'Guilty until I prove I'm innocent': Homeowners frustrated by vacant unit tax rollout

Some Ottawa homeowners and landlords are expressing frustration and confusion over a new tax they could have to pay — unless they opt out by checking a box.

City council passed the vacant unit tax last spring, in an effort to increase affordable housing by cracking down on livable homes that may be sitting empty for six months or more a year.

The tax doesn't apply to someone's principal residence, yet homeowners who forget to check the box by mid-March each year risk paying a $250 late fee — which is being waived for 2023 — or possibly thousands of dollars in taxes, equivalent to one per cent of a property's assessed value.

Tom Ryan wasn't impressed when a letter arrived in his mailbox in November.

"They're imposing a rule on us, when my interpretation of our justice system is you're innocent until proven guilty. And this is an implication that I'm guilty until I prove I'm innocent," said the Vanier resident, who's owned his home since the early 1990s. 

This letter went out to homeowners in November. The city plans to send another in January.

Ryan is one of several residents CBC heard from who are voicing concerns about the implementation of the new tax.

He said he agrees with its ultimate goal, but not the implementation, known as negative option billing. He believes the city should rely on data from utility bills instead to determine if a home is vacant.

'Death by one thousand cuts'

It's a sentiment shared by the Ottawa Small Landlords Association.

Founder Tony Miller said they support the overarching goal as well but believe it's flawed as much of what it hopes to achieve is already covered by other municipal, provincial and federal laws.

That includes both Ottawa's short-term rental bylaw and the provincial foreign homebuyers tax, he said.

"One landlord told me it's death by one thousand cuts," Miller said. "And that's the impact that all these bylaws are having."

Vancouver implemented a one-per-cent tax in 2017 that's gradually increased since then. It's brought in $32 million for affordable housing and "returned" more than 4,000 homes to locals. 

Toronto will introduce a similar tax this year, with Hamilton following suit in 2024.

In addition to not covering principal residences, Ottawa's tax has other exemptions, including for homeowners who've died or are in hospitals or long-term care homes.

The city expects to bring in $25 million in net revenue over the first five years, with the money meant to help fund affordable housing units.

'No magic bullets'

Some experts say Ottawa's housing landscape can't be compared to those larger cities.

"This is a drop in the proverbial bucket," said Ian Lee, an associate professor at Carleton University's Sprott School of Business.

"If all the alleged empty units vanished, were rented, it would barely move the needle. It would barely show up statistically in terms of the shortfall in units in Canada."

Carolyn Whitzman, a housing policy adviser in Ottawa, said that while Vancouver's tax freed up a number of condo units, there are "no magic bullets."

"It's not going to be a revenue stream that's going to lead to, you know, thousands upon thousands of affordable units. But it's one of the mechanisms that cities are looking at."

What Ottawa does have, she said, is a lot of government-owned land — much of it close to LRT — that can be used to build affordable housing.

Delay suggested

In December, Orléans East-Cumberland Coun. Matthew Luloff raised the idea of delaying the tax for one year, saying people are "confused" and "upset."

"I've got residents that are caring for somebody who's on the tax roll who has dementia, who doesn't understand what's going on, who doesn't understand why they're being taxed," Luloff told council.

Bay Ward Coun. Theresa Kavanagh said she supported the tax after hearing a "significant" number of complaints from residents upset about the number of homes sitting empty and neglected.

But she said she also understands the fear and confusion surrounding the tax. And with the first notices only going out in November, it's been a learning process, she said — both for residents and the city.

"I don't want to see people inadvertently punished for just forgetting or other things like that," she said. "I want to make sure this goes as smoothly as possible."