If “empty home” levy raised $100 million, 700 to 1,000 affordable units could be built
If an “empty home” levy proposed earlier this week raised $90 million to $100 million a year, as the authors claim, the money could generate the construction of 700 – 1000 affordable housing units.
(I used the much smaller number of 116 in my comments to Jeff Lee Jan. 18, due to my own garbled math. But the calculation is a little complicated.)
According to Mukhtar Latif, Vancouver’s chief housing officer, $100 million could produce 700 to 1000 units, assuming the city contributed the land and depending on the degree of affordability. Since BC Housing no longer provides operating funding, all developments must be mixed income, so “the average rent covers the management and maintenance costs.”
Assuming rents at housing income levels, $800-900 for studio and one bedrooms, $1200 for two-bedrooms and $1400 for three bedrooms, the city would require a $100,000 a unit capital grant for a mix of family and single housing.
That could rise to $150,000 a unit for deeper affordability and even higher if the city was not contributing land. To enable the city to maintain a supply of suitable land in the Property Endowment Fund, the city may require a contribution for land, further reducing the number of units.
The economists proposing this levy assume quite high levels of vacant homes with owners who would pay the levy rather than rent or seek an exemption. I’m sceptical about that, and if I’m right, the fund would be much, much smaller.
Nonetheless, the proposal does highlight how quickly the province could make a significant difference in the supply of affordable housing if it makes a new investment.