income to the tenant.

[nickff]

I don't know why the BC government makes this distinction, but it does. The $100 from working at your job is taxed at a lower rate than the $100 from renting out a property, though I should add that there are various schemes to avoid paying the 'passive income' tax.

[sdm]

This isn't actually the case now is it? Are you confusing corporate income tax with personal income tax? Normally if you're renting a place out you'd be doing it through a hold co. As the rental income would be your main business income it would be tax at the very low Canadian Controlled Small Business rate; not the general rate.

Even if you were to take the unwise, for both legal and tax reason, choice to not use a hold co, income from rent is FUNDAMENTALLY different from regular income. In that, if you make a loss, you can claim it. That's just not possible with regular income. I.e., if you rental unit is unprofitable, it reduces your taxes in general -- potentially applied in future years. This is not the with "active" income.

[dangjc]

In a simple math world yes, but tax policies consider other factors like social equity, disincentivizing work/investment, compliance likelihood, etc.

[roel_v]

"passive income" is not a tax term. Are you saying there should be a capital gains tax at the same rate as income taxes?

[SilasX]

The concept of passive income is used in tax laws, though in the US the term is "unearned income" (a term I really don't like).

[caretStick]

Why not? Someone working their ass off for $300k shouldn't pay more tax than someone banking $300k in "long term" capital gains.

[hhw]

There's no such tax on 'passive income', it's just taxed as business income, which is exactly what it is and taxed no higher than employment income. It's just not taxed as capital gains nor has dividend tax credits, which it shouldn't be/have.

The only tax that discourages renting out is that the portion of your principal residence used for renting out no longer qualifies for tax-free capital gains.

Considering how almost nobody in BC ever declares this, and barely anything is done to curb it, it's kind of a moot point.

[snrplfth]

Which is one reason why condo ownership is so ubiquitous there.

[nickff]

Yes, the tax on 'passive income' discourages apartment buildings.

[mstodd]

There's no good reason for any of this other than simply being able to take more money from people. It's wrong for the government to pick who wins and who loses, and never works how it's sold.

[Spooky23]

Renters are a net drain on any city. It's always a smart move to incentivize ownership.

Making rentals more expensive pulls in more Federal money in low income property and encourages purchases by middle class families.

[Trombone12]

How is it similar? The tax Vancouver is introducing applies if the house is empty, and the tax you describe is concerned with differentially taxing non-empty houses.

[gozur88]

Isn't the net effect of something like that to drive up the price of rent?

[meganvito]

I guess you are not in California.

[diego]

Interestingly California has a homestead exemption but it's a joke (capped at $70).

[malyk]

Oakland has a $7000 homestead exception. It actually just takes $7000 off the "value" of the property for taxation purposes.

https://www.acgov.org/assessor/decreasetax/exemptions/homeow...

[diego]

Right, I live in Oakland. This is a state exemption. In other parts of the state it may be meaningful, but if you (like me) bought property in the Bay Area in the current millennium then it's insignificant.

[matwood]

Heck no! I don't make enough money to live there in a way I would enjoy.

[cloudjacker]

If you like camping you'll enjoy San Francisco

[mmanfrin]

Not since the 8th, though.

[meganvito]

Is it because the Berkeley dudes ain't that hippy any more?

[cloudjacker]

Oh cool, how can I find the sf results? Not interested enough to google it thanks for the public service!

[hyperbovine]

There is also a capital gains penalty (15% of net gain) when you sell an investment property.

[kspaans]

You pay capital gains tax on all capital assets you sell, with the notable exception of your primary residence. There is no reason to call it a "penalty".

[hyperbovine]

You can exclude the tax under certain ownership conditions even if it is not your primary residence. Tomāto tomăto.

[grey-area]

I agree about this measure - it's a good way to raise income for infrastructure from those who can most afford it and discourage leaving property unused.

But when did the global elite become our new scapegoat? Must we always blame difficulties on an ill-defined enemy who shifts conveniently with the speaker until everyone or no-one is to blame?

To me this global elite sounds just like all those other labels you claim this shadowy cabal are trying to fool us with (no doubt they plot to raise house prices once a year at Davos or Bilderberg or wherever). It's a cheap trick we invent to fool ourselves into thinking someone other than us is to blame for our messy predicament.

[krschultz]

I'd say a more specific definition in this case is "people that are using real estate as a place to park money rather than as housing". In many cities like Vancouver, New York, and Miami, the money often is coming from foreign countries. With housing so limited, that has a real impact on people that live in these cities, and the benefit is provided to people that don't even live here.

[zaroth]

If people want to park money in funds tied to housing (that have returns tracking real estate) then there are funds like IYR that can do that much cheaper than actually owning a house and paying property taxes!

If someone is buying real estate and leaving the property empty just to park funds... It makes me wonder if these are funds that can't be straight up invested in an ETF and are actually being laundered in some way.

[cfraenkel]

um, yeah, that's the whole point. In addition to all the empty homes, there's so many teenagers driving around in Ferraris/Lambos it's become a joke. Sometimes Mom comes with the kid, other times it's just the kid living alone (typically with a nanny). It's mostly hot money from China. Though to be fair, there are plenty of Mom+Kid from places like Korea who are here for the education & into to the 'West'.

[hhw]

The worst part is they collect social benefits like education and healthcare without paying any income taxes into the system.

[nommm-nommm]

Presumably they pay property taxes and sales taxes (if BC has that)? That should offset some of the lack of income taxes. I'm not sure you can consider them complete freeloaders.

Also, can foreign children just move into Canada without any paperwork? I guess student visas?

[skewart]

I always hear about these people, but I've had a hard time tracking down any data on who they are or how many properties they have bought.

I'm sure there are some wealthy Chinese people who have bought property in major cities as a way to park money. I'm just a little skeptical that it's in any way a significant driver of higher housing prices. I would be willing to bet that there are far more Canadians looking to buy housing in Vancouver than there are foreigners looking to do so.

The fundamental problem seems to be that there are more people who want to move to Vancouver than there are people who want to leave. It would be incredible if there were so many foreigners looking to buy places to park money that reducing their numbers would somehow change this fact.

[hhw]

I've lived in an older but expensive (even by Vancouver standards) neighbourhood with larger houses and lots most of my life, and many of our neighbours have been replaced by mainland Chinese with absentee husband/father.

I'd say the effects are overestimated by locals, but they are definitely around and easily observable by those who live here, and since they buy housing at the top end of the market, they skew the average home sales prices significantly upward. Realtors also espouse a "buy now or be priced out forever" which scares locals into borrowing way beyond their means, and banks in Canada are happy to loan them the money when taxpayers cover the mortgage for them (but not the home owners) through CMHC. Household debt in Canada is at record highs, worse than the US in 2008, and Vancouver is by far the most extreme example especially given that our average incomes are significantly lower than the other major Canadian cities.

[aianus]

I'm Canadian and I've never heard of anyone moving to Vancouver.

It's rainy, depressing, very expensive, and unlike SF there aren't isn't any major industry paying fat salaries to make it worth it.

[hhw]

Almost everyone new I meet moved to Vancouver from elsewhere. I often get the comment that I'm the first person they've met that grew up here.

