Is Toronto's Vacancy Tax Actually Working — and Should London Be Paying Attention?

Vacancy taxes sound good on paper. Tax empty homes. Push owners to rent or sell. Increase supply. Lower prices. Simple, right?

Years into the experiment, Toronto's vacant home tax is raising a more uncomfortable question:

Is this policy solving a housing problem — or fighting the last one?

According to CTV News, Toronto introduced its vacant home tax in 2022 with the goal of improving affordability and freeing up supply. But the data tells a more complicated story.

What the Numbers Actually Show

Toronto reports:

• 6,944 vacant homes in 2022
• 5,077 in 2023
• 5,989 in 2024

That sounds like a lot — until you add context. Vacant homes represent less than 1% of Toronto's total housing stock in any of those years.

More importantly, the city cannot confirm whether any of those homes were actually rented or occupied because of the tax.

At the same time:

• Sales volumes are at or near record lows
• Listings are sitting longer, not because owners are hoarding supply, but because buyers aren't absorbing it at current prices
• Many "vacant" units are simply unsold inventory, not intentionally empty homes

Toronto projected $103 million in billed revenue for 2024, but actual collections — and real housing outcomes — remain unclear.

Which brings us to the real issue.

Vacancy vs. Demand: A Critical Distinction

Vacancy taxes are designed for tight markets, where demand overwhelms supply and owners can afford to sit on empty units. But today's market looks very different.

Homes aren't sitting empty because owners don't want to rent or sell. They're sitting because the market isn't clearing at yesterday's prices.

That distinction matters — a lot. When demand softens and competition rises, adding a vacancy tax doesn't magically create affordability. It just adds carrying costs to owners who may already be under pressure.

Why This Matters for London, Ontario

London doesn't currently have a vacancy tax — but conversations around housing policy tend to travel.

And if Toronto's experience tells us anything, it's this: Policies built for a shortage don't always work in a slowdown.

In London right now, we're seeing:

• More listings competing for fewer buyers
• Condos and entry-level homes sitting longer
• Investors reassessing cash flow, not hoarding units
• Vacancies driven by pricing resistance, not speculation

If homes aren't being absorbed because the market is recalibrating, a vacancy tax doesn't increase supply — it just changes who feels the pain.

The Bigger Question Policymakers (and Owners) Should Be Asking

The goal isn't to punish vacancy. The goal is to create functional housing supply — homes people can realistically afford to buy or rent.

When demand weakens:

• Prices need to adjust
• Expectations need to reset
• Policy needs to reflect current conditions, not past cycles

Otherwise, you risk treating symptoms instead of causes.

What This Means for You

Homeowners & investors: If policy tools start lagging market reality, it's even more important to run conservative numbers and plan for longer holding periods.

Buyers: Soft demand creates leverage — but only if you understand why listings are sitting. Not all "vacancy" is opportunity.

Sellers: The market is still moving — just not at aspirational pricing. Strategy matters more than ever.

Vacancy taxes were built for a different moment in the cycle. The real question now isn't whether they collect revenue — it's whether they still solve the problem they were designed for.

Helping you read between the headlines — and make decisions based on reality, not rhetoric.