A vacant home tax could be in the works for Mississauga and Brampton

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Published April 28, 2023 at 5:01 pm

The Region of Peel, which is comprised of Mississauga, Brampton and Caledon, is considering implementing a vacant home tax (VHT) to discourage investors from letting homes–which are in short supply–sit vacant when they could be rented or sold to residents seeking housing. 

Yesterday (April 28), regional council authorized staff to submit a proposal to Peter Bethlenfalvy, Ontario’s Minister of Finance, requesting the authority to implement the tax in Peel.

According to the region, the 1 per cent tax would only apply to homes left vacant for more than 184 days in a calendar year and are not otherwise exempt. 

The move comes after the region retained Ernst & Young LLP (EY) to complete a study outlining how such a tax would work to increase the housing supply across the three municipalities. The report’s findings were presented to regional council on April 27, 2023. 

The region also launched community consultations regarding the proposed tax in April 2022.

According to a report presented to the region, EY recommended a hybrid delivery model that assigns most core enforcement responsibilities to the Region. Local municipalities will handle other functions, such as tax billing and collections. 

The EY Study estimates that the tax, if implemented, will generate approximately $17 million in annual revenue for the region. The study says the region could expect a one-time implementation cost of $12-14 million and that the annual operating cost will amount to about $4.5 million. 

“The EY study recommends that a VHT would be a feasible housing policy and revenue-positive tool for implementation in Peel Region to address affordable housing challenges,” the report reads, adding that the firm’s financial analysis estimates approximately 3,000 vacant units could be potentially subject to the tax annually. 

Should the Province agree to allow the region to implement the tax, it would not come into effect immediately. According to the study, the region and municipalities would need some time to develop the appropriate systems.

The study, which says financial benefits might not materialize if operating costs outstrip revenues, suggests the tax could come into effect in 2025 and could have a positive impact on housing inventory. 

“The Region would need to advance investment in this program in the coming years to facilitate the work required for implementation,” the report reads. 

“VHT has been used in other cities to improve housing supply and affordability, is consistent with council’s advocacy for ensuring the use of housing for homes and relates to the fourth pillar of the Region’s Housing and Homelessness Plan to optimize existing housing stock.”

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