Rain is preferable to freezing snow in most other parts of the country, and true Vancouverites don't mind it because it means fresh powder on the mountains for skiing/snowboarding, conveniently located 30 minutes from downtown and open at night with artificial lighting. And there's no place better in the summer, when there's no rain, extreme heat, humidity, or mosquitoes. Just lush green surroundings, and ocean and mountain views everywhere

[skewart]

Interesting. I've known several Canadians who've moved there from elsewhere in BC, and from Quebec. Vancouver's population has grown steadily over the last few decades[0]. Though perhaps it hasn't had anything like the population boom that, say, Calgary has, or the same kind of economic draw that SF has.

What are the places you've found your fellow Canadians tend to move to?

[0] https://en.wikipedia.org/wiki/Demographics_of_Vancouver

[aianus]

> What are the places you've found your fellow Canadians tend to move to?

CS classmates: overwhelmingly San Francisco, with NYC and Seattle in second place.

Business graduates: Toronto, Chicago, New York

A few go to remote areas to work in mining etc.

But yeah, never heard of anyone moving to Vancouver unless they were originally from there and were moving back.

[CPAhem]

>But when did the global elite

Many homes are being bought out by the Chinese elite. They are desperately trying to get their money out of China before the Yuan devalues or recession strikes.

The same is happening in Hong Kong, Australia and New Zealand.

[ryanwaggoner]

They are desperately trying to get their money out of China before the Yuan devalues or recession strikes.

The horror!

They're investing their money legally in the hopes of protecting or even (gasp!) growing their wealth.

Yes, there are some downsides to that investment, but there are also upsides, and it's unclear to me why they have the primary responsibility for ensuring that every dollar they invest minimizes harm.

I invest in index funds and I'm sure those dollars do some harm in the world (not net, I hope). Am I a monster?

It's reasonable for governments to take actions like this to protect their citizens. It's their job, in fact.

But it seems profoundly unreasonable to me to get angry at the chinese elites for investing their money legally in order to protect their wealth. Understandable, but unreasonable.

[LBXrRkxx]

Then it's UNREASONABLE for anyone poorer than you to get angry at you, isn't it? They're all irrational, but everyone with a higher net worth is more REASONABLE than you are, right? And you make exactly the average income in the US, so you're point of view is fair and balanced, isn't it?

[ryanwaggoner]

What? I have no idea how you made that jump. If you're angry at someone for making more than you (or more than the average income, what a useless metric), then yes, that's irrational. How could it not be?

If you're angry at someone for being unfair to you, then their wealth level is irrelevant.

If you're angry at them because they invested or spent their money in a way that way down the line has some tiny effect on your life that's negative [1], then that's too high a standard. There is literally no one on earth whose actions don't have some negative effect on someone, somewhere.

1. I mean that that individual's actions have a small effect on you, not that the aggregate effect isn't large and meaningful.

[sumedh]

> But when did the global elite become our new scapegoat?

When people found out that they pay less tax and have offshore accounts.

[grey-area]

So your definition of the global elite is that they avoid tax. Other people would say that they earn over a certain amount, or that they are sneering metropolitans, or that they don't have a home country, or that they own too many houses, or that they make their money from the wrong thing. Most of those definitions would fit Donald Trump or Nigel Farage for example, but of course they are not part of the global elite for many.

That's the problem with this sort of term; it is inflated with so many contradictory meanings by so many people it becomes meaningless.

[sumedh]

If people complain that other people earn more than them then they are just jealous. I am talking about fairness. When Warren Buffett complains that billionaires are paying less tax compared to the average Joe then you cant blame the average Joe getting angry about it.

[grey-area]

So talk about specific actions to remedy specific problems, not about a nebulous global elite.

[sumedh]

I guess the voters made a specific action, voting Trump.

[nitrogen]

Blaming oneself for the actions of others is no solution, either.

[grey-area]

To be clear, I'm not blaming myself, or you, I'm saying it is a collective problem with collective solutions (like this law, like reforming zoning or planning rules, building more housing etc).

Find solutions, not a scapegoat.

[murbard2]

Have you considered that these people payed for their house fair and square and that it's profoundly unfair to charge them just because you and others don't like what they chose to do with it?

[mmanfrin]

This isn't about a house in the woods; this is about homes in a deeply urban environment which have surrounding services and businesses that are reliant on local residents; and public services supporting both the residents and businesses that are reliant on the active use and fees/taxes generated to sustain.

Empty homes attract crime, necessitating more policing resources, empty homes do not support local businesses but drive up prices, making the area less affordable for residents and less lucrative for businesses.

The 'payment' for living in an urban environment goes beyond just the normal local taxes, it involves a participation because the resident who lives in a home in that environment contributes to the environment.

No house is an island in an urban environment (except maybe in Venice).

[prostoalex]

Participation often results the resident's (large) family moving in, with their 4-5 vehicles, increasing traffic (and pollution) and load on local services (daycare, schools, public transport, hospitals, police, fire departments), all while paying the same level of property taxes as before.

Talk to someone living in San Jose or San Francisco about their daily commute on 85 or 101. They somehow don't profess as much love for densely populated urban environments.

[hhw]

We have decent transit, and bike lanes everywhere. Unlike the US, many people are happy not to own cars and there are at least 4 major car shares and as of the last few months, a new bike share with convenient availability (albeit we're quite late to get one after Montreal and Toronto have had theirs for years). Many of those who do drive carpool. A lot of people also live right downtown, as we have far more residential buildings in our downtown core than most cities. Vancouver is a very centralized, dense, metropolitan city which probably has more in common with New York than Seattle, but much newer and cleaner.

I still get annoyed by traffic, as I can remember when there was barely any back in the 90's. But then every time I drive down to Seattle, I realize how good we have it in comparison.

[monkeynotes]

It's not really as black and white as that. If a city, such as Vancouver, is suffering from large economic and social problems caused by foreign investors sitting on prime real estate then you have to eventually do something about it for the sake of everyone actually living in the city.

The city is for living in, else it's a dying city. This step taken by the city of Vancouver isn't reactive, the problem has been propagating for 15+ years and has started to have a very large negative impact on the people who want to live there.

I myself, and many others that I know, have moved away from Vancouver or are planning to exit because they can't find or can't afford accommodation. It's not like SF where huge salary and booming business jacks up the prices. Vancouver is just a regular city.

[murbard2]

There is something you could do, liberalize building permits: if we can build housing, particularly tall buildings, the cost of apartments will remain low. But more importantly, liberalize rental leases.

Why would you sit on prime investment property and not rent it? Because when it comes time to sell, you may end up with a tenant who's not paying rent and whom you cannot evict. The cost may just be large enough to forego the income of having a renter. Laws meant to protect bad renters end up hurting everyone.

Or we could slap more bad laws on top of more bad laws.

[monkeynotes]

How would you liberalize rental leases? The lessor can already kick someone out when they want to sell, I mean they need 2 months notice but I think that is entirely fair. Foreign investors (Chinese millionaires) don't give a crap about rental income. They don't want the headache, property is merely a cash investment hedge for them to sit on care-free.

More liberal building permits? Have you seen downtown Vancouver? There are towers everywhere. Infrastructure already cannot keep up with the pace of development in the city and surrounding it.

The city should have had a much better long term plan and not grabbed easy cash when it was available. Chinese investment was good for cleaning up Yaletown but it's gutted the city as far as I am concerned. Vancouver is a beautiful place but it's like a vapid supermodel. Nice to look at, but not something I could live with.

[conanbatt]

Wouldnt this problem sort itself out, if an area suffers a downturn because of vacant property, property loses value and then investors would pull out.

I remain very unconvinced on how this is a good thing, but i can see how easy it is to sell to capture more tax.

[cletus]

Short answer: no.

