Scenic cityscape of downtown Toronto Ontario Canada during a sunny day

Ontario will impose foreign buyer tax and rent control as part of 16-point Fair Housing Plan

In Canada by TheRedPin20 Comments

Scenic cityscape of downtown Toronto Ontario Canada during a sunny day

On Thursday, April 20, Kathleen Wynne introduced Ontario’s Fair Housing Plan, a set of measures that will tax foreign buyers, and establish more regulations for speculators entering the Toronto real estate market.

Many owners and renters in the city are feeling the pinch as housing costs increase exorbitantly and rents rise faster than wages. Others are moving farther afield in the hopes of finding something in their budget, fuelling pricing increases in cities like Hamilton and the Niagara region.

The 16 measures outlined in the plan address the recent trend of Toronto’s red-hot housing market by attempting to regulate some of the rules governing agents, buyers, landlords and speculators, while also establishing more purpose-built rental property.

“We are not interested in controlling the market,” Wynne told the CBC. “That is not the aim. But we do believe that there is a need for interventions right now to calm what is going on, to put protections in place.”

Most of the rules must be passed in legislation before moving forward, but one was implemented the date of Kathleen Wynne’s announcement on Thursday, April 20, protecting renters in units built after 1991 from rental increases above the rate of inflation.

So how will these rules affect new home buyers and speculators, and will they change the city’s real estate market? Here’s a run-down on Queen’s Park’s extensive new measures that will affect homebuyers.

  • Tax on non-resident foreigner buyers

The province has proposed a 15 per cent tax on so-called foreign real estate investors. This measure, which echoes the revised 15 per cent foreign buyer tax implemented in Vancouver, will not apply to foreign citizens residing in Ontario, multi-residential rental apartment buildings and non-residential land.

Refugees and skilled workers enrolled in provincial programs would also be exempt from this tax, and anyone who obtains permanent residency or citizenship within four years of purchasing their property will receive a full rebate. So will international students who have been enrolled in a full-time program for at least two years. There is currently no data on how many homebuyers in the GTA are foreign speculators, but industry insiders suggest it’s a small percentage.

  • Tax on vacant homes

According to recent census data, 4.5% homes in the GTA are unoccupied (approximately 65,000 homes according to Toronto mayor John Tory). These properties are either owned by real estate speculators who plan to sell the units before renting or living in them, or are on the short-term rentals market.

The province will grant authority to Toronto and municipalities in the Greater Golden Horseshoe (GGH) to tax owners of vacant property. This measure will encourage owners to rent or sell these properties, rather than hold on to them in the hopes that the value goes up.

  • More rental units and protection for tenants

A few of the measures are targeted at Toronto’s renters. Landlords were not permitted to raise rents above the rate of inflation, however rental units built after 1991 were not subject to this rule allowing landlords to raise rents at unreasonable rates.

The measure that went into effect on April 20th protects renters by capping rent increases for all residential property at 2.5 per cent regardless of the year it was built, even if the rate of inflation exceeds that number. In addition, the province will introduce a standardized lease document for tenants throughout the GGH.

In light of these rental caps, and to counteract worry it would discourage developers from building new rental units, the Fair Housing Plan also includes measures to encourage construction of new rental buildings.

New policy will give $125-million in rebates on municipal development charges to builders for creating more rental housing. It should be noted that the city is experiencing a renaissance when it comes to new rental property. According to CIBC and Urbanation, during the final quarter of 2016, 5,000 apartment units were under construction compared to 2,000 two years prior.

Kathleen Wynne’s government also plans to investigate provincially owned surplus land (such as the West Don Lands and 27 Grosvenor St.) and whether or not this land can be used for affordable housing.

  • Protection for homebuyers

The only measure aimed at real estate agents is a review of the rules that protect consumers in property transactions, including an investigation into the practice of double-ending. This controversial practice, which some believe is on the rise in Toronto, happens when an agent represents both the buyer and seller in a housing deal. This breaks the Real Estate and Business Brokers Act (REBBA) code of ethics by giving a favoured buyer confidential information to ensure their deal goes through.

Additionally, the provincial government will review so-called paper flipping (also known as assignment sales), which allows investors to assign a real estate contract to another homebuyer before the closing date. This takes advantage of the speed at which housing costs are rising by taking the difference between the sell and closing date.

