Ontario's plan to cool the housing market includes taxing foreign buyers
Jessica Smith Cross and Allison Jones, The Canadian Press
Published Thursday, April 20, 2017 10:44AM EDT
Last Updated Thursday, April 20, 2017 6:48PM EDT
TORONTO -- Ontario plans to help cool a hot housing market by bringing in a 15-per-cent foreign buyer tax, expanding rent control, allowing Toronto to impose a tax on vacant homes and using surplus lands for affordable housing.
Premier Kathleen Wynne announced Thursday that a non-resident speculation tax will be imposed on buyers in the Greater Golden Horseshoe area -- from the Niagara region to Peterborough, Ont.-- who are not citizens, permanent residents or Canadian corporations. Once legislation passes, the tax would be effective retroactively to April 21.
The tax is not about targeting immigrants, Wynne said, and a rebate would be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and international students.
"The non-resident speculation tax has nothing to do with new Canadians and people who want to make Ontario their home," she said. "With this tax, we are targeting people who aren't looking for a place to raise a family -- they're looking only for a quick profit or a safe place to park their money."
The average price of detached houses in the Greater Toronto Area rose to $1.21 million last month, up 33.4 per cent from a year ago.
Skyrocketing demand and rising cost of housing is the "unwanted consequence" of a growing economy, but the province's new measures will make the process of finding a place to live a little easier, a little less frantic and a lot fairer, Wynne said.
"When young people can't afford their own apartment or can't imagine ever owning their own home, we know we have a problem," she said. "And when the rising cost of housing is making more and more people insecure about their future, and about their quality of life in Ontario, we know we have to act."
The province will also expand rent control, which currently only applies to units built before November 1991, after tenants in newer units complained of dramatic spikes in rent. New rules would see all private rental units fall under annual rent increase guidelines. Those have averaged two per cent in the last 10 years and this year it is 1.5 per cent.
OntToronto Mayor John Tory has been calling for a tax on vacant homes, and Wynne says Ontario will give Toronto and other interested municipalities the power to impose such a tax to encourage owners to sell or rent such spaces.
The provincial Liberal government's housing plan contains 16 measures in total. It also includes rebating a portion of development charges to encourage rental construction under a five-year, $125-million program.
Rules for real estate agents will also be reviewed, in particular practices such as double ending, where the agent represents both the buyer and the seller.
Ontario will also establish a program to identify provincially owned surplus lands for affordable and rental housing, with an eye to using a few specific sites such as the West Don Lands in Toronto for pilot projects.
Here are the 16 proposed measures:
- A 15-per-cent non-resident speculation tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations.
- Expanded rent control that will apply to all private rental units in Ontario, including those built after 1991, which are currently excluded.
- Updates to the Residential Tenancies Act to include a standard lease agreement, tighter provisions for "landlord's own use" evictions, and technical changes to the Landlord-Tenant Board meant to make the process fairer, as well as other changes.
- A program to leverage the value of surplus provincial land assets across the province to develop a mix of market-price housing and affordable housing.
- Legislation that would allow Toronto and possibly other municipalities to introduce a vacant homes property tax in an effort to encourage property owners to sell unoccupied units or rent them out.
- A plan to ensure property tax for new apartment buildings is charged at a similar rate as other residential properties.
- A five-year, $125-million program aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges.
- More flexibility for municipalities when it comes to using property tax tools to encourage development.
- The creation of a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.
- An effort to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market.
- A review of the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions.
- The launch of a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures and any additional steps that are needed.
- Education for consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.
- A partnership with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.
- Set timelines for elevator repairs to be established in consultation with the sector and the Technical Standards & Safety Authority.
- Provisions that would require municipalities to consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes, among other things.
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