Long answer: New York City has historically had a policy that NYC is for New Yorkers. There are several aspects to this. One is the cooperative ("coop") structure that came about as rent control was (largely) unwound. Coops are typically owner-occupied and coops tend to have limits on renting out your property or even just not living in it that may require you to sell it. This is (IMHO) a good thing as condos, which don't tend to have the same restrictions, are often ghost buildings (the NYT has done pieces on this where occupancy rates can be 30% or lower).

This has meant that condos in the same area have tended to attract a premium of ~20% versus an equivalent coop. Condo buyers are dominated by foreign buyers paying all cash who are parking money in the US and/or buying an apartment they might occupy a few days a year.

This sort of thing is not good for the city as a whole. These residents aren't funding city services. Foreign buyers have I believe decimated neighbourhoods in other cities (eg I heard of this happening in Tel Aviv).

Now Bloomberg kinda went too far on this as he believe that you should attract the billionaires to the point that someone who owns a $100m condo (of which there are now several) pays only about 10-15x the property tax of a $1m condo. This is something that needs to be reformed.

I'm very much in favour of public policy that benefits residents be they owners or renters.

Now other commenters have pointed out one issue and that is you have to be careful you don't catch landlords in your net. Landlords provide a useful service in providing a rental stock for people to rent. There are various reasonable ways to handle this. Some options:

- Don't tax a property (extra) if it's occupied by somebody;

- Exempt landlords from the higher prices if they're a resident of the state (and paying state income taxes).

This can be a way of handling illegal hotels too. Have much higher taxes for non-active properties and reporting AirBnB type income can trigger whatever housing regulations apply so illegal hoteliers are faced with a choice of paying higher property tax if nothing else.

[CountSessine]

I sort of agree, but we're being too selective in our choice of crisis.

The people who sold that house for $1.25M also enjoy free healthcare in Canada. I have to pay 40% of my income to foot that. The average cost of our healthcare system is about $3500/citizen, but the high end of the average is typically found with older people in their 70's. Why should I have to pay 40% of my income to pay for the medical costs incurred by that old guy who sold his house for $1.25M to a Chinese investor who will pay almost nothing in Canadian income taxes?

Then, we can talk about the fact that Vancouver is mostly zoned for detached homes. We can say that if a property developer buys a bunch of detached homes and then wants to consolidate the properties to build townhouses, that it's "profoundly unfair" to try to prevent that, but that's exactly what detached home owners have done over and over again, both by lobbying and supporting those restrictive zoning laws and by speaking out against developers at city council meetings. That's why almost all new townhouse and apartment developments in Vancouver are in reclaimed commercial zones.

Let's address the whole problem all at once. Right now people who own houses are having it both ways.

[mistermann]

> Why should I have to pay 40% of my income to pay for the medical costs incurred by that old guy who sold his house for $1.25M

Which he won't pay taxes on because it is his primary residence.

Those who happened to get shut out of the property market simply for being born on the wrong place at the wrong time are paying a much larger portion of the tax bill than those who were "lucky" enough before everything went parabolic. It's actually the opposite of a progressive tax, which Canadians claim to love so much (but the real reason they love it is because they think they're sticking it to someone else.....try and take their capital gains tax exemption away and watch their principles on taxation do a 180).

[prostoalex]

A system that depends on taxing current income vs current wealth will always suffer a possibility of being gamed by those with high wealth but low income. If not foreign moneybags, then retirees.

[20andup]

I am on the same boat as these people that can't afford a home with these property prices. But, I don't blame other people for having more than me. The concept of private property is that anyone can do whatever they want with their property.

[nommm-nommm]

That is not the concept of private property. You have never been able to do whatever you want with your property. You can't, for example, build a factory in a residential neighborhood. You can't make your property a fire, health, or safety hazard. You can't partake in activities that significantly disturb your neighbors. You can't build illegal or unpermitted construction. Your construction must follow fire and safety codes. You must follow ordinances about how tall your building can be, how big your lot has to be, and how far back from the street it can be placed. If you live in a historic neighborhood you can't decide on the materials, style, and color your house is. Your house can't be too big or too small. You can't be a slumlord. You can't build a dumpster fire in the backyard. You have to keep your house "up to code." If your property stays blighted for long enough the town will bulldoze it. (This happened to the house next door to my old house). You even may not even be able to water your lawn unless it's a Tuesday. You probably can't even let 8 of your college buddies move into your mansion[1]. If the government decides they want a courthouse or a highway where your house sits it will literally just take it away from you without asking.

About the only thing the government can't force you to do (in the United States) is quarter soldiers during peacetime.

Like the sibling comment said, you live in a society so we all have to play nice with each other.

[1] most cities forbid a large number of unrelated people from living together.

[curried_haskell]

The fundamental flaw with this is, you don't exist in a vacuum. This all has effects on the city and on everyone else who lives in it. At a certain point, no, they can't do "whatever they want" because ultimately it does affect other people.

[20andup]

This "At a certain point" is, however, subjective. Who can say your "point" is right or wrong. Some people have more tolerance than others. Having a mob mentality of dictating what those limits are is dangerous in my opinion.

I would not oppose having a quantitative measure of how empty homes ultimately harm Vancouver's economy in the long term. I think that would be a much more constructive argument to implement measures to curb this trend.

[mistermann]

> Who can say your "point" is right or wrong.

We've kind of decided on using a democratic process, which indeed is a form of mob rule.

As for the danger of this approach....so multi-millionaires have one less global city they can buy property in completely hassle free....I think they'll find a way to survive.

[20andup]

https://en.m.wikipedia.org/wiki/Ochlocracy

"Ochlocracy ("rule of the general populace") is democracy ("rule of the people") spoiled by demagoguery, "tyranny of the majority", and the rule of passion over reason, just as oligarchy ("rule of a few") is aristocracy ("rule of the best") spoiled by corruption, and tyranny is monarchy spoiled by lack of virtue. Ochlocracy is synonymous in meaning and usage to the modern, informal term "mobocracy", which arose in the 18th century as a colloquial neologism."

[1_2__3]

That is not even a little bit true.

[murbard2]

Usus, fructus, and abusus have been recognized as pillars of private property since the antiquity. "Abusus" is the right to destroy or dispose of a property. Certainly that would include not using it.

[will_hughes]

But there are reasonable limits on those private property rights that are commonly accepted.

For instance, I don't have the right to set up a nightclub without permission from the city, and (if I'm not being an asshole) neighbours and other nearby residents/businesses that would be affected.

These limits come into existence because there was a problem that residents of the city felt needed action on. Leaving large numbers of properties empty is the extreme opposite end of everyone running nightclubs.

[Spooky23]

It's profoundly unfair that the entire population needs to put up with the problems associated with empty property and increased costs.

[aminok]

You have no right to force people to sell their assets at a low price. It's not unfair at all if they exercise their right to their private property in some way, like refusing to sell, that causes prices in the market to increase.

[Spooky23]

Vacant property has other costs to a municipality. Nobody is forcing them to sell, just taxing them more.

[orthecreedence]

Nobody is forcing them to sell. They just have to pay an "I'm filthy rich and can afford an empty house in Vancouver" tax.

Private property is not some sovereign nation. It's still subject to law.

[aminok]

You missed my point. I was giving an example of a rightful exercise over one's own private property leading to market prices increasing. You don't own the market and the extent to which you have a right to influence it is limited to whatever influence your own offers, bids, purchases and sales have.

Maybe there's a justification for an empty home tax, but I don't see it in your argument.

