TORONTO, April 20 Ontario's provincial government on Thursday introduced a 15 percent tax on property purchases by foreign buyers as part of 16 measures created to cool Toronto's red-hot housing market. The area, which stretches from the Niagara Region to Peterborough, Ont., is home to about 9 million people and is one of North America's fastest growing regions. Once legislation passes, the tax would be effective retroactively to April 21.
The most recent possibility floated by the Ontario government is a "non-resident speculation tax", but the province hasn't yet said how exactly that tax would work. She says they are taking aim at speculators and are tackling affordability.
The tax "would apply to transfers of land that contain at least one and not more than six single family residences" and affect buyers who are not citizens or permanent residents as well as foreign corporations.
The number of sales in Metro Vancouver plunged in the wake of the new tax, but the market appears to have bounced back since. The index prices for Greater Vancouver and Greater Toronto stood at C$919,300 (US$687,636) and C$772,500 (US$577,830), rising 13% and 29% year-over-year, respectively. Wynne says when the market jumps 33 percent in a year they know there's a problem.
Ontario Housing Minister Chris Ballard has also said the provincial government has been developing "substantive rent control reform" amid calls to end a rule that sees annual rent increase caps only apply to residential buildings or units constructed before November 1991.More news: Some veterans can go to CVS 'MinuteClinics' for minor illnesses
The new plan extends rent control to all private rental units in the province.
Ontario's average vacancy rate dropped to 2.1 per cent in the fall of 2016, from 2.4 per cent in 2015, the lowest vacancy rate since October 2003; in Toronto, the vacancy rate was 1.3 per cent, the lowest in 12 years.
The province is also considering to bring in a standardized lease, similar to that exists in Quebec, to stop landlords from putting illegal clauses in their contracts with tenants. The decline of purpose-built rental housing-which has recently witnessed a resurgence due to increased demand-has been attributed by some to previous rent control measures, though the extent to which rent controls have impacted new construction starts is disputed.
We have committed to meet quarterly to collectively discuss how we can address the challenges of housing affordability, managing expectations, and the impact of market speculation in the GGH.
Toronto's surging real estate market has triggered debate over whether non-Canadian speculators are bidding up homes and fuelling unsustainable record price gains, or if a lack of housing supply and inadequate urban planning is more to blame.More news: Protesters march before EPA chief Indiana visit
Before imposing any new measures on real estate agents, Ontario government said, it will review the regulations governing the industry, including the body representing agents (the Ontario Real Estate Association) and the provincial regulator (The Real Estate Council of Ontario), CBCNews reports said.
Neither of Ontario's opposition parties objected to any of the government's proposed measures. Progressive Conservative Housing Critic Ernie Hardeman said the measures are moving "in the right direction".
Ontario Premier Kathleen Wynne is set to unveil a package of housing market reforms to help cool out-of-control price growth in and around Greater Toronto.
Other measures to be implemented by the CMHC next month include the introduction of improved underwriting flexibilities and a revised premium schedule supporting increased affordable housing. That kind of tax would discourage speculation and make it more expensive to "flip" homes, he said.
In explaining the new rule, the government said the information is sought "to support evidence-based policy development with respect to Ontario's real estate market".More news: Volkswagen Going Down EV Route, After Dieselgate Scandal