Montreal could soon join Vancouver, Toronto and Ottawa in taxing empty homes, as the mayoral candidate for the ruling Projet Montreal has pledged to introduce fees on owners of vacant residential properties.
Outgoing Mayor Valerie Plante did not favor the tax. Still, her successor in the party, mayoral candidate Luc Rabouin, has vowed to implement the measure as a way to increase the total number of available rental units in the city and help lower rents if elected. The election is set for Nov. 2.
Rabouin's main opponent, Soraya Martinez Ferrada of the Ensemble Montreal party, does not endorse the measure and has also vowed to repeal separate regulations on Airbnb rentals in the city. However, Rabouin's goal of bringing the empty homes tax to Canada's second-largest city might remain unfulfilled, as a recent poll had him trailing Ferrada by 9%.
Empty homes taxes were introduced in Canada as a measure intended to help keep rents down as the cost of housing grew and rental apartments became scarce. Canada's housing crisis led to a 1.5% national residential vacancy rate in 2023. In 2024, the rate has loosened to 2.2%, but remains below the 3% goal that is considered a balanced market, according to the Canada Mortgage and Housing Corp., or CMHC.
However, the housing crunch that justified the tax appears to be fading. Canada's national vacancy rate has increased to 4.1%, the highest level recorded since 2020, with Calgary posting a 7.4% vacancy rate, Toronto 4.2% and Edmonton 4.6%, according to the Yardi real estate data company's July report. The CMHC is expected to release its 2025 vacancy numbers at the end of the year.
The vacant homes tax has proven popular among voters. It is typically marketed as a way to discourage speculation and help lower rents.
Canada's first vacant homes tax was passed in late 2016 in Vancouver under Mayor Gregor Robertson. The Vancouver tax took effect in 2017 and applied to unoccupied non-principal residences for at least six months per year.
Vancouver originally set the rate at 1% of assessed value and imposed fines up to $10,000 for false or misleading declarations and a $250 penalty for failing to file. The city has since increased the tax rate to 3% of assessed value and collected over $115.3 million from the tax in its first five years. Vancouver City Council voted against a motion to increase the tax to 5% in May 2023.
Mixed results
The tax has not necessarily delivered what government officials had hoped it would, according to CoStar analyst Paul Richter.
"After nine years of having the tax implemented in Vancouver, there is no proof that it has resulted in lower rents, the chief goal of the tax," Richter said in an email. "In the City of Vancouver, the tax provided a bump in units available for lease, but rent growth since that time has moved at about the same rate as neighbouring municipalities."
Toronto Mayor Olivia Chow launched a vacant home tax in 2022, setting it at 1% of assessed value and raising it to 3% in 2024. The tax brought in roughly $56.5 million in 2022 and $50.6 million in 2023.
The city projected its empty home revenue would more than double at the higher 3% rate. Over 2,000 homeowners declared their homes vacant, and roughly 17,500 were deemed empty by the city after owners failed to respond to notices. The city has had to deal with about 43,000 homeowner appeals and 62,000 formal complaints.
Ottawa Mayor Mark Sutcliffe brought the vacant tax to that city in March 2022, and the municipality collected about $12.6 million in its first year. The city paid $2.28 million to administer the tax.
Almost every property owner in Ottawa filed the required report, with a 99% compliance rate, and 3,633 owners paid the 1% tax in 2023, with 2,836 deemed vacant due to no declaration. The city received roughly 1,900 complaints against the tax.
Many elected officials have been critical of the tax.
In Toronto, Etobicoke City Councillor Vincent Crisanti introduced a motion to repeal the tax in April 2024. He described the tax as "invasive to our taxpayers… disruptive and inconvenient beyond repair," and said his office was "literally taken over by complaints" from residents surprised by bills in the thousands after believing they were exempt.
Toronto City Councillor Frances Nunziata said, "We screwed up … That's the bottom line. I think we should have put a pause on the program when we realized that there was a problem."
In Ottawa, Councillor Laura Dudas has called for the Vacant Unit Tax, or VUT, to be scrapped. She described the levy as "an unparalleled annual bureaucratic burden on households. In August 2023, Dudas said that many homeowners were "blindsided by having the VUT applied to them." She noted the number of homes declared vacant was much higher than staff expected, and argued the administration of the tax is too broad.