[orthecreedence]

The justification is that people are hoarding limited resources from others and not consuming them. They can still exercise whatever property rights they want. They just have to pay a fee for taking up space and not using it. If they want to participate in a real-estate pump and dump, that's fine, but the voters have decided to penalize such activity.

> You don't own the market and the extent to which you have a right to influence it is limited to whatever influence your own offers, bids, purchases and sales have.

...and to the extent that the government can influence it with taxes and tariffs, which is a perfectly acceptable form of market intervention.

[delecti]

There's clearly a limit though. We impose laws on all sorts of things that impose negative externalities on society.

[st3v3r]

Have you considered that their choice is negatively impacting quite a lot of people, and it is profoundly unfair for them to take housing off the market and drive up prices just because they can?

[int_19h]

Their house still occupies space where another full house could stand. Such space is in short supply within the city. It's basically a tragedy of the commons here - an abuse of a shared resource, to the detriment of most.

And it's not even an onerous requirement on the owners. They will just have to rent them out, now. And they can hire companies that will fully manage it all for them, and still make a profit, marginal as it may be. So it's actually better for them as well.

[prostoalex]

Wouldn't it be easier for them to have grandma or some other distant relative just live there to fulfill the minimum requirements?

[Thiez]

You say that like you've found a clever loophole, but what you suggest would be the intended effect of the tax: fewer unoccupied houses.

[zaroth]

I didn't read the bill, but if it's literally what's on the tin and reported in TFA then I think this is a horrible over-reach.

A property is by far the most expensive asset most people own. Usually "own" in this case means paying a small percentage of the total cost each year and financing the rest. Now there are a million reasons why you might need to leave your house for 6 months or longer where you cannot afford the cost and risk of moving out all your belongings and renting the place to a stranger. Vancouver is saying that they will fine you 1% the value of your house because of this?

Someone commented on the AirBnb thread about how "owning" a home in SF was really just a long-term lease you are very likely but not guaranteed to be able to renew. Policies like this make it crystal clear; you own nothing, even owners are renters, and circumstances be damned they will tell you what to do with your house, and heck probably even have a say in who you rent it to, before the day is done.

Many single family houses cannot realistically be rented for a true net profit if you really account for all depreciation and wear and tear. Oh, and remember, it's illegal in many jurisdictions to even dip into a security deposit based on "normal wear and tear".

Now if any given property had a vacancy budget of, let's say, 3 years, before this kicked in, then I could at least accept this isn't going to screw over legitimate vacancies.

But the idea of an "illegitimate vacancy" on a house I own that I'm paying property tax on... That is truly bizarre. A city should be happy to have the tax revenue with none of the burden.

[andkon]

Here's some math that should make this make sense to non-Vancouverites:

A 1200sqft bungalow across the street from me sold for $2.8mm four months ago; it's now back on the market for $3.2mm. If you put 20% down, that'd be a monthly mortgage payment of $11,500. That's 1/6th of the average Vancouver family's annual income, per month!

I have a feeling that if you're paying $11,500 a month on your mortgage, you're not worried about 1% of the value of your house, and you're definitely not worried about renting it out at a profit. You're just hoping it keeps appreciating enough to pay for interest and this new piddly 1% tax.

That's who this tax is targeting. And I welcome it wholeheartedly.

[quickben]

Just thinking about this in a detached, mathematical sort of way. The increase or 400,000 over 4 months, is more than 1% of the value.

Depending on how crazy the market it, prices may jump even higher short term to accommodate the added speculation loss.

In any case, hopefully Toronto doesn't reach that level of insanity.

[zaroth]

So $3mm is basically retirement money, right? So why isn't everyone just selling and moving somewhere else?

This sounds to me like real Vancouver residents who bought years ago have just won the lottery. Boohoo my house is worth 10x what I paid?! Tell me more about your problems!

Seriously, cash in the chips and enjoy life until the crash and then move back in a few years, own your house outright, and, continue to enjoy life.

I mean, I don't want to be rude but I'm having trouble wrapping my head around this...

  Hey man, my house is worth like $4 million on Zillow.
  Yeah, that totally sucks, how are relatable people supposed to move in next door?
  Those Ferraris really have loud engines. It's a menace!
  How are we going to *fix* this?!
  We need the value of our homes to plummet back to equal or less than what we paid. I need noisy neighbors who can't afford landscaping, not just this eerie silence all up and down the street.
  For sure.

Please can you tell me how we can get these Chinese investors interested in some nice New England properties?!

[uw_rob]

I don't think the anger is people bought their home 20 years ago. It's from people who rent; people who grew up with their parents and want their own place in the city; people who have moved to the area for a job and cannot afford to live within a reasonable distance of work.

Having property that no one lives in despite people wanting to seems like a poor allocation of land. (Mind you, it may not be a poor allocation of resources for the people investing)

[ryanwaggoner]

A 1200sqft bungalow across the street from me sold for $2.8mm four months ago; it's now back on the market for $3.2mm.

That's incredibly frustrating, I get that. I'd love to live in the Bay Area again, but it's too expensive to be worth it to me.

What you're describing is a classic bubble. Speculation divorced from the underlying asset value. Presumably not enough Vancouverites would think that $3.2mm for a 1200 sg ft house is worth it to keep that value there. So it's temporary and will eventually pop. Bubbles hurt a lot of people while they run up and when they pop, but it's not clear that price controls do anything other than shift the pain elsewhere, usually while making it worse. I'd rather try and understand what's driving the underlying bubble and fix that if we can. The vacancy is a symptom, not a cause. That said, that's probably not something Vancouver can deal with directly, as it seems more tied to global macroeconomic conditions.

[orthecreedence]

> I'd rather try and understand what's driving the underlying bubble and fix that if we can

Foreign real estate investment? Driven by economic forces in foreign countries? I don't know if you can really "fix" that, but you can sure as hell tax it while it's happening. And 1% isn't bad at all if the houses are gaining that much in value over such a short period of time. Whoever's flipping these is certainly beating inflation still.

EDIT: Read some more comments, particularly emptybits':

> It's an experiment. Much like our recent 15% foreign buyers tax reported a few months ago. We're all watching the experiment. Perhaps our role is to serve as a lesson to other cities?

So it seems as though they are trying to curtail the bubble caused by foreign influence, and my comment about "fix"ing it was made in ignorance.

However, I still think it makes sense to tax both ends of the spectrum...the buyer tax limits new purchases, the "living here" tax limits houses already bought.

[pbhjpbhj]

>there are a million reasons why you might need to leave your house for 6 months or longer //

Could you give a few examples? I know some rich middle-class (UK) people who have left their home for a couple of months whilst they've had renovations. And I know a few people, again pretty well off, that have travelled extensively abroad or lived abroad and rented out. Beyond that though?

I do think they should adjust to allow small-scale local-owner rental.

>Policies like this make it crystal clear; you own nothing, even owners are renters [...] //

I think they make it clear that peoples housing needs are being preferred over rich peoples right to profit from those same housing needs.

[zaroth]

It could be to care for a sick, disabled, or mentally ill relative. Or because the resident gets sick and needs to move in with a relative.

It could be some sort of seasonal work transfer, or an unexpected work transfer that you are forced into until finding a new position back home. Or maybe you are taking a sabbatical. Or a stint in the peace corps (I think that's usually 18 months).

[sokoloff]

I might want to live in a warm climate for 183 days per year and Vancouver for the rest.

I might have a temporary overseas assignment.

