The Globe and Mail reports that some aspects of Vancouver’s foreign-buyers regulation have been embraced in Greater Toronto’s “Golden Horseshoe” the area from Peterborough to the Niagara region that houses a population of over 9.25 million people.
Effective today a new measure similar to Vancouver’s foreign-buyers tax will apply to buyers who are not Canadian citizens and permanent residents. Foreign companies will also not be exempt. The tax will be 15 per cent of the value of the purchase in a market that already has 8 per cent of home owners being non-residents. Those folks will also need to prove “ that they have a legitimate reason for buying property in Ontario that goes beyond investing. The tax is not aimed at new Canadians, according to Premier Kathleen Wynne. It will be reimbursed to buyers who become permanent residents within four years of a sale, and won’t apply to international students enrolled full-time for at least two years or someone who has been legally working in Ontario for at least one year. To qualify for a rebate, the property must also be considered someone’s principal residence.”
What is also interesting is that Ontario is planning to bring all rental apartments under rent control, meaning that rent hikes will be held “around inflation, and capped at 2.5 per cent a year, although landlords can still apply for special increases if they do renovations or upgrades. Rents can be raised when a tenant moves out.” Lease agreements are going to be standardized, and provisions when tenants could be vacated if the landlord wanted to move in are being tightened, with compensation now required for such lease termination.
Ontario has also announced a $125 million dollar program to rebate development cost charges to boost new apartment building construction, targeting areas where housing need is greatest. Powers for a vacant home tax enactment are also being given to the City of Toronto and other municipalities with housing shortages. The challenge of “paper flipping”, called “assignments” in British Columbia is also being investigated where titles of condominium units are sold with a market lift prior to the occupancy permits being granted.
These are measures towards providing housing affordability and accessibility in a market that is “saturated with families…who are not able to buy and are forced to rent indefinitely.” Diverse development is needed to accommodate a range of different family types and household sizes and incomes.
These are major changes in acknowledging the need for housing affordability and accessibility to appropriate housing-but is it too little too late for Toronto?
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Reblogged this on Sandy James Planner.
Forgive my scepticism, but are not most of these policies already in place in BC and found to be rather useless? Rent control here is mandatory for all rental units, with a universal tenancy agreement and rent increases only once per year and held at inflation. And yet, we still have renovictions and tenants forced to move due deliberate negligence (water turned off, etc.), and we still are seeing older, preferable apartment buildings torn down for condos. The foreign buyers tax here hasn’t been tried yet, but we can already detect loopholes the size of the moon. (It’s largely based upon self-identification, for crying-out-loud). Ontario is proposing that they won’t go after international students or people who are applying for permanent residence or people who are working in the province, but in BC, these minor obstacles are very easily dodged. International students in Vancouver have been known to buy 25 million dollar homes… My scepticism is not diminishing.
We will see similar results as in BC. In BC the results were:
A) money shifted to other cities, notably Victoria causing 50% price increases there. Similar effects will happen in Ottawa, Kingston, Montreal as only Golden Horseshoe cities incl KWC will be affected by this new foreigners tax.
B) money will shift into other asset classes such as commercial, farmland, vineyards, retail, office or industrial.
C) high end home prices and those with high foreign money concentration will drop the most, 15-20%, whereas condos and mid to lower priced homes will not shift much
D) volume will drop immediately as foreigners re-assess the situation ( and that is why realtors do not like these measures at all )
E) in a year or max. two prices will be like today
The rent control laws are dumb dumb dumb. At least BC allows inflation plus 2% ie around 3-4% annual rental increases. 1.5% is far too low and will lead to immediate spike in rents for vacant units to compensate for the lack of increase ability, and it will lead to folks not letting go of their oversized units ( eg granny in a 3BR will stay, depriving a young family with two kids to get modestly priced accommodation ). It will also result in less rental construction.
My MLA David Eby’s idea of taxing non-income tax payers 2% a year is a far far smarter idea: http://vancouversun.com/news/local-news/affordability-an-issue-for-election Don’t ban foreign money, just tax it far higher ! Bravo ( perhaps the frequent emails to him, personal meetings and Twitters did pay off )
The best form of rent control is a landlord worried about too many vacant suites. Increase supply with a density bonus for (arms length) rental suites in new projects.