Ontario, the Canadian province with the nation’s most populated city, Toronto, is using the lessons of British Columbia and Vancouver to tackle spiking rent-control issues.
Calling it a Fair Housing Plan, the 16-measure program lays out a path to deal with the soaring demand for housing. In addition to taking steps to protect renters, as well as homebuyers, the plan also hopes to find a path toward increasing the province’s housing supply.
The hallmark of the reform is a 15 percent taxation on foreign persons or companies buying property in the Greater Golden Horseshoe region guised under a “non-resident speculation tax,” a very similar tax that was applied in British Columbia last August.
Under Ontario’s plan, more people who purchase their first home will be eligible for a doubled up Land Transfer Tax refund, upping the refund to $4,000. This means eligible homebuyers in Ontario pay no Land Transfer Tax on the first $368,000 of the cost of their first home.
Several actions have already been taken, such as updating the Land Transfer Tax to accurately account for current real estate market statistics. This includes increasing rates on one or two single-family residences valued at over $2 million. The taxes would go toward the First-Time Homebuyers Refund.
The Fair Housing Plan also includes a benchmark, five-year $125 million program meant “to further encourage the construction of new rental apartment buildings.” Additionally, the legislation would allow Toronto and potentially other cities to introduce vacancy taxes.
According to an investigation by The Globe and Mail, a loophole from the Mike Harris administration left rent control in place for buildings built before 1991, but stripped rent control on buildings built after that time, leaving a two-tiered system.
Many welcome the plan, though experts are cautious.
The Toronto Real Estate Board said in a April 20 press release that TREB “strongly believes that public policy decisions with regard to the housing market should be evidence-based and supported by empirical data. In this regard, it is not clear that the issues targeted by the policies announced today are fully understood at this point, nor is it clear how effective these policies will be, or if they will have unintended outcomes.”
Meanwhile, Royal LePage Johnston & Daniel senior vice president Dianne Usher told CTV News on April 20 that the Fair Housing Plan was welcomed and that she welcomed “the affordability issue,” but that people shouldn’t be overly optimistic or expect the market to change overnight.
With that said, industry experts like Larry Weltman, Customer Service Representative at AccessEasyFunds, an Ontario company that provides cash flow solutions to real estate agents, believes that the government should hold off on interfering with the real estate market; Weltman notes this for various reasons.
If there is going to be market interference, Larry Weltman thinks there is a better approach compared to what the provincial government announced last week, favoring instead initiatives that would help buyers save for a down payment and eliminating property taxes for first time buyers for 5 years.
As of May 1st, opinion as to whether the Fair Housing Plan has already made an impact on the real estate market in Ontario has been mixed, with some experts saying it’s still too early to tell what the plan’s effect will have or how strong it will be.