I might have a military deployment. (Or UN or Peace Corps.)

[pbhjpbhj]

3 months is a long overseas assignment in most roles, I guess your company would have to pay you enough to make it worthwhile. That's not the city struggling for housing stocks problem.

Military deployment, seems reasonable, I wonder how many deployable military are living in these houses; also wouldn't the location remain your primary residence and so avoid the tax?

Wanting to live somewhere else? That's exactly what the tax is for - pay up or change your residence.

[sokoloff]

You asked for reasons why someone might choose to move out of their house for 6 months or longer rather than rent it out. I gave a few; nothing more. By all means, I support the local government's right to pass whatever laws/policies/incentives they want as representatives of the residents and a policy could be good on balance even if it screws over a few edge cases.

BTW, most of our overseas assignments are 2 years initially. 3 months seems more like a long business trip, not an overseas assignment to me.

[nommm-nommm]

You must be filthy rich to be able to keep an empty house for 2 years.

[emptybits]

> A city should be happy to have the tax revenue with none of the burden.

This is true. The city (actually province & city) receive the tax revenue.

Unfortunately, rental stocks are so low in Vancouver that it's very difficult to find a place to live among all the (apparently) empty condos and houses owned by people who don't live here. The average house price is $1.4 M. A small 2 bedroom condo will still set you back half that. Thus, the pressure is on the rental market and finding/encouraging a larger rental supply.

So while the government is fairly paid by absentee home owners, there is an argument that the government should be doing something for its resident citizens.

It's an experiment. Much like our recent 15% foreign buyers tax reported a few months ago. We're all watching the experiment. Perhaps our role is to serve as a lesson to other cities? :-)

[spott]

Honestly, you aren't the problem. The problem is speculative investors who are buying lots of property in nice areas and sitting on them: not renting them, not living in them, but just letting them sit vacant.

For a city like Vancouver, that drives up the cost of living for everyone as it drives the price of real estate through the roof, which is exactly what those speculative investors want. They have a perverse incentive to buy up all the property and not rent it out.

A tax at a percent of the property value destroys the motive to do that, which is in the best interest of the city. There are exemptions for primary residencies and properties that are rented for at least 50% of the year by month are exempted.

[zanny]

Sounds like all you need is a primary address exemption. IE, a property needs an associated primary addressee, rather than occupancy. You would not be able to claim a primary address for your second or third home, so if it goes unused it can then be taxed.

[aianus]

Their second, third, and fourth homes are in Shanghai, Beijing, and Hong Kong. I don't think Canada has any access to their land registries.

[ethanbond]

The burden is lack of housing and therefore skyrocketing housing costs, what are you talking about?

[theseadroid]

The sooner some of you guys get the idea that you own nothing, the sooner NA will become a better society. Living inside a society means your rights are not granted by the god or by nature, it is granted by other people around you, by the society. The right and law of ownership is the same. It is merely a consensus how the society distributes its wealth.

The issue you described doesn't really exist in Vancouver, where it has one of the lowest vancancy rate in the world (0.6 percent), it's a seller market and rent is high enough comparing to local income/maintenance cost.

BTW, Switzerland has the lowest house ownership in Europe according to [1]

1. http://qz.com/167887/germany-has-one-of-the-worlds-lowest-ho...

[zizzles]

Good nationalism would have been forbidding rich Chinese investors from pricing-out average everyday Canadians from their own housing market, in the very first place. Drastic, calculated measures; that "disgusting kind" of nationalism is what ends up making the real difference. The nationalism you are proposing is just spinning the wheels.

[yummyfajitas]

The global elite are not the cause of high housing costs. Housing prices have risen globally - NYC, Mumbai, Vancouver, London, etc. There just aren't enough wealthy people to take much housing out of circulation.

http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-...

I did some calculations a few months ago; if every wealthy person in NYC bought 10 homes, that would have the same (negligible) impact on the housing supply as building another NYU.

https://news.ycombinator.com/item?id=12022235#12022920

This is not an effective use of public policy. It's just an attempt to find a scapegoat while ignoring the real problems - exclusionary zoning, low density and bad local regulations.

[andkon]

Vancouver has an annual average income of around $70,000. At current benchmark prices of ~$1mm, we're paying 14x our average salaries for homes. That's roughly as unaffordable as Hong Kong — the world's most unaffordable housing market.

Whether or not zoning and high density would bring housing prices down (it almost certainly would), you gotta ask: if Vancouverites can't afford these places right now, who can? People who have a lot of money.

http://business.financialpost.com/personal-finance/mortgages...

[Moshe_Silnorin]

A government passes a law limiting the number of cars that can be sold. Manufacturers switch to exclusively luxury cars as they have much higher margins. Rich people buy them because they can afford them and need them. Everyone gets mad at the manufacturers and the rich people instead of the idiotic legislation. If we killed zoning laws, allowed modular housing and dorm housing, rents would drop very quickly.

[snrplfth]

Yeah, it's hard to get this across to people who live in a city where it feels like supply is increasing fast (because it's in huge, highly visible towers), but as a percentage of the total stock, is growing quite slowly.

I lived in Vancouver for a while, and though people were totally on board with the idea that increases in demand for housing would push up prices, they were highly skeptical of the idea that increased supply could decrease prices.

[naasking]

> If we killed zoning laws, allowed modular housing and dorm housing rents would drop very quickly.

Except you just screwed existing home owners, which is why this will probably never fly.

[Moshe_Silnorin]

I agree. This is a sustainable equilibrium. But blame the equilibrium or the homeowners for supporting terrible laws, don't start burning witches.

[refurb]

What was the latest data on citizenship of home purchases in Vancouver? 10% foreign, 90% Canadian. And almost 30% of those Canadian purchasers were speculators.

Are the Chinese causing home prices to go up in Vancouver? Probably a little. The much bigger problem are the Canadians over extending themselves by speculating on home values.

[stuartaxelowen]

Perhaps you don't about the situation in Vancouver BC, but it is a very common place for wealthy Chinese nationals invest in a "safer" place outside their country. This is well known to the locals and those in the region.

[afarrell]

I've heard this about many cities, including Boston, London, and New York.

Do you have evidence that it is true in large numbers?

[twistedpair]

I've got a home in Boston. Zillow tells me it's appreciated 45% in several years. Since I (1) got a very low interest rate and (2) got a house in a hard to come by area and (3) would have to pay realtor fees to sell, why wouldn't I just rent it out when I decide to move somewhere else?

If other people keep doing that in their lifecycle (move further out when deciding to have kids), you end up with many homes as investments where the home owners have no intention to combat high housing prices, as that only leads to higher rents and more profits.

[afarrell]

If you rent it out, the home isn't empty.

[Scoundreller]

If you're trying to stash illegitimate money overseas, would you do it in your own name, or use a trustworthy local stand-in when available?

Secondly, even if the money is legitimate, Canada does not tax capital gains on residences that are your primary residence.

So if one wants to buy 5 homes, one could buy 1 yourself, and find stand-ins for the other 4. Or if one doesn't plan on living in any, 5 stand-ins.

[twistedpair]

Which is why in Boston (5th most expensive US housing market), I get 50% discount on my property taxes, because I actually live in my house. If the house was an investment property, I'd pay 2x as much in taxes.

[1] Boston Residential Exemption https://www.boston.gov/departments/assessing/how-file-reside...

[yummyfajitas]

People make similar claims about NYC, Mumbai, etc. The numbers just don't add up. There aren't that many rich Chinese people.

