BC’s latest housing proposal takes aim at vacant properties, foreign owners and, rather remarkably, the people building the homes we desperately need.
Leave it to our elected officials to look at a struggling housing development industry and conclude that what it really needs is another tax.
Actually, make that two.
On September 25, David Eby announced a proposal to introduce a new Unsold Condo Tax on developers holding completed, vacant condominiums for more than a year. He’s also proposing another increase to BC’s existing Speculation and Vacancy Tax (SVT).
Let’s unpack this, because the timing is particularly interesting.
First, the Vacancy Tax. Again.
Under Budget 2026, BC had already scheduled an increase to the SVT on foreign owners and untaxed worldwide earners from 3% to 4%, effective for the 2027 tax year.
That increase hasn’t even taken effect yet.
Nevertheless, Eby is now proposing to increase it AGAIN, to 5%, while simultaneously doubling the rate for domestic owners subject to the tax from 1% to 2%.
For perspective, here’s what that means for a foreign owner with a taxable, vacant $2-million property:
| Tax Year | Rate | Annual Tax |
| 2025 | 2% | $40,000 |
| 2026 | 3% | $60,000 |
| 2027 (scheduled) | 4% | $80,000 |
| New proposal | 5% | $100,000 |
That’s a proposed 150% increase over the 2025 rate, assuming the property’s assessed value remains unchanged.
Of course, exemptions still exist, and not every foreign owner is automatically subject to the tax. But for those who are, $100,000 annually is a rather expensive reminder that British Columbia would prefer they invest in real estate elsewhere. And therein lies the problem: people with substantial disposable income don’t suddenly stop investing in real estate because BC makes it unattractive. They simply find somewhere else to invest. Their money is mobile. Our housing shortage isn’t.
But I digress…
The government’s rationale is that higher taxes will encourage owners to sell or rent vacant homes.
Fair enough. There is an argument to be made for encouraging existing housing to be occupied.
But the second announcement is where things get particularly interesting.
The New Unsold Condo Tax: Because Developers Aren’t Struggling Enough
According to figures cited in Eby’s announcement, Metro Vancouver has approximately 5,000 newly completed but unsold condominiums, representing an estimated $4.45 BILLION in inventory.
His proposed solution?
Tax the developers until they sell them.
Under the proposal, completed condos left vacant and unsold for more than a year would attract a 2% annual tax, increasing by another percentage point each subsequent year.
Consider a developer sitting on 20 unsold condos worth an average of $800,000 each.
That’s $16 million in inventory.
In the second year, the proposed tax would cost that developer $320,000. In the third, $480,000. By the fifth, assuming the units remain unsold and the proposed rates apply, the annual bill reaches $800,000.
And that’s ON TOP of existing financing costs, insurance, maintenance, property taxes and everything else associated with carrying millions of dollars in unsold inventory.
Now, you might be thinking: Well, why doesn’t the developer just lower the prices and sell them?
Sometimes, that’s precisely what needs to happen.
But developers generally finance their projects through lenders, and those financing arrangements can impose restrictions on the prices at which individual units may be released for sale.
There is also the rather inconvenient matter of construction costs. Land, labour, materials, municipal fees, financing and development charges have already been incurred. A developer cannot retroactively negotiate those expenses downward simply because the market has deteriorated.
BCREA Chief Economist Brendon Ogmundson raised precisely this concern following the announcement, warning that forcing financially strained developers to sell could impair their ability to finance future construction.
Which brings us to the fundamental problem.
We Need More Homes. So Why Make Building Them Less Attractive?
The government wants developers to release existing inventory. That’s understandable.
But what happens after they do?
If a developer is forced to liquidate completed inventory at substantial losses, that capital isn’t magically replenished for the next project.
And if development becomes increasingly financially unattractive, fewer projects may get started.
That’s not merely a problem for developers. It’s a problem for future purchasers, renters, construction workers and anyone else who depends on new housing actually being built.
Vancouver architect and development consultant Michael Geller raised another interesting point during a September 25 interview on The Jas Johal Show.
Why don’t developers simply rent their unsold condos until the market improves?
Well, there’s a rather inconvenient little thing called GST.
Under the federal self-supply rules, renting a newly completed condo for the first time can trigger an immediate obligation to remit 5% GST on its fair market value.
On an $800,000 condo, that’s $40,000. The equivalent of TWO YEARS of Eby’s proposed Unsold Condo Tax (2% in year two and 3% in year three, respectively).
So, to recap: leave your completed condo empty and face an escalating provincial tax. Rent it out instead, and you could trigger an immediate federal GST obligation.
This is what you call the decision between “shit” and “shite”.
What Does This Mean for Buyers and Homeowners?
In the immediate term, prospective purchasers could benefit if developers respond by reducing prices on completed inventory.
Likewise, higher vacancy taxes could encourage some property owners to sell or introduce their homes into the long-term rental market.
Those are legitimate potential benefits.
But short-term inventory and long-term housing supply are two different things.
For developers, the proposal introduces another financial risk into an already challenging business. For future buyers, the concern is whether today’s forced inventory reductions come at the expense of tomorrow’s construction.
And for foreign investors, the latest SVT proposal adds another layer to an existing tax environment that already includes BC’s additional property transfer tax and federal restrictions on certain foreign residential purchases.
There’s an important distinction between foreign capital purchasing existing homes for speculative purposes and foreign capital financing the construction of NEW homes.
One does not necessarily create supply. The other can.
Housing policy should be capable of recognizing the difference.
Today’s Affordability Solution. Tomorrow’s Housing Shortage.
Here’s the irony in all of this.
If these policies further discourage investment and compromise developers’ ability to finance future projects, Eby may inadvertently accomplish the very opposite of what he’s setting out to achieve.
Sure, taxing developers into liquidating their existing inventory might create some short-term buying opportunities. But what happens when those same developers no longer have the capital, confidence or appetite to build the next project?
And it’s not as though the construction industry is entering this experiment from a position of strength. According to CMHC, housing starts in Vancouver were already down a staggering 42% year-over-year in July 2026.
That’s the backdrop against which we’re proposing to make the economics of residential development even more challenging.
Fewer housing starts today mean fewer completed homes several years from now. And if demand eventually rebounds while the construction pipeline continues to deteriorate, that scarcity could put renewed upward pressure on home prices.
In other words, Eby’s latest affordability proposal risks becoming an unintended gift to existing property owners: more pressure on developers today, potentially less housing tomorrow, and another obstacle to restoring affordability in the long run.
There’s something almost poetic about trying to solve a housing shortage by making it more expensive to be in the business of building homes.
We need more supply. Not another reason to stop supplying it.
Note: This article reflects the housing tax proposals announced September 25, 2026. The proposed measures discussed are not yet enacted legislation. Financial examples are illustrative and assume unchanged taxable property values.