Canada's Condominium Magazine
As expected, Kathleen Wynn moved to cool down the sizzling hot GTA real estate market with a bundle of measures, led by new 15 percent non resident speculation tax. Investors who are residents are exempt, although separate “policies” may also target locals. Expanded rent controls are also certain.
“When I talk about the frenzy in the housing market, it is at its peak in the Greater Golden Horseshoe,” said Wynn in her announcement today. “So, we are looking at a number of options. We have a number of options we might do to cool that frenzy down, to give everyone some breathing space.”
She added, “There are other issues across the province. So, we’re going to bring forward a package of initiatives, before the budget, as we have said, and they’re coming very soon.”
In her announcement she also mentioned help for renters, and emphasized that the measures were designed to temper, not shock.
“We are bringing in some initiatives that will help people in that whole continuum of housing, right from rental through to purchasing a home, without having unintended consequences. That is my fear in a market, but I think that when you look at what economists are saying, look at what folks who are trying to buy a home are saying, it’s really gotten to the point where it’s out of control, and we need to do something.”
Foreign Speculators About 5 Percent of Market
The main focus of this initial policy announcement was non-resident investors, estimated at about 5 percent in the 2017 market. The policy is similar to tax on foreign buyers recently deployed in Vancouver. Both Premier Wynn — and previous remarks from Charles Sousa, Ontario’s Finance Minister — indicated a bundle of measures and “no one-size-fits-all” solution.
Mentioned previously were measures that would also focus on domestic investors, especially speculators, although Wynn made it clear they would not be subject to the 15 percent tax.
Rent Control Certain
Amendments to rent control expands “rent hike” protection from pre-1991 units to all homes and apartments for rent — limiting them to increases equal to the inflation rate. For example, the inflation rate last February was 2 percent. As with previous controls, landlords enjoy some exemptions if they renovate or improve properties.
Critics point out this policy will prove to be a disincentive for new rent-specific developments, but Charles Sousa, Finance Minister is convinced this won’t happen. There was some suggestion of incentives to build affordable housing and other measures.
The other big policy change will likely involve real estate transparency, particularly relating to the “bidding wars” which dominate the Golden Horeshoe area, and especially downtown Toronto.
- Inventory provincially-owned land with a view to developing affordable housing
- Taxation of vacant homes to push inventory back into either the buying market or rental market.
- More control for Municipalities to encourage development
- More protections in the Residential Tenancies Act, particularly relating to lease content and evictions.