Ontario sets tax on foreign buyers to cool Toronto housing market

Posted April 25, 2017

The tax, which is effective immediately, is aimed at preventing foreign investors from driving up real estate costs.

Wynne says the tax is not about targeting immigrants and a rebate would be available for people who subsequently become a Canadian citizen or permanent resident within four years of the date of the purchase.

"The fact that people are paying upwards of two grand for their tiny downtown apartment, still doesn't give me that much hope", she said.

The Ontario government has announced what it calls a comprehensive housing package aimed at cooling a red-hot real estate market.

Housing experts believe it could also free up more rental homes, say politicians and housing experts.

"The timing (of Wynne's plan) is most disappointing given that it's our spring market and we also have a real uptick in the last 10 days in terms of inventory", said Dianne Usher, senior vice-president of Johnston and Daniel, a division of Royal LePage.

In the Greater Toronto Area, the average price of detached houses rose to $1.21 million last month, up 33.4 per cent from a year ago.

Premier Kathleen Wynne's Liberals are widely expected to reveal housing policy measures when Sousa issues his budget on April 27. "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".

- Expanded rent control that will apply to all private rental units in Ontario, including those built after 1991, which are now excluded.

BMO had concerns about rent control, noting that the change could slow the construction of rental units.

The 16 measures will also fundamentally change the province's rental housing market by imposing rent controls on all units. This led to stories of landlords doubling their tenant's rent - which were really about landlords using this loophole to force their tenants out of their condos.

With public frustration growing, federal Finance Minister Bill Morneau met with Ontario Finance Minister Charles Sousa and Toronto Mayor John Tory earlier this week.

"We're going to continue to pay close attention to what happens in the housing market", she said. Progressive Conservative Housing Critic Ernie Hardeman said the measures are moving "in the right direction".

Tim Hudak, CEO of the Ontario Real Estate Association, welcomed the review.

Josh Gordon, an assistant professor at Simon Fraser University who studies the housing markets in Ontario and British Columbia, said one way to tax "non-resident speculation" would be to levy a foreign buyers tax but refund or offset it according to income tax paid in the province.

The new plan will expand rent control to include all Ontario buildings constructed after 1991. The City of Vancouver also imposed a tax on vacant homes.

- Align property tax for new multi-residential apartment buildings with other residential properties.

- Municipalities could be allowed flexibility to use property tax as a policy tool to influence development. The Fair Housing Plan will also include a new Housing Supply Team of dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.

The three politicians made the comments after a special meeting to discuss the housing situation.

A government backgrounder on the measures announced today specifically mentions the practice of double-ending, when one agent represents more than one party in a transaction.

Canadian Prime Minister Justin Trudeau sought to dispel any notion that Ontario's proposed 15 percent tax on foreign homebuyers is a sign the country is shunning foreign investment.

The plan also includes establishing timelines for elevator fix so that they aren't broken so often in condos and apartments.