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| Location, location, location: how the world is tackling issue of empty homes | Location, location, location: how the world is tackling issue of empty homes |
| (6 months later) | |
| Wealthy property owners mothballing homes as investments for long periods is not a dilemma confined only to London | |
| Hilary Osborne | |
| Wed 2 Aug 2017 18.02 BST | |
| Last modified on Mon 27 Nov 2017 19.05 GMT | |
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| How to persuade the world’s wealthiest people not to leave properties empty is a conundrum that is not confined to London – other major cities around the globe have also been grappling with the problem of buy-to-leave. | How to persuade the world’s wealthiest people not to leave properties empty is a conundrum that is not confined to London – other major cities around the globe have also been grappling with the problem of buy-to-leave. |
| Higher rates of tax for owners and buyers seem to be the preferred choice. In Vancouver, where an estimated 20,000 properties were lying empty all or much of the year, a new tax on empty homes was introduced at the start of this year. The city is now charging 1% of the value of any property left empty for at least six months a year. Owners must declare that this is the case, or face fines of up to $10,000 a day if they do not and are found out. On a property worth £500,000 the annual bill is £5,000 and as the property rises in value, so does the penalty for leaving it unused. | Higher rates of tax for owners and buyers seem to be the preferred choice. In Vancouver, where an estimated 20,000 properties were lying empty all or much of the year, a new tax on empty homes was introduced at the start of this year. The city is now charging 1% of the value of any property left empty for at least six months a year. Owners must declare that this is the case, or face fines of up to $10,000 a day if they do not and are found out. On a property worth £500,000 the annual bill is £5,000 and as the property rises in value, so does the penalty for leaving it unused. |
| In the days running up to the first taxes kicking in, six months into the year, local media reported that homeowners were caught in a “scramble to rent”, or considering selling up to avoid the tax. The response suggests that the threat of taxation was having the desired effect. | In the days running up to the first taxes kicking in, six months into the year, local media reported that homeowners were caught in a “scramble to rent”, or considering selling up to avoid the tax. The response suggests that the threat of taxation was having the desired effect. |
| Similar measures are in the pipeline in Australia, where more than 100,000 homes are believed to lie vacant in Melbourne and Sydney, while locals struggle with affordability. As of January 2018, anyone who owns a home in Melbourne and leaves it empty for more than six months will face an annual tax equal to 1% of its value. Across Australia, the most recent budget brought in an annual charge for foreign investors who buy-to-leave. Any new purchasers who leave a property unused for six months face an annual charge of at least AU$5,500. | Similar measures are in the pipeline in Australia, where more than 100,000 homes are believed to lie vacant in Melbourne and Sydney, while locals struggle with affordability. As of January 2018, anyone who owns a home in Melbourne and leaves it empty for more than six months will face an annual tax equal to 1% of its value. Across Australia, the most recent budget brought in an annual charge for foreign investors who buy-to-leave. Any new purchasers who leave a property unused for six months face an annual charge of at least AU$5,500. |
| In Paris, the city has recently increased its annual surcharge for owners who keep properties empty. Since 2015, second-homeowners in France’s most pressurised housing markets have paid a 20% premium on the annual taxe d’habitation property tax. However, since the end of January those in Paris have been charged 160% of the standard rate. The city also offers grants and incentives to encourage owners to rent out properties not in use. | In Paris, the city has recently increased its annual surcharge for owners who keep properties empty. Since 2015, second-homeowners in France’s most pressurised housing markets have paid a 20% premium on the annual taxe d’habitation property tax. However, since the end of January those in Paris have been charged 160% of the standard rate. The city also offers grants and incentives to encourage owners to rent out properties not in use. |
| Another measure introduced in cities across the world has been an extra tax for overseas buyers – arguably those most likely to be speculators. Most have been targeted at cooling house price inflation, but may have also dampened people’s enthusiasm to buy somewhere they don’t intend to live in. | Another measure introduced in cities across the world has been an extra tax for overseas buyers – arguably those most likely to be speculators. Most have been targeted at cooling house price inflation, but may have also dampened people’s enthusiasm to buy somewhere they don’t intend to live in. |
| Since August 2016, the purchase of properties in and around Vancouver has been more expensive for buyers who are not Canadian or based in the country – they pay an extra 15% in tax when they buy. Figures from property firm Knight Frank show that annual house price inflation in the city is now running at just 2%, compared with over 30% in the months before the tax came into effect. Meanwhile, the percentage of homes selling to foreign investors across British Columbia has fallen, from almost 8% in June 2016 to under 4% in May this year. | Since August 2016, the purchase of properties in and around Vancouver has been more expensive for buyers who are not Canadian or based in the country – they pay an extra 15% in tax when they buy. Figures from property firm Knight Frank show that annual house price inflation in the city is now running at just 2%, compared with over 30% in the months before the tax came into effect. Meanwhile, the percentage of homes selling to foreign investors across British Columbia has fallen, from almost 8% in June 2016 to under 4% in May this year. |
| Toronto is also bringing in a 15% surcharge for overseas buyers, while in Australia there is a renewed determination to collect capital gains tax from foreign buyers when they sell. The country, which already forced potential investors to apply to the government before purchasing property and generally refuses to let them buy existing homes, is also limiting overseas purchases of new-build developments. Only 50% will be allowed to be sold to buyers from overseas. In Hong Kong, stamp duty for foreign buyers was set at 15% in 2012. | Toronto is also bringing in a 15% surcharge for overseas buyers, while in Australia there is a renewed determination to collect capital gains tax from foreign buyers when they sell. The country, which already forced potential investors to apply to the government before purchasing property and generally refuses to let them buy existing homes, is also limiting overseas purchases of new-build developments. Only 50% will be allowed to be sold to buyers from overseas. In Hong Kong, stamp duty for foreign buyers was set at 15% in 2012. |
| One potential problem with higher taxes on empty homes is policing the rules. In common with council tax in the UK, the rules rely on self-reporting, and cities may lack the resources to check that everyone is telling the truth. Another issue is that what is coming back onto the market is luxury property, which might not be immediately useful to those struggling to get on the housing ladder. | One potential problem with higher taxes on empty homes is policing the rules. In common with council tax in the UK, the rules rely on self-reporting, and cities may lack the resources to check that everyone is telling the truth. Another issue is that what is coming back onto the market is luxury property, which might not be immediately useful to those struggling to get on the housing ladder. |
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