The Metropolis of Ottawa’s Vacant Unit Tax (VUT) might get more durable, with growing penalties for properties that stay unoccupied for a number of years.
In accordance with a report ready for a joint assembly of the Finance and Company Providers and Planning and Housing committees on Nov. 6, strengthening the VUT was one of many commitments the Metropolis of Ottawa made in change for a take care of the province to supply the town with $543 million in funding.
“Strengthening the VUT is a precedence not simply to assist the province’s funding deal but additionally to make sure that housing is just not underutilized throughout a housing disaster,” the report says. “The tax ensures houses stay occupied and unoccupied houses are returned to the housing provide.”
The VUT was carried out by council in 2022 to encourage householders to occupy or lease their properties to deal with the reasonably priced housing disaster within the metropolis. All income collected from the tax will go into the town’s funds for extra reasonably priced housing. Properties which can be declared vacant for greater than 184 days within the earlier calendar 12 months are charged a price equal to 1 per cent of the property’s assessed worth on their ultimate property tax invoice.
In accordance with the joint committee report, metropolis workers are contemplating implementing a graduated VUT charge that will increase by 1 per cent a 12 months for repeat vacancies, as much as a most of 5 per cent of assessed worth. Updating property eligibility codes would additionally add roughly 1,200 extra items to the rolls.
Workers say including a graduated tax charge would generate as much as $4 million of extra income.
The report says workers thought of scrapping the obligatory annual declaration mannequin however decided doing so would cut back the effectiveness of the VUT’s said objective of bettering housing availability.
“Different declaration fashions, akin to a periodical or voluntary declaration mannequin, had been explored by workers, however had been discovered to considerably scale back public consciousness of this system and diminish the significance of guaranteeing all eligible residential properties are contributing to the Metropolis’s housing provide. Different declaration fashions would generate considerably much less income whereas requiring related administrative prices, leading to an total internet value to the town or insignificant contributions to housing initiatives,” the report says.
“Elevated provide has an influence on market pricing, resulting in affordability of houses on the market and lease throughout Ottawa. Along with serving to make Ottawa extra reasonably priced, the online revenues from the tax all go towards reasonably priced housing initiatives,” the report provides.
New exemptions are additionally being thought of, together with farms, hazardous properties outdoors of the proprietor’s management, and medical care properties. Town additionally plans to take away the constructing allow requirement for one-time retrofit renovation per property and proprietor, if the unit is occupied inside one 12 months.
Present exemptions embrace main residences, tenanted properties, and houses which can be vacant because of a property sale, a courtroom or authorities order, a dying, an proprietor in care, or due to development or renovation. Newly constructed houses which can be listed on the market and cottage leases are additionally exempt.
Property house owners may be allowed to enchantment after the enchantment deadline by paying an extra price. Town is contemplating offering a window of as much as 15 months for late appeals.
Councillor vows to oppose
Orléans West-Innes Coun. Laura Dudas, a longstanding critic of the VUT, says she intends to vote towards strengthening the tax.
“I have been persistently voting towards this tax because it first got here throughout council’s desk, and it appears to be like like I will be doing it once more,” she informed Newstalk 580 CFRA’s Ottawa Now with Kristy Cameron on Tuesday. “The administration of it continues to be onerous on residents. It actually locations the burden on residents and actually states you’re responsible till confirmed harmless.”
Dudas says the intention of the tax, to encourage empty items to return to the market and pay for housing initiatives, is noble, however she would not consider it needs to be the accountability of property house owners to declare their occupancy standing yearly.
“It is mainly casting such a large internet that it is catching so many people, 1000’s in reality within the final 12 months alone, on this case of getting to file after which enchantment their predicament,” Dudas mentioned.
Information from the town present of the 6,348 properties charged the VUT, 3,357 appealed. Of these appeals, 2,908 had been accredited and 377 had been rejected. Seventy-two appeals stay in progress.
Dudas additionally steered the VUT is just not as essential to the Ontario-Ottawa deal because the workers report implies.
“When it comes to the precise settlement that’s between the province and the town, the report that council goes to be debating over, it tremendously overstates the function of the VUT when it comes to the settlement. The settlement itself lists the VUT as an out there device … that’s out there beneath the phrases of the settlement that the town can use to fulfill the necessities of the province,” she mentioned.
The Ontario authorities mentioned in March, when it introduced the $543 million deal, that strengthening the VUT was one of many reciprocal commitments the town made.
“The Metropolis of Ottawa has made a variety of reciprocal commitments to Ontario, together with opening up municipal lands for housing growth to assist shared housing priorities, guaranteeing Ottawa meets and exceeds its housing targets, strengthening the town’s vacant dwelling tax, implementing effectivity measures that decrease the property tax burden on Ottawa’s folks and companies and facilitating the event of a long-term care dwelling at The Ottawa Hospital,” the information launch, dated March 28, mentioned.
Regardless of planning to vote towards the plan, Dudas mentioned she is happy to see the town is contemplating including extra exemptions to the VUT.
“I’m happy with that, do not get me unsuitable, that could be a enormous step in the best route, however I type of circle again to the truth that on the finish of the day, over 300,000 residential properties will obtain a notification saying, ‘Oops! You forgot to go surfing this 12 months, now you are in arrears, we’ll be chasing you down.’ That is an overreach by the municipality,” she mentioned.
Last numbers for first 12 months of VUT
Workers say the primary full annual cycle of the VUT, together with audits and appeals, is now full. The report states that the tax has influenced property house owners to occupy empty residences within the capital.
In accordance with the report, the ultimate rely of vacant properties in 2022 was 3,673 items, almost half of which metropolis workers say at the moment are occupied.
“Preliminary evaluation of the 2024 cycle signifies 1,785 properties which had been vacant in 2022 at the moment are occupied, and VUT appeals are down by 64 per cent. This system efficiently influences property house owners to make sure that residential items are stored occupied,” the report says.
The ultimate rely of vacant properties is down barely from the preliminary determine of three,743 vacant properties that the town gave final 12 months. Town acquired occupancy declarations for 99.6 per cent of the 323,182 residential properties included within the VUT program in 2023.
The primary full 12 months of taxation on vacant properties raised $12.6 million in income, with $10.3 million being allotted to the town’s housing long-range monetary plan. It value $2.28 million to manage the VUT program in its first 12 months.
Property house owners should declare their occupancy standing yearly, or danger paying the extra tax. Town opened the VUT portal final December for the 2023 calendar 12 months, with a deadline to use by March 21, 2024. Late declarations had been accepted till April 30 however had been charged a $250 penalty.
