City Council Approves Framework for New Vacant Home Tax and Adopts Home Energy Rating Program
July 19, 2021
This week, City Council approved the framework for a new Vacant Home Tax (VHT) and a new Home Energy Rating and Disclosure (HER&D) program. These policies are not in effect yet. As per Toronto Regional Real Estate Board's recent news release, both the vacant tax and the home energy rating and disclosure programs are not necessarily bad ideas, as long as the implementation is done right.
For the vacant home tax, TRREB has worked closely with City staff over the past months and years, calling for evidence-based decision-making to ensure that the tax meets its policy objectives of improving rental or ownership housing supply, not be viewed by the City as a revenue generator tool. We also called for appropriate exemptions to be provided, so the tax will not apply to principal residences, snowbirds, homes under renovation, and other exemptions.
On the home energy rating and disclosure program, TRREB’s position and advocacy efforts have been supportive of increasing energy efficiency, but the program has to remain voluntary for homeowners.
Vacant Home Tax – proposed to come in effect on January 1, 2022
City Council approved the proposed recommended design features to implement a new vacant home tax in Toronto. It is important to note that this tax is not yet in effect. Council has asked City staff to undergo further public consultation and report back with a final tax design during Q4 2021, including any potential modifications following public input, so that Council can consider and enable the tax by-law to be implemented on January 1, 2022.
The framework provides a definition of what a “vacant home” is, the method for declaring a property status, the percentage of the tax (proposed at 1% of the appraised value of the home), and proposed key exemptions like principal residence, snowbirds, units undergoing major renovation, owner is in care or hospital, court order is in place, etc.
In principle, TRREB is supportive of the proposed vacant home tax, as long as the prime objective of the tax as a tool is to increase housing supply by reducing the prevalence of properties left vacant. However, we remain concerned that the City might be viewing this tax as a revenue generation tool, as evidenced by a motion introduced and carried by Council stipulating that the City reserves the right to consider any potential increase to the tax rate in the future.
TRREB will continue to participate in the consultation process and provide further input before the final staff report is presented to Council in the fall, and will continue to update Members on this file.
Home Energy Rating and Disclosure program (HER&D) – proposed to come in effect in 2025
As part of the bigger Net Zero Existing Building Strategy, Council has also approved in principle, a home energy rating and disclosure program, and is asking City staff to report back to Council in Q3 2021 with a plan for a voluntary program initially (to commence in latter half of 2022) and a subsequent plan to consider making the program mandatory in 2025. As such, HER&D program is not yet in effect. Under such a program, homeowners would have an energy audit conducted on their home, receive a home energy efficiency rating, and disclose it to potential home buyers.
TRREB supports programs encouraging home energy efficiency, but strongly believes any such program must remain voluntary and optional, and should never be mandated. Ideally, it should be incorporated as part of a standard voluntary home inspection.
The City is also encouraged to focus on incentive programs that provide financial assistance or rebates for retrofits to improve a home’s energy efficiency, as such programs have been extremely successful in the past. For such programs to be meaningful and make a difference in terms of climate change and reducing greenhouse gas emissions, they cannot be tackled in isolation at a local level, but should be considered at the provincial or federal levels.
TRREB will continue to provide input to the City on this file, and will update Members as soon as further information becomes available. We will also be working with OREA and CREA to coordinate actions on this issue.
- Toronto Regional Real Estate Board