In any case, suppose you are right. Why not keep building homes and selling them to those dirty chinamen? They want to throw money at Canada, why not take as much of it as possible?

Oh right, exclusionary zoning. Which I'm sure is also somehow the fault of evil foreign scapegoats rather than nice white middle class Canadians.

Maybe you guys should build a wall, and make the Chinese pay for it. Make Canada Great Again!

[YZF]

There are lot of rich Chinese people. A friend of mine in a Vancouver suburb sold their place three months ago to a buyer from China who paid cash and who left the house empty. That's a fact. Another story I heard which may or may not be fact :) but I tend to trust is that someone came in to a local insurance office to insure 30 houses they owned. Houses in the Vancouver suburb I live in went from about 700K to 1.4M in two years in direct correlation with the arrival of foreign buyers. Some of those actually do live in those houses but a lot of houses are left empty.

China owns $1.25 trillion of US debt. I think this gives a window into the amount of money sitting there. That's a million $1M houses. Vancouver has 47K houses...

[kevin_thibedeau]

> There aren't that many rich Chinese people.

China has 1M+ millionaires. Assume 10% have enough disposable cash and motivation to go shopping for foreign real estate. It doesn't take much effort to look across the Pacific and home in on the politically easiest place to escape to. If 10% of those people choose Vancouver that's 10K units locked away from local residents.

[yummyfajitas]

So how come housing prices have been skyrocketing in most global cities as well? You seem to want to blame Vancouver's problem on foreign scapegoats, but Vancouver's problem is hardly unique.

If all these evil Chinese folks are going primarily to Vancouver, what's the cause of SF, NYC, Boston, Mumbai, Delhi, Bangalore and London's high housing prices?

And why is Houston somehow immune to this global phenomenon?

[YZF]

The total housing inventory available in all these cities is just not high enough to satisfy the demand of investors. It seems there are certain cities that attract attention while others do not. Seems to be about where the marketing effort is and what the screening criteria is on the buyer side.

This is nothing to do with evil. It's just business/common sense. If I had a lot of money and I was living in China where there's a large risk and I was looking to make a similar investment I'd probably go the same route. A lot of wealth was created in a short time and those wealthy people like any normal person are concerned about preservation of that capital and some sort of safety net.

[gamblor956]

Chinese buyers are not restricting themselves to Vancouver....

There are also a good number of wealthy Russians and Middle Easterners paying cash in the cities listed. If you've followed NY or London real estate news for the past decade, you would know that what's happening in Vancouver has been happening in other cities as well.

[clock_tower]

> "And why is Houston somehow immune to this global phenomenon?"

"We don't like yer kind 'round here."

[Element_]

60% Chinese rich people plan to buy house overseas, US most preferred - "About 1.34 million Chinese people who own at least 1.5 million USD took the survey from August to October, 2016." - http://usa.chinadaily.com.cn/china/2016-11/09/content_273251...

[xxpor]

Vancouver has a lot of for sale signs in front of houses that are entirely in Chinese.

[hesarenu]

It does not have to be wealthy people, just people who make substantially more then the locals. Housing prices have risen in my city(2nd tier city) in India. Most are brought by NRI's/outsiders, many vacant. There are numerous flats coming up. For locals it very difficult to acquire one, hence they are buying out in smaller cities, and prices have risen in smaller cities as well.

[raldi]

And even the libertarians should be on board with this tax, because it's correcting a huge negative externality: empty units are bad for a neighborhood. Occupied units support local merchants, reduce crime, and generally make a neighborhood more fun and interesting to live in.

[dmix]

None of those sound like particularly libertarian-centric issues. A government fine regarding how a persons decide to use their private property sounds quite anti-libertarian to me.

[civilian]

If you're a principles-first libertarian, then yes it's anti-libertarian.

But if you're a "let's use the market and data to solve problems efficiently" kind of libertarian, then this is a nice solution.

[ryanwaggoner]

Umm, I don't see a market here. I see the government charging a fine for behavior they find objectionable. If the government decides that you shouldn't drive more than 55 mph and they catch you doing that and write you a $100 ticket, you haven't participated in a market transaction in any way.

[billions]

Libertarian means do what you want as long as you're not hurting others. Gary Johnson ran on the platform of 'keep the government out of our pocketbook and out of our bedroom'. Not sure how taxing home use aligns with that.

[fucking_tragedy]

> Libertarian means do what you want as long as you're not hurting others.

People are doing what they want and it's being argued that it's hurting others.

That said, I've never seen a libertarian push for anything other than leaving it up to the market, even in the face of negative externalities.

[DINKDINK]

>even the libertarians should be on board with this tax

No, Libertarians would not support this. The reason why there are empty properties is that there are capital controls so severe that it's more lucrative to buy a house (and not rent it) as a store of value than a currency/stock/precious asset (gold,bitcoin etc). A law -- which didn't account for the second-order detriments -- created this perversion in the market. Adding another law -- which again won't account for the second-order detriments -- is not going to fix it. Less is more, when it comes to economic law.

[ubernostrum]

OK, so how can the voters of Vancouver change the laws of China?

[kspaans]

Enact a Land Value Tax. In a squeezed market like Vancouver most of the value in houses is the plot of land underneath them, not the "bricks & mortar". By taxing the value of the land rather than the property on top of it you won't penalize people for renovating or knocking down an old building and replacing it with a newer one. Hopefully the tax is high enough to put off speculators and bring prices to a more reasonable level (because massive swings in land value of 20% per year will increase the tax burden).

[orthecreedence]

Just abolish all laws and government and let the market, you know, figure it out.

[mjevans]

Trade relations treaties.

[ecopoesis]

Tanks and bombs.

[ubernostrum]

So... the libertarian option is to initiate the use of force?

[krschultz]

You're making a huge assumption that capital controls are the cause. It's more likely that people believe real estate is a better investment than currency, stocks, precious assets. Or perhaps they just want to diversify their holdings. I'm considering buying some investment real estate, and it has nothing to do with capital controls.

[zaroth]

I think DD must be right, because there are funds like IYR (I don't know about Canadian equivalents) that would be a much less expensive way to get the same real estate market exposure, so the question is why isn't the money going there?

[aianus]

The Canadian government subsidizes home-ownership by not taxing the capital gains on a primary residence.

I know the article is about empty properties, but it's actually a lot more common to send your 18-year-old kid to study in Canada and wire him $1 million to buy a primary residence in his own name.

[zaroth]

So what you're saying is... the rich will aptly avoid this tax just like they do all the others, and the hapless hoi palloi who might have to leave their home vacant for 6 months (e.g. to care for a dying relative) would be stuck paying the fine. Sounds about right :-(

[krschultz]

You can get a mortgage on a physical residence but not a fund. You can buy insurance on a physical place but not a fund.

[aianus]

You can certainly get a "mortgage" on a stock portfolio. It's called trading on margin and the interest rates are even better.

But it's true you can't get quite as much leverage and the dividends and capital gains are not tax deductible like they are for your primary residence.

[kspaans]

Probably VRE. (Disclaimer: I own shares of VRE.)

[nostromo]

Libertarians would argue that this is a problem created by onerous zoning requirements to begin with.

[andkon]

Zoning doesn't make empty units. If you took away all zoning strictures, you'd still be left with the fact that people who buy just as an investment aren't doing much good for a neighbourhood and a city.

