Ontario, Canada brings in foreign housing tax to cool market

Ontario, Canada brings in foreign housing tax to cool market
Ontario, Canada brings in foreign housing tax to cool market
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21 April, 2017

Moments after introducing a package of measures created to cool the GTA's red-hot housing market, Premier Kathleen Wynne conceded she's open to doing more if her plan doesn't work.

Three levels of government facing a red-hot housing market in the Greater Toronto Area have agreed Tuesday not to introduce any measures that would further boost demand and drive prices even higher.

Sousa's office would not comment on whether the government would introduce rules similar to those imposed in British Columbia, but the finance minister has floated a number of possible measures, including implementing a tax on foreign buyers, vacant homes and speculators.

This year, the government announced a much bigger investment geared toward collecting housing data-$300 million over the next decade, including $39.9 million to study foreign ownership.

The Ontario government is expected to unveil a suite of housing affordability measures in the coming days aimed at cooling soaring home prices in the Greater Toronto Area.

Wynne said the tax is not about targeting immigrants.

"We need to put mitigations in this system", the treasurer said in Toronto where he announced an investment of nearly $190 million over three years to support the "Career Kick-Start Strategy".

Rent control has been one of Toronto Mayor John Tory's main concerns, especially after recent published reports about some tenants in the city receiving notices that their rent would double.

The foreign-buyer tax would be effective in all markets within Greater Golden Horseshoe, which is bounded by Peterborough to the east, the Niagara region to the south, Waterloo to the west and Orillia to the north.

Since taking office in late 2015, the federal government has twice taken steps in an effort to cool scorching housing markets, especially Toronto and Vancouver.

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Wynne said the Liberals were not interested in controlling the market.

The good news is that the measures announced today are unlikely to send the market into a tailspin.

The proposed legislation includes expanding rent control, incentives for those who build rental housing and new tools that will allow Toronto city council to follow Vancouver's lead in imposing a tax on vacant homes.

To mitigate the potential negative impacts that closing the so-called 1991 loophole could have on new rental construction, Ontario's Fair Housing Plan will also introduce a targeted $125-million, five-year program, offering a rebate on a portion of development charges for rental apartment buildings. The province is also setting up a Housing Supply Team to look into measures that can be taken to improve the supply of new homes and condos.

"While we support the government's interest in ensuring viable rental options for Ontarians, well intentioned yet dramatic changes to rental policies meant to improve options for renters will have unintended consequences, resulting in a stagnant rental industry, declining rental assets, and less choice for today's tenants".

With new legislation, the Wynne government also plans to limit rent increases to 2.5 per cent per year for all units in the province.

What else do you need to know about "Ontario's Fair Housing Plan?"

- 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.

The Vancouver foreign-buyer tax "had a noticeable moderating effect on prices", said Robert Hogue, economist at Royal Bank of Canada.


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