Vancouver is raising the empty homes tax that is designed to ease vacancy rates in the city, from three per cent to five per cent of the property's value. 

The motion by Mayor Kennedy Stewart to hike the tax in 2023 received unanimous backing from city councillors on Wednesday.

Stewart said boosting the tax is a "big blow to housing speculators."

"I think we have actually a chance of ending speculation by taking it to five per cent," he said in an interview Thursday. "Municipal governments have limited tools and this is one that we know is working."

The tax hike means that the owner of a vacant home worth $1.36 million, which is the benchmark price for all housing types in Metro Vancouver, would face an annual tax bill of $68,000.

"That's a big chunk of cash when you think about it. That's how serious we are about this," Stewart said. "The ultimate goal would be that we don't collect any fees, that either all the homes are filled or they're being sold. The goal is to maximize the productivity of our housing stock."

The motion also doubles the number of annual compliance audits to 20,000 and Stewart says it includes measures to improve fairness, ensuring the tax is not assessed on homes that legitimately qualify for an exemption.

Andy Yan, director of the City Program at Simon Fraser University, says the tax increase sends a strong message and will be "serious motivation" for people to either sell or rent properties and help address the housing crisis.

"The ultimate policy goal isn't necessarily just revenue generation, but more around unit occupation," he said in an interview.

"The message is if you’re going to park your money into Vancouver real estate, that it's not free parking."

Yan said the increase in auditing and the enforcement of the empty homes tax is vital.

"I think that's a really important element to give a sense of the tax being transparent and accountable," he said.

The tax was introduced in 2017 as a one per cent levy designed to return empty and underused properties to the market as long-term rental homes.

It was raised to three per cent last year, a move that Stewart has said brought in an extra $32 million for affordable housing and "returned" more than 4,000 homes to occupancy.

Further increases are possible and Stewart has described the tax as an important step in tackling Vancouver's housing affordability crisis.

Vancouver homeowners are required to submit a declaration each year to determine if their property is subject to the tax, which does not apply to principal residences or homes rented for at least six months of the year.