[gravypod]

Zoning is the cause of high housing prices. This is only an issue because there aren't enough houses to meet the demand. Zoning laws are artificial restriction to prevent deflation of home values. They also prevent people from building what has been dubbed as "tiny homes" that would allow poorer people to provide a substantial improvement to their living conditions. That is where this issue stems from.

The inability to a) provide for yourself reasonable living accommodations, and b) the surprisingly huge spike in prices of homes due to the lack of homes that are required.

This is what a libertarian believes (disclosure: I'm a libertarian).

[stephen_g]

I don't think that's true in most places though. In Australia we have crazy unaffordable house prices, and economists and politicians often say the problem is supply, but a group called LF economics did a study recently and found that our fastest growing markets were in oversupply for more than half the time the price has been rapidly rising.

As far as I can tell, the idea that it is a supply problem is just an assumption, assumed simply because neither neoclassical nor Austrian economics appear to have an understanding of credit and money creation by banks (through lending, which creates deposits) that lines up with how modern banks and the real-world monetary system works.

Some of the post-Keynesian models seem to match the real-world situation a lot more. The house prices seem to be so strongly distorted by speculation based on easy access to credit that the price statistics don't correlate almost at all with the supply surveys, but does strongly correlate to the amount of money created by lending. This explains pretty well what we're seeing, including how lowering interest rates will inflate asset prices instead of stimulating the real economy. But many people refuse to believe the data and the conclusions it leads to just on principal, because the idea of market prices not being set by supply and demand is blasphemy!

[gravypod]

Australia is a different case due to the lack of many urban areas. If development where allowed to continue at a faster pace with no red tape most of Australia could no doubt be turned into an economic super power much like Japan. The country is huge, has an extremely smart population, and is already known for engineering prowess. The heel that is Australia's weakness is high import tariffs on pretty much anything, poor ISP quality due to monopolies, and a select few urban areas.

This is also coupled with how great of a place Australia is to live to create a pretty high bar in housing prices. To be honest, if some things where changed about Australia I'd move there. It's got low crime, great politics so far, and a lot of things I like. It's just too focused on a select few areas and too pricey.

[andkon]

Zoning is just one cause of high housing prices. If zoning allowed for greater supply, we'd have lower housing prices. No argument from me there. But if we believe that housing isn't meant to be an empty investment that pushes out local residents, we should regulate uses of housing that don't actually put roofs over heads.

Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way. It decreases demand and absolute prices, sure, but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now. Our local GDP is largely based on real estate. It's not great.

[gravypod]

> But if we believe that housing isn't meant to be an empty investment that pushes out local residents

As a libertarian I feel that protections of any free trade are the cause of most of these problems so no, I do feel that housing is meant to be an "empty investment" as you put it. I don't believe in government protectionism.

To me it looks like you are saying "I want more people to be able to afford houses" then following up with "oh that person? No they're too poor, they don't deserve a house" as that is where this sort of "necessities-as-an-investment" thinking leads. A house should only be worth what a house is worth, nothing inflated by a restriction on the homes created.

> we should regulate uses of housing that don't actually put roofs over heads

Do you think that anyone would buy a home that doesn't have a roof? I could actually see a few situations for doing this (installing your own roof after purchasing is one). I don't think government should mandate safety scissors. This is again another protectionist mentality that ruins freedoms of decisions.

In my ideal world I'd go to a reputable inspector, have them inspect one of the thousands of new homes in a development, then based on their comments buy or not buy the home. No one should tell me I have to live in this home. What if I want to use it as an office for a doctors clinic that's built in the center of the town? No one should be able to tell me that isn't allowed other then the person selling me the home. Government involvement in this is a) just to increase price and b) just red tape that keeps "those people" out of "my" neighborhood.

> Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way

I don't see how wanting someone to be allowed to build a home for themselves, or allow someone to build homes for the poor/homeless as a charitable prospect, on land that isn't currently developed requires government regulation.

> but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now.

Again, I don't think a property is an investment. Then again I also don't believe in bailouts or other protectionist viewpoints. It would be beneficial to you to read up on libertarian viewpoints as your characterizations aren't correct in these cases. I don't believe any investment should be protected as every investment is to be a compensation for the risk that was taken in making it.

To a libertarian this looks like a ruling elite class oppressing the poor minority in an attempt to make themselves rich.

> Our local GDP is largely based on real estate. It's not great.

I don't see why property sale being a large percent of GDP is bad. If a country was made of 90% diamonds selling the land to diamond mines would be very profitable and as such a large percentage of the GDP would be from land sales. This isn't a necessarily bad thing. It just depends on who it's benefiting. Currently this benefits the ultra-rich and the government and that's just doesn't fit in my world view.

[linkregister]

I think in the absence of zoning, the affected neighborhoods would have HOAs by contract limiting building freedom. What's the difference as to whether the contract is imposed by the local government or a private council that is attached to the property?

[snrplfth]

The problem is that there's no effective way with (currently constituted) zoning law to 'trade' the externalities of density. You can't compensate your neighbours for shadows or traffic or other impacts in exchange for being able to build larger. So the choice faced by most residents is:

1) Acquiesce to high-density development, and receive zero compensation, or

2) Fight high-density development, and probably get zoning laws imposed at minimal personal cost.

You can see why this setup incentivizes people to push hard for "static neighbourhood" zoning law.

[MichaelBurge]

If the HOA is a corporation with the residents as shareholders, then Walmart or whoever can go to the council and offer to buy out the area or make an exception. The local neighborhood can vote on whether to allow it to go through, or ask Walmart for money to compensate them for the disruption. There's very little friction if Walmart is willing to come to an agreement with the neighborhood. The worst case is that Walmart buys the HOA corporation, and there's always some amount of money that will buy people off.

If the local city manages it, then it's a long drawn-out process of lobbying for zoning controls that apply city-wide. And offering the citizens money to vote for it might be illegal in some jurisdictions. Even if Walmart and the local citizens are okay with it, a couple hold-outs or people from other neighborhoods can delay the entire process by complaining to the zoning board.

[gravypod]

> the affected neighborhoods would have HOAs by contract limiting building freedom

Then I wouldn't sign those contracts or I would not move into their properties. I'd move to the outskirts of their neighborhood and build there.

Governments have a perceives authority to enforce their regulations on everyone. No one perceives Joe-blow as having the same power. It is because of this that society can keep people in check when these situations arise but no one can control the government as they are presumed to have abilities ordained allowing them to (unfairly) arbitrate these situations.

[yummyfajitas]

Zoning is what causes Vancouver to have 1/3 the density of Brooklyn.

Based on this doc, I believe Vancouver (or "Vancouver A", as distinguished from the greater metro area) has about 200k units.

http://www.metrovancouver.org/services/regional-planning/Pla...

It appears zoning rules, which prevent Vancouver from building up to Brooklyn levels of density (approx 3x as high), is keeping 400k units off the market.

In contrast, unoccupied housing is keeping only 10k units off the market.

But I'm sure the rich Chinese people are secretly to blame for this too.

[raldi]

You're focusing on yet another externality of vacant units, that they increase the price of housing. I agree with you that this is minor compared to the way that restrictive zoning drives up the price of housing, but what about all the other negative externalities I mentioned in my comment?

[Tiktaalik]

Zoning for higher density doesn't necessarily solve this problem.

Creating more supply results in more units that can potentially be purchased as an investment and left empty.

[Moshe_Silnorin]

You're arguing that vastly increasing supply will not lower house prices?

[yummyfajitas]

Housing is a good investment because it's illegal to make more of it. This makes the price of existing stock go up.

