The voraciousness with which foreign buyers have been buying up real estate in Toronto has been equally intense in comparison to Vancouver over recent years. The B.C. Liberal Government introduced a 15% foreign buyers tax in 2106, and – after months of speculation that they would – the Ontario Liberals are now doing the same.
Here at Real Estate Leads, we’re all about ways for realtors to get more listings, but we’re also keenly interested in healthy real estate markets that don’t preclude any particular demographic from being qualified buyers. To be certain, Canada’s cultural mosaic is of a benefit to us all but we believe in the need to protect affordable housing in Canada’s big cities.
The new regulations will also include expanding rent control, allowing Toronto to impose a tax on vacant homes, and using surplus lands for affordable housing. All of this stems for the same maladies that Vancouver has long claimed to be suffering from, where foreign buyers (among other factors, to be fair) have driven up housing prices to the point that people can longer afford to live in the city, and that includes families and people who have significant operational value to the city – live police, firefighters, paramedics, – and even doctors!
Premier Kathleen Wynne announced today that this non-resident speculation tax will be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations. Wynne says the package of housing measures will make the process of finding a place to live a little easier, a little less frantic and much more of a fair process. The province will also expand rent control, which currently only applies to units built before November 199. This, and again like Vancouver, comes after tenants in newer units complained of dramatic rent spikes that – in some cases – led to financially-stable long term tenants now being in a precarious position to afford renting their home
Curbing Vacant Ownership and Rental Avoidance
Toronto Mayor John Tory has been insisting on a tax on vacant homes for some time now, 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 Ontario Liberal government’s housing plan is made up of 16 measures in total, including identifying provincially-owned surplus lands for affordable or rental housing development, rebating a portion of development charges to encourage rental construction (sorely needed in Toronto and Vancouver), and undertaking a review of the rules for real estate agents.
The measures are aimed at putting the brakes on a hot real estate market in the Greater Toronto Area that is speeding out of control, where the average price of detached houses rose to $1.21 million last month, up a massive 33.4% from a year ago.
Other parts of the new measures include:
- 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.
Following Other Cities Leads As Well
Ontario’s move to make foreign ownership of property more expensive – and thus more prohibitive – is not mirroring that of Vancouver only. Many other cities around the world have introduced similar measures, including Sydney, Australia and Singapore most notably. The belief that affordable housing is a right that should be A) offered to all citizens, regardless of origin, but B) still protected for families who have invested in those countries for generations, and provide the backbone for society.
It is likely that this will be the last of such real estate correction measures taken by provincial governments, as outside of Vancouver and Toronto the demand for housing in other big Canadian cities is not so great. Calgary may be an exception there, but we have not heard any rumblings from Rachel Notley and the Alberta NDP as of yet.
The hope is that, in the long term, these measures will allow families and individuals to see property ownership as something that MAY be in the future. Even if it is not presently, it is important that these people do not see it is an impossibility and move on from these locations.
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