Ontario mulls non-resident speculation tax

Ontario announced a rash of measures including a tax on foreign buyers and expanded rent control as part of a plan to temper escalating home prices in Toronto.

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.

A 15 per cent tax on home purchases by non-resident foreigners.

The plan has a number of initiatives aimed at the rental market with the biggest being the province's decision to expand rent control to all units built after 1991.

Mamourian thinks that the foreign-buyer tax could slow pre-construction condo sales.

Home sales in the country hit a record high last month, the Canadian Real Estate Association said Tuesday.

In Vancouver, home sales plunged and price growth stalled for several months following the B.C. government's introduction of a 15 per cent tax on foreign buyers. "Ontario's Fair Housing Plan is a thoughtful way to address the recent price increases in our housing and rental market so that affordable housing is available to people and meets the diverse needs of our communities". "I am pleased that the government will activate surplus provincial land like the West Don Lands to create new affordable housing, something I have been urging the Premier to do for some time".

"We sure think there's a need for more information".

Simply increasing taxes on home ownership could lower the value of Toronto real estate, while doing nothing to increase the supply of homes, bringing with it the worst of both worlds.

- 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.

The issue has become a headache for the province's Liberal government, which is trailing the Progressive Conservatives in polls ahead of an election in June next year, and lawmakers face a hard balancing act to find policies that will stabilise prices without crashing the market.

It would not apply to transfers of other types of land including multi-residential rental apartment buildings, agricultural land or commercial/industrial land.

What Sousa didn't say is that the Liberals have more than doubled Ontario's debt to more than $300 billion since coming to power in 2003, which has made Ontario the most indebted sub-sovereign (non-national) borrower in the world.

London and NY have shown that rent controls are a disincentive to building new units, because they curtail the potential return on investment for pension funds and other investors in these kinds of developments, said the business group's CEO.

He also said that he discussed vacancy rates that are constraining supply at a meeting this week with the federal finance minister and Toronto Mayor John Tory, who has been talking about a vacant homes tax.

Reviewing the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions.

- Set timelines for elevator repairs to be established in consultation with the sector and the Technical Standards & Safety Authority.

Many analysts are now focussed on the Bank of Canada's next move for guidance on whether or not policymakers believe an interest rate rise is needed to cool the housing market.

"Ultimately at the end of the day, you probably end up in a situation where the market absorbs the tax and keeps pushing higher", said BMO economist Robert Kavcic.

Analysts say Ontario had no choice but to act aggressively, given the frothy state of the Toronto market.

  • Zachary Reyes