{"id":206874,"date":"2024-11-25T10:17:40","date_gmt":"2024-11-25T20:17:40","guid":{"rendered":"https:\/\/www.hawaii.edu\/news\/?p=206874"},"modified":"2024-11-25T11:01:08","modified_gmt":"2024-11-25T21:01:08","slug":"empty-homes-tax-uhero-blog","status":"publish","type":"post","link":"https:\/\/www.hawaii.edu\/news\/2024\/11\/25\/empty-homes-tax-uhero-blog\/","title":{"rendered":"Empty Homes Tax could increase available Honolulu housing by 14,000 units"},"content":{"rendered":"Reading time: <\/span> 2<\/span> minutes<\/span><\/span>

\"condo<\/p>\n

A bill being heard by the Honolulu City Council could potentially free up 14,000 housing units and bring in an additional $144 million annually. The estimates are according to a new University of Â鶹´«Ã½<\/span> Economic Research Organization<\/a> (UHERO<\/abbr>) blog by Associate Professor Justin Tyndall.<\/p>\n

Bill 46, also called the Empty Homes Tax<\/a>, would create a new property tax that applies to empty homes. The current proposal would see a 3% property tax surcharge on properties that are vacant for more than six months in a year. The rate would be phased in, with 1% assessed the first year the property is vacant, 2% the following year and 3% for years thereafter. The bill provides a list of 15 exemptions, which owners would need to declare.<\/p>\n

The bill emulates a policy enacted in Vancouver, Canada, which also assesses a 3% surcharge for properties left vacant. The policy resulted in a 54% reduction in the city\u2019s vacancy rate<\/a>, and in 2023, the Vancouver Empty Homes Tax raised $47 million CAD<\/abbr><\/a> ($35 million USD<\/abbr>) from properties that remained vacant.<\/p>\n

To predict the impacts of Bill 46 in Honolulu, there are three major sources of uncertainty: 1) the true vacancy rate, 2) how willing homeowners will be to convert their empty units and 3) how long units are typically kept vacant.<\/p>\n

Bill 46 in its current form assumes that 9.2% of homes in Honolulu are currently vacant, which is based on 2020 U.S. Census estimates. However, about a quarter of these vacancies are from homes that are listed for sale or rent, which would be exempt from the tax. This means roughly 6.9% of housing units would actually be subject to the tax.<\/p>\n

Potential revenue impacts<\/h2>\n

According to Tyndall, if we assume 7% of Honolulu homes are vacant under the tax, and we assume Honolulu empty home owners will respond similarly to those in Vancouver (54% of homes switching from vacant to occupied), the policy would free up 14,000 housing units, and the county would take in an additional $144 million each year. Tyndall cautions that given the unknowns, the actual outcomes could vary significantly. Under other reasonable assumptions, the policy might free up anywhere from 4,000 to 20,000 units of housing and could raise annual revenue anywhere from $50 million to $400 million, he said.<\/p>\n

“The potential housing supply and revenue effects are both significant,” Tyndall said. “An increase in 14,000 housing units amounts to a 4% increase in Honolulu County\u2019s total housing stock. In recent years, Honolulu has only expanded its housing supply by roughly 2,500 units per year, so this change represents several years of new housing supply. On the revenue side, $144 million represents about 4% of Honolulu\u2019s entire county operating budget.”<\/p>\n

The proposed tax would raise revenue disproportionately from second-home owners and out-of-state residents, making it a relatively progressive tax that reduces the burden on local residents. However, Tyndall notes that while Bill 46 would discourage investors from holding vacant homes on Oʻahu<\/span>, it could potentially redirect investment pressures to the neighbor islands.<\/p>\n

The bill in its current form also applies only to empty housing units and not to vacant land in residentially zoned areas. According to property tax records, Honolulu has more than 2,000 vacant residential lots sitting empty, each with the potential to provide multiple units of housing. Extending the tax to cover these empty lots could provide additional housing and revenue benefits beyond the current estimates.<\/p>\n

Read the entire blog on UHERO<\/abbr>\u2019s website<\/a>.<\/p>\n

UHERO<\/abbr> is housed in UH<\/abbr> M\u0101noa\u2019s College of Social Sciences<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Bill 46 would create a new property tax that applies to empty homes.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[301,197,1467,1363,1600,1026,343],"class_list":["post-206874","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-research","tag-college-of-social-sciences","tag-economics","tag-manoa-excellence-in-research","tag-manoa-research","tag-public-impact-research","tag-social-science","tag-uhero","entry","has-media"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t