Hamilton to go ahead with vacant unit tax after defeat last year

Hamilton's vacant unit tax has been resurrected after it was unexpectedly struck down late last year.

That means pending a final, procedural vote in coming months, residents who own a home that's vacant in 2024 will pay one per cent more on their property tax bill in 2025, general manager Mike Zegarac told council Wednesday. 

Coun. Nrinder Nann's motion to approve the vacant unit tax passed 9-6, with the mayor abstaining as she owns a vacant property.

"The merits of the vacant unit tax are very clear," said Nann, who's worked for years to get the bylaw approved. "It's about ensuring empty homes become occupied by our residents."

The vacant unit tax is designed to crack down on investors who buy homes and let them sit empty instead of renting them out for more than half a year, staff have previously said. Residents will be expected to declare if their property is vacant. 

The city has estimated over 1,000 property owners will be taxed, generating over $4 million in revenue in the program's first year. After recouping program costs, the city will use money for other housing programs.

Council divided on merits of tax

In a case of déjà vu, council approved the same program early last year and staff spent at least $400,000 developing it and notifying residents it would roll out in December, staff said in a recent report. 

But in a surprise twist, when taking the procedural step to confirm the bylaw, council defeated it in a 6-6 tie — presenting a seemingly unprecedented situation Nann described as "disrespectful" and Coun. John-Paul Danko said was "very messy."

Those opposed to the bylaw said they were concerned residents would be wrongly taxed and it wouldn't generate as much revenue as staff were estimating. Had the bylaw passed in 2023, the city would have begun to receive revenue this year.  

What's changed now that's allowed council to vote on the program again, is the year, said Zegaric Wednesday. 

Council has to re-approve the vacant unit bylaw annually as is required under provincial legislation, he said. While it was defeated in 2023, council could still vote on it for 2024.

Council will once again be required to confirm the bylaw in the coming months, but appear to have enough support to pass it. 

Coun. Alex Wilson said cities have limited ways to bring in revenue, and the vacant unit tax is one of them. 

"This is changing the pressure away from those who are in an affordability crunch," said Wilson, "and is instead asking residents who own multiple residences, who are leaving them vacant, to add additional funds to help supplement the costs of having those vacant homes on our housing system."

The approval for the vacant unit tax came the same day council formally passed a new anti-renoviction bylaw.