Zohran Mamdani’s pied-à-terre property tax is a ‘go.’ Will it work?

From New York to Vancouver to London, a once-niche policy idea is moving into the mainstream of urban finance: taxing pied-à-terre properties, second homes, vacation apartments, and luxury units that sit partially or entirely unused.

New York City is just the latest example, with Mayor Zohran Mamdani and New York State Governor Kathy Hochul supporting the tax as part of a state and city effort to make up a big budget hole. In a new budget proposal this week, Mamdani dropped plans to raise property taxes on many middle-class homeowners, a move that could have been a difficult one for Mamdani to politically stomach, but kept the pied-à-terre tax idea.

The idea has already resulted in a political crisis for the mayor after he posted a video standing outside the building where hedge fund billionaire Ken Griffin owns a unit, leading to well-known politically conservative Griffin’s first vocal pushback against Mamdani, and a threat to pull business from New York in the future. While that’s a tension that has been expected to percolate between the billionaire class and new socialist democratic mayor, real estate sales in the city remain strong.

But there is a more fundamental question about this new form of property tax for New York to now contend with: does it work? There are existing examples from around the world to help in trying to answer it.

Versions of second-home and vacancy taxes exist globally, across several major housing markets. In Canada, Vancouver’s “empty homes tax” and a federal “underused housing tax” are among the most prominent examples. Toronto recently followed with its own vacancy levy. 

As housing affordability worsens, rents continue to rise, and fiscal pressures mount, cities are increasingly targeting what are often highly visible symbols of inequality: dark luxury condos in prime urban neighborhoods.

Vancouver officials framed the city’s Empty Homes Tax as an attempt to “return empty or under-utilized properties to use as long-term rental homes for people who live and work in Vancouver,” according to the City of Vancouver’s public materials on the program. The city has also said net revenue from the tax is reinvested into affordable housing initiatives.

In Europe, London and Paris both apply forms of surcharge or higher taxation on second residences and underused properties. Singapore imposes some of the most aggressive foreign buyer surcharges globally, reaching as high as 60% in certain cases.

‘Vacant homes’ taxes and homeowner behavior

Paris is now moving toward even steeper vacancy penalties. According to reporting by Le Monde, the city plans to sharply increase taxes on vacant housing, with local officials hoping to push thousands of units back onto the market. Jacques Baudrier, Paris deputy mayor for housing, told the paper:…