Douglas Todd: Startups offer way to address hefty B.C. vacancy taxes
Douglas Todd
The Vancouver Sun
Aaron Hutchinson sees a win-win every time he drives past another collection of Vancouver houses bundled together by a developer for a “land assembly.”
Instead of letting the oft-empty houses become infested with rats or tossed by vandals, Hutchinson and his partner, Sage Brocklebank, seek to come to deals with such homeowners to help them sidestep paying high-vacancy taxes while also providing accommodation.
The co-owners of Property Sage rent the owners’ well-worn houses, perform enough upgrades and cosmetic work to make them livable and then sublease them to tenants, frequently groups of students or temporary offshore workers.
Property Sage has so far helped dozens of Vancouver homeowners, many of them awaiting building permits, save big bucks by sidestepping vacancy taxes in this novel way.
The duo, both of whom are also professional actors, describe how a Vancouver homeowner who leaves empty a $1.58-million property now has to pay $19,750 a year to the city’s empty homes tax and another $7,905 to B.C.’s speculation and vacancy tax.
Property Sage works frequently with family members who have become responsible for the old homes of elderly westside people who have either moved into a seniors’ facility or died.
Such homes often sit empty for years, with those in charge not wanting to go to the trouble of repairing a roof or fixing a furnace or finding tenants for, say, eight months or two years, to avoid the city and province’s taxes, which were brought in to ease what was until recently an extremely tight rental market.
“It’s a hassle and a lot of work, but it’s a fun one for us,” said Brocklebank, acknowledging this year brings their business an extra challenge, with the pandemic reducing the number of prospective renters.
While Property Sage specializes in sprucing up and renting out modest but large homes, Hutchinson says many non-resident property investors and satellite families often hire more conventional property management companies to find tenants to bypass the taxes.
The city’s empty homes tax will rise to 1.25 per cent of assessed value in 2020, while the province’s runs at 0.5-per-cent-of-value in select cities. The taxes generally target owners who leave their dwellings empty more than half the year.
Since Hutchinson and Brocklebank say they don’t speak foreign languages, they say they have trouble connecting with offshore investors and satellite families who might hope to find tenants to circumvent the taxes.
Sage Brocklebank, left, and Aaron Hutchinson of Sage Properties fix up a once-vacant house to prepare for renters.
However, another company, Asheya Accommodations, has found a niche with more high-end owners — renting their homes from them at a relatively low cost before subleasing them to other tenants at enough of a margin to make a profit.
The website of Asheya Accommodationsfeatures Chinese-language testimonials by owners of Vancouver houses who say they’re satisfied with the company’s ability to both find and manage medium-term renters.
Company owner Asheya Kassner, who is also a teacher and singer-songwriter, says she keeps up good relationships with her “hands-off landlords” while often paying out of her own pocket to ensure furnished and comfortable homes for tenants.
B.C. Attorney-General David Eby, the NDP MLA for Point Grey who helped champion the province’s speculation and vacancy tax, said in October that he’s aware of companies like Sage Properties and is glad vacancy taxes are “creating jobs in the form of property management.”
However, even though Eby appreciates more rental spaces coming open, his overall aim is to see fewer owners using the city’s housing market as an “investment vehicle.”
This year’s COVID-19 outbreak, say Brocklebank and Hutchinson, has made it a little harder to earn a profit subleasing vacant homes — because of the drop in students moving to the city, a decline in immigrants and more Airbnb vacation units being made available as long-term rentals.
“Chinese-student tenants were a big driver for us on the westside. And we also ended up providing housing for a lot of Irish lads working in the trades,” Brocklebank said, noting many of the houses overseen by Sage Properties have four-to-six bedrooms.
In addition, real estate analyst Stephen Punwasi of Better Dwelling reported Thursday on another factor that might lead to more empty dwellings in Vancouver — newly constructed homes, mostly condos, are being completed and going on the market in B.C. this year at almost twice the rate of population growth.
But this year’s apparently abundant supply of Vancouver rental properties is likely temporary, say Brocklebank and Hutchinson. And they suggest most places can attract tenants if the price is right.
The incentive is high for people with empty houses to find creative ways to rent them, says Hutchinson. With the land value alone of many westside Vancouver houses hovering at about $3 million, the overall cost of the two vacancy taxes this year should run to about $52,000.
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Sage Brocklebank, left, and Aaron Hutchinson of Sage Properties prepare to spruce up a vacant house for renters while the home’s owner waits for building permits.
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