If you legalized the production of housing that would no longer be true.

[andkon]

No, the fact that the whole lower mainland has 30% the population of NYC is why Vancouver proper has 1/3 the density of Brooklyn.

Increasing density in response to rising populations is great. Increasing density in response to rising investor demand is what we've done already, and it's why we have incredibly lonely, dead neighbourhoods like Coal Harbour.

[snrplfth]

The logic is that zoning makes for a housing shortage, which means it's profitable simply to hold on to properties without renting them, because the rent would be such a small portion of the investment gains. If supply increased, and moderated the price increases, then people would rent out more because they wouldn't be seeing huge year-on-year home value increases.

[andkon]

That's definitely an alternative response. Here, we've decided that we should instead cut investors' demand of housing, rather than increasing supply proportionately in response to investor demand. Like raldi says above, it's an approach that's a little more sensitive to the fact that we have to live in the hollow feeling city that an investor class can make.

[snrplfth]

I understand the response, certainly. But I don't think it's going to make housing (rental or ownership) substantially more available or cheaper in Vancouver - it'll just shuffle a few people around. And rich people don't just evaporate because you limit housing supply; they can arbitrage their way around most of these limits pretty easily.

[pashapiro]

I'll allow that ignoring or abandoning private property is generally the measuring stick that libertarians use to justify seizing it, but as others have said, if the real estate market in Vancouver were less regulated, this wouldn't have happened in the first place.

[mahyarm]

If somewhere like SF will adopt it although, they will have to make their rent control at least follow inflation. Sub inflation %0.5 rental limit increases are a bit crazy. Even %2/yr is relatively low.

[MichaelBurge]

If the picture is accurate, it looks like they're mostly worried about single-family homes. The investment market mostly values properties based on how much money they can make, so it's far more rational. Single-family homes aren't part of the investment market, and only exist in a housing supply shortage due to restrictive zoning laws.

I don't know enough about Canada to say why they have restrictive zoning laws. In the US, it's mostly government-backed mortgage programs and covert racism.

I don't care how rich the Chinese are; those properties would be demolished, rebuilt as apartments, and rented if it were allowed. Because the value of the property is directly proportional to its expected profit. It's only when the government disconnects the two that you ignore the rental profit. The Chinese government's currency controls probably don't help, either: The Chinese are willing to lose money as long as it's free from their government's currency controls.

Does Canada offer government-backed loans that are available to foreigners?

[andkon]

I personally am worried not about single family homes, but about maybe one day getting to own a condo. That'd be cool. But new tiny units start at $600,000.

But what happens if you just chop down SFH and rebuild with higher density, and you don't also put restrictions on investing in the new units? You just end up with the problem we have now. We're building tons. Our local GDP is largely based around real estate. Not that we don't have a NIMBY problem — but there's only so much building you can do before you look around and feel like you just built more empty houses for people who don't live here.

[MichaelBurge]

You should always ask for a copy of the HOA bylaws before buying a condo. You might prefer to pay extra to discourage empty investors, and that could certainly be written in. Even without that, you might also ask how many of the other buyers are pure investors or otherwise ask people how they like it there.

Though, it seems like a condominium complex that is 50% empty would give you a greater density of neighbors than a SFH suburb that is 50% empty. And you can get the Chinese to pay for your new roof, to boot.

Somehow I doubt even the Chinese have enough money to turn a high-density city into a scene from 28 Days Later, though.

[andkon]

Anecdotally, I lived in Coal Harbour in Vancouver when I first moved here. The newest waterfront condos were ~30 stories tall, and on average, you'd see three lights on at night in them. It's not like that everywhere here, but it is really strange.

[secfirstmd]

Based on Dublin's experience. I think that a tax on unused but already zoned residential land would be more effective than one on "empty" homes.

Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.

[kareemm]

> a tax on unused but already zoned residential land would be more effective than one on "empty" homes.

Don't know how much you know about Vancouver's geography, but there's not much of this kind of land.

> Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.

An influx of foreign capital (excess demand) and zoning (not enough supply fast enough) are the biggest drivers of this in Vancouver.

[xrange]

>This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1%

We'll believe it or not, that's what Trump supporters think they were doing:

https://www.google.com/#q=draintheswamp

https://www.google.com/#q=globalism+vs+nationalism

[dclowd9901]

You say it's not enough, but doesn't it just need to be enough to make real estate underperforming compared to other asset investement opportunities? Even during good times, home appreciation isn't much more than 3-5%. Taxing that by a percent makes even money market accounts look palatable.

[nemo44x]

A home is more than an investment. You live in it. Homes aren't competing with other investments, they're competing with renting or being homeless in some form.

[aianus]

> Homes aren't competing with other investments, they're competing with renting or being homeless in some form.

If you have $1 million, you can buy a house and live in it "for free" or you can buy stocks/bonds/ETFs, maybe earn $50k a year in dividends and capital gains, rent a place for $30k a year, and pocket the difference.

So yes, buying a home does compete with a combination of (other investments + renting).

[nemo44x]

And after taxes on your gains you can pay your rent and live for free. Sounds similar but I guess that's the market at work.

[Scoundreller]

Sure they are. If homes are cheap, you buy a big home and save little. If homes are expensive, you invest in a car and commute or buy a "cute and cozy" home, and invest the rest.

[jorblumesea]

3% is better than 0%, which is your appreciation on renting, no? Not to mention building equity, which will eventually pay you back some

[Moshe_Silnorin]

Zoning laws, zoning laws, zoning laws.

[jcoffland]

Don't forget us genXers.

[ryanwaggoner]

the kind where people band together to defeat the global elite and the upper class / 0.1%, instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials).

Why is this kind of us vs them against "the wealthy" acceptable to you? The upper class / 0.1% constitutes millions of people, some bad, most good. Just like every other group. Would you be comfortable putting any other words in your sentence above instead of upper class? Like men, women, the elderly, the poor, minorities, etc? Why is bigotry against the wealthy ok?

[LBXrRkxx]

Not all wealthy are greedy. But enough of them are, like not all blacks are criminals and not all Hispanics are illegal, and actually to a greater extent. Language is imprecise and trying to police it belies a fundamental lack of respect or empathy.

[ryanwaggoner]

But enough of them are, like not all blacks are criminals and not all Hispanics are illegal, and actually to a greater extent.

You're making my point. Presumably you wouldn't generalize "blacks as criminals", even though some are, but it's OK to generalize wealthy as greedy, even though not all are? Not saying you've generalized that way, but OP did.

Thanks for the lecture on respect and empathy, but I'm not trying to police language. I'm trying to understand why some people who are otherwise quite empathetic and respectful think it's OK to generalize and stereotype other groups of people.

[orthecreedence]

In this case the wealthy, good or bad, man or woman, black, white, brown, or otherwise are using their resources to artificially drive up prices in a marketplace where they do not have to live with the consequences of their actions. Essentially, they are using a place where people are trying to live as a giant real-estate pump and dump scheme and completely screwing up the local economy in the process.

Individually, each of these wealthy persons are just looking out for their own interests, as they should, but as a group they are causing harm, and as such are garnering ill-will from the locals. So the GP's words could have been better chosen as "defeat the global elite who are using our town as a get rich quick scheme" instead of using a blanket statement, but I honestly think that was kind of implied here.

Also, I don't really think an us vs them mentality is extraordinarily harmful at a time when wealth disparities are so astronomically high. In fact, I think ignoring the issue is what's causing us (and not "them") great harm.