Published: Fri, April 21, 2017
Markets | By Terence Owen

Ontario to tax foreign buyers, expand rent control to cool housing market

Ontario to tax foreign buyers, expand rent control to cool housing market

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.

Bank of Canada governor Stephen Poloz said last week that the current rate of price increases suggests demand is being driven more by real estate speculators and investors than homebuyers.

The Ontario government is considering a tax on non-resident speculators as it looks for ways to cool the hot housing market in the Greater Toronto Area.

The tax would not target immigrants and a rebate would be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and global students.

Fears of a potential real estate market collapse as well as diminishing housing affordability have put increasing pressure on Wynne's Liberal government to take action, at a time when the average price of detached houses in the Greater Toronto Area has increased more than 30 per cent since past year. But given that Toronto has fewer vacant homes in 2016 then it did 10 years ago (but slightly more than in 2011), it's not clear why Mayor Tory feels this is the most important issue for Toronto to tackle.

The 24-year-old has been anxious about rent increases since she started hearing reports of them in her condo building this year.

Along with expanding rent control, the province also pledged to strengthen the Residential Tenancy Act. New rules would see all private rental units fall under annual rent increase guidelines.

The new policies are expected to include sweeping rent control changes, a tax on foreign buyers and efforts to tamp down speculative investment, The Canadian Press has learned.

Some housing measures promised by the province Thursday were encouraging to market watchers in Hamilton, where prices have been rising by double digits for years. It would match the 15 percent tax on foreign home buyers that the Pacific coast city of Vancouver has implemented.

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"History has shown us that rent control leads to slums".

The news release continued to state that FHP lists a set of 16 comprehensive measures, which in addition, to stabilising real estate market in enabling more people find an affordable place, would also protect interests of renters and the investment of homeowners.

Ontario is also giving Toronto and other interested municipalities the power to impose a vacant homes tax to encourage owners to sell or rent such spaces.

Sousa said he wants the federal government to close a "loophole" that allows so-called property scalpers to treat their profits as capital gains, which means only 50 per cent is taxable.

He said the measures were a mixed bag but said seeing controls on the realtor practices and the implementation of a standard lease were positive moves.

Canada's home prices saw another double-digit rise in March as sales became more active, according to a report Tuesday by the Canadian Real Estate Association.

- A five-year, $125million program aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges.

The challenge for Wynne, Sousa, and Ontario Housing Minister Chris Ballard will be to introduce policies to improve housing affordability without toppling the real estate sector, which has come to represent increasingly significant slices of the provincial and national economies.

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