Over the next 10 years, Canada is facing an estimated shortfall of 4.3 million very-low and low-income homes, with major cities like Vancouver and Toronto accounting for a substantial portion of this need.
At the same time, housing, especially in major cities, is increasingly being purchased as an investment rather than as a home. In other words, investors are turning to housing speculation, which includes practices like ‘flipping’, where properties are bought just to be resold at a higher price, or simply kept empty as a passive investment or vacation home. This type of housing financialization has skyrocketed in urban metropolitan areas during the last few decades.
One way to address speculation and vacancy is through vacancy taxes, which target people or companies who own properties that may serve as a passive investment or vacation home but are empty for most of the year.
Ideally, a vacancy tax acts as an incentive for people to sell or rent out their vacant properties to long-term tenants. By utilizing this supply for housing, this mechanism can also relieve pressure on overall housing demand, which can help decrease prices for both prospective homebuyers and renters, improving affordability. Furthermore, tax revenue from homeowners who choose to maintain empty homes can be used as revenue streams for projects that help protect existing affordable housing from speculation, such as non-profit acquisition projects.
British Columbia
BC’s speculation and vacancy tax was introduced in 2018, after a major spike in Metro Vancouver real estate prices prompted a wave of public discontent. Between 2015 and 2016, the cost of homes had increased by as much as 40%.
This provincial vacancy tax applies to properties that are empty for more than six months in a calendar year. Homes that are an owner’s main place of residence or are rented for a minimum of six months in 30-day increments are exempt from the tax. As of August 2026, the tax rate is 3% for foreign owners and untaxed offshore owners, and 1% for Canadian citizens and permanent residents.
According to experts, this tax has successfully reduced speculation, prompting owners to rent or sell their vacant properties. Estimates show that the tax helped to return 20,000 empty units to the long-term rental market between 2018 and 2020. Moreover, all of the revenue from this tax helps pay for affordable housing initiatives—$79.6 million in 2024.
City of Vancouver
Separate from the province-level vacancy tax, Vancouver also applies a city-level vacancy tax, which is called the Empty Homes Tax. Similar to the provincial tax, it is levied on homes left vacant for more than six months in a year.
Between 2017 and 2024, the Empty Homes Tax reduced vacant residential properties by 67% . This vacancy tax directly funds affordable housing programs like the Community Housing Incentive Program (CHIP), a grant program that has helped non-profit housing organizations build more than 1,200 homes using $47 million from the program.
CHIP was a key source of funding for an exciting affordable housing project led by First United and the Lu’ma Native Housing Society called First Forward, which opened its doors in June 2026. The project, which received $6.73 million from CHIP towards the $64 million project, involved re-developing a church building at 320 East Hastings Street into an 11-storey, mixed-use building. First Forward features 4 non-residential floors that provide key wraparound supports, including a legal advocacy clinic, a cooling centre, and a sacred space for multi-faith and Indigenous traditional practices. The flexibility of CHIP funding here is key when it comes to funding wraparound supports. In fact, it is common for other funding programs, such as the national Affordable Housing Fund, to restrict eligibility for projects that are, at most, 30% non-residential space. This is a threshold that First Forward does not meet, with four out of eleven floors set aside for non-residential use. Wraparound supports are often crucial in order for vulnerable tenants to be able to live comfortably in their homes and have been found to decrease costs to policing and healthcare sectors.
City of Toronto
Toronto’s Vacant Homes Tax also applies to homes vacant for more than half the year, at a rate of 3%. It generated roughly $105 million in the 2024 taxation year.
This tax is a substantial source of revenue for the Multi-Unit Residential Acquisition Program (MURA). MURA was established in 2021 and supports non-profit housing providers in acquiring, renovating, and refinancing rental homes. Small apartment buildings of up to 60 units and multi-tenant houses (rooming houses) are eligible.
MURA is widely acknowledged as an example of an effective acquisition program, having helped 21 different organizations, including non-profit providers, co-ops, and community land trusts acquire more than 1,000 rental homes since its inception. Importantly, it offers pre-approvals for non-profits and covers the upfront costs of acquisition right away. ing a building. Without succession planning, decades of accumulated community wealth and cultural knowledge could simply be lost.
A Model for Other Canadian Cities
These examples from BC, Vancouver, and Toronto show what is possible when creative policy design allows us to target multiple aspects of the housing affordability problem at once. Cities like Montreal and Calgary, which are also facing speculative investment and low rental supply, should take notice of the vacancy tax as a promising tool for reducing their own affordability problems.
The Balanced Supply of Housing (BSH) is a SSHRC-CMHC funded partnership grant led by Dr. Alexandra Flynn at UBC’s Peter A. Allard School of Law, focused on land use, housing financialization, and sustainable housing futures across Vancouver, Toronto, and Montreal.
