What is an empty homes levy?  

Countries and cities around the world including Vancouver, France, Ireland, Scotland and Melbourne encourage investors to make their residential properties available to long-term tenants by imposing an empty homes levy. The levy is charged if the investor chooses to keep the property empty without a good reason.

How much is the empty homes levy?

In Melbourne, the levy is 1 per cent of the value of the property. In Vancouver, the levy was 1 per cent of the property’s assessed taxable value when the scheme was introduced in 2017 but has been incrementally increased to 3 per cent in 2021 and to 5 per cent in 2023. In Ireland, the levy is charged at a rate three times the Local Property Tax.    

Why do we need an empty homes levy? 

Tasmania has a critical shortage of affordable long-term rental accommodation. In March 2018, the Premier Will Hodgman convened a Housing Summit because “immediate action is needed to alleviate the housing concerns of Tasmanians doing it tough”.[1] And yet over the following years housing supply and affordability has worsened. Over the last five years, median rents across Tasmania have increased by $150.00pw (50%).[2] The wait list has increased from 2962 to 4598 applicants (55%)[3] and the average wait time has more than doubled from 48 to 101 weeks (110%).[4]

Has the empty homes levy been a success? 

The empty homes levy has operated in Vancouver since 2017. Since then, there has been a 36 per cent drop in the number of empty homes and more than $115M raised for affordable housing.[5] 

How long does a property have to be empty?

In Melbourne, the vacant residential land tax is paid on residential properties left vacant in Melbourne’s inner and middle suburbs for at least six months.[6] In Vancouver and Scotland, the property has to be empty for one year.[7]

Why are we calling it an empty homes levy and not a tax?

In some jurisdictions, the empty homes levy is called an empty homes tax. We are deliberately calling it a levy is because the monies raised through the levy will be exclusively used to build and acquire more affordable housing rather than a tax where monies raised going into general revenue.   

What exemptions exist? 

Every jurisdiction that has an empty homes levy has different rules, but if we use Melbourne as an example, the exemptions include that it is your principal place of residence; that the property is undergoing significant renovations or reconstruction; that the property is used as short-stay accommodation and is occupied for more than six months in a calendar year; or that it is a residential premises used for work purposes at least 140 days of the year.   

Isn’t the Government addressing housing affordability by promising to build and acquire 10,000 new and affordable homes by 2032?

Yes, and we enthusiastically welcome the Government’s commitment to new, long-term housing supply. But, most of those homes will not be built for another 8, 9 or 10 years. We strongly believe there are actions the Government can take immediately to alleviate housing stress in Tasmania.  

Does the lack of affordable rental homes only have an impact on accommodation?

The lack of affordable housing also undermines productivity and economic growth with employers across Tasmania unable to fill job vacancies. A recent report by Impact Economics and Policy found that there were over five jobs available for every rental vacancy in Launceston and the North East,[8] leading to significant losses per annum in lost economic output in regions where housing is scarce.[9]

What could an empty homes levy mean for Tasmania?

In an extremely tight rental market, the return of a small number of properties to the long-tern rental market can have a significant impact. For example, the return of a mere 113 short stay accommodation properties to the long-term rental market in the Hobart City Council municipality during COVID-19 resulted in a 9 per cent reduction in rents.[10] Since the levy was introduced in Vancouver in 2017 there has been a 36 per cent drop in the number of empty homes and more than $115M raised for affordable housing.[11] Using Vancouver as a guide, a 36 per cent drop in Tasmania would see 326 homes in the Hobart City Council municipality, 429 in the Launceston City Council municipality and 219 in the Glenorchy City Council municipality returned to the long-term rental market municipality in the short-term.

[1] Will Hodgman, ‘Housing Summit’, Media Release, 14 March 2018. 

[2] Tasmanian Rents June 2017; Tasmanian Rents June 2022. As found at http://tutas.org.au/publications/tasmanian-rents/ (accessed 8 February 2022).

[3] The number of applicants on the wait list has increased from 2962 applicant in June 2016/17 to 4598 in November 2022. As found at Department of Health and Human Services, Annual Report 2016/17 at 45; Department of Communities Tasmania, Housing Dashboard November 2022 at 14.

[4] Department of Health and Human Services, Annual Report 2016/17 at 45; Department of Communities Tasmania, Housing Dashboard September 2022 at 15.

[5] City of Vancouver, Empty Homes Tax Annual Report 2021. As found at https://vancouver.ca/files/cov/vancouver-2022-empty-homes-tax-annual-report.pdf (accessed 8 February 2023).

[6] Victorian State Revenue Office, ‘Vacant residential land tax – frequently asked questions’. As found at https://www.sro.vic.gov.au/vacant-residential-land-tax-faq (Accessed 8 February 2023). 

[7] City of Vancouver, ‘Empty Homes Tax FAQ’. As found at https://vancouver.ca/home-property-development/empty-homes-tax-frequently-asked-questions.aspx#questions (accessed 8 February 2023); Scottish Government, ‘Council tax on second and long-term unoccupied homes: guidance’. As found at https://www.gov.scot/publications/council-tax-on-second-and-long-term-unoccupied-homes-guidance/ (accessed 8 February 2023).   

[8] Impact Economics and Policy and Everybody’s Home, Housing Critical – The role of housing in solving critical skills shortages across the regions (August 2022) at 19. As found at https://everybodyshome.com.au/resources/housing-criticalthe-role-of-housing-in-solving-critical-skill-shortages-across-the-regions/ (Accessed 14 November 2022).

[9] Impact Economics and Policy and Everybody’s Home, Housing Critical – The role of housing in solving critical skills shortages across the regions (August 2022) at 26. As found at https://everybodyshome.com.au/resources/housing-criticalthe-role-of-housing-in-solving-critical-skill-shortages-across-the-regions/ (Accessed 14 November 2022).

[10] Caitlin Buckle, Nicole Gurran, Peter Phibbs, Patrick Harris, Tess Lea and Rashi Shrivastava, Marginal Housing during Covid-19 (Australian Housing and Urban Research Institute, Final Report No. 348) at 40.

[11] City of Vancouver, Empty Homes Tax Annual Report 2021. As found at https://vancouver.ca/files/cov/vancouver-2022-empty-homes-tax-annual-report.pdf (accessed 8 February 2023).