Ottawa’s vacant unit tax (VUT) is raking in millions more than expected, leaving some residents and one city councillor wondering whether it’s a fix for the housing crisis or simply a cash grab.
The tax charges one per cent of the assessed value of homes left unoccupied for six months or more within one year. It’s meant to push property owners to either put those units up for sale or rent them to address the city’s housing shortage.
When council approved the tax two years ago, it was expected to bring in about $6.6 million per year. But city staff now say last year’s revenue haul came to $11.5 million.
Orléans East-Cumberland Coun. Matt Luloff, a longstanding critic of the tax, asked staff for that information through a formal inquiry. He didn’t like what he heard.
“I don’t think that this program is truly doing what it was meant to do, which is to free up rental units — not to become a new income source for the City of Ottawa,” said Luloff.
Luloff said he hasn’t seen a clear measure of whether the tax is actually getting vacant homes back on the market. He also asked staff for more detailed information about how the revenue is being spent.
Staff responded that all of the money goes to fund affordable housing initiatives, minus about $2.3 million spent to administer the program, though they promised to get Luloff additional details.
It sounds like they may need to increase the tax if it’s not punitive enough.
Indeed! They also need to observe the tax’s effect on the availability of rental units for multiple years to evaluate how it’s working. Data after 1 year aren’t that meaningful in this case