The province will review all rules that real estate agents must follow according to REBBA, as well as the ways real estate investors are capitalizing on the ever-changing market, to make sure homebuyers are not exploited or unfairly left out of a housing deal, making the rules of engagement the same for everyone.

Entering the Toronto real estate market is a risk like any other: you’re investing not only in property, but also in the city as a whole. What will it be like to live in Toronto be in five or ten years from now? Purchasing property in Toronto and the surrounding area is a bet for the city and its future.

Want to get started on your home buying and selling journey? Give us a call at 416.800.0812 and check out TheRedPin’s listings page

Comments

  1. Mathew pappachan

    Wanted detached homes for 450000 to 500000.if possible please let me know.

    1. Chantel Richards

      Go to shelburne…. prices are still fair- 30 minutes north of Brampton

    2. Author
      TheRedPin

      Hi Mathew,

      Thanks for reaching out to TheRedPin!

      While some detached homes can be found below the $500,000 mark, they represent a tiny minority of the Greater Toronto Area housing market.

      Of the roughly 11,500 detached homes that sold in the GTA between January to March 2017, only about 3 per cent sold for $500,000 or less.

      Most detached homes in this price range can be found in the Durham Region in the GTA’s eastern boundaries. Townships like Brock and Clarington would be ideal places to look at in this price range. If you’re willing to compromise on a detached home, you can also begin to find freehold townhouses in cities such as Oshawa. However, overall, the freehold market is largely seeing homes close for above the $500,000 mark.

      One of TheRedPin’s in-office agents will be reaching out to you soon to discuss your home search in more detail and help guide your home buying journey.

      Best,

      TheRedPin

  2. Bil Hobson

    Toronto and Vancouver are supposed to be world class cities. Home prices in most world class cities located abroad, dwarf the cost for buying and renting here. The mishandling of the housing and rental file by the Wynne Government will only inflame future shortages of both owned homes and rental units. World class cities command world class living costs.

    1. Author
      TheRedPin

      Hi Bil,

      We wholeheartedly agree, on a global scale, Toronto isn’t an expensive city for real estate.

      Best,

      TheRedPin

    1. Author
      TheRedPin

      Hi Brian,

      One of TheRedPin’s salaried in-office agents will be reaching out soon to help kick off your house hunt in Orangeville.

      Expect an email in your inbox soon.

      Best,

      TheRedPin

  3. Mandeep Kaur

    looking homes with backyard for 450000 to 500000.if possible please let me know.

    1. Chantel Richards

      Prices are still reasonable in Shelburne…. detached with yard, 3-4 bedroom.. 30 minutes north of Brampton..

    2. Author
      TheRedPin

      Hi Mandeep,

      Thanks for reaching out to TheRedPin!

      We can definitely help kick off your search for properties that fit your price range. One of our in-office salaried agents will be reaching out to you soon to discuss your home search in more detail and find your ideal location.

      Best,

      TheRedPin

  4. Andrew Iori

    Government needs to say out of the market, a free market will allow prices to float to reasonable levels. Rather Government should work on processing application for land developments. The real problem is the lack of available houses, lets fix this problem. I am not sure the current government is up it this, they would rather continue trying to be best friends to all these green groups.

    1. Author
      TheRedPin

      Hi Sam,

      Thank you for looking to TheRedPin to start your house search.

      One of our salaried real estate agents will be reaching out to connect about your criteria and hone down exactly what you’re looking for.

      Expect an email or call shortly.

      Best,

      TheRedPin

  5. Srivithiya

    Looking a new townhouse between 350000 and 450000. Please let me know.

    1. Author
      TheRedPin

      Hi Srivithiya,

      We can definitely help with your search for a townhouse. A fully licensed salaried real estate agent will be connecting with you soon to help hone down your ideal neighbourhoods and discover more about what you’re looking for (e.g. are you open to condo townhouses or are you strictly searching for freeholds).

      Expect an email in your inbox soon.

      Best,

      TheRedPin

  6. Shivangi

    Hi,

    Looking for a home nearby Mississauga or Brampton. Coz me and my husband both work in Mississauga near Hurontario and Courtneypark.
    My range is in between 450,000.00 to 500,000.00.

    Also looking for either free hold or low maintenance nearby 200$.

    1. Author
      TheRedPin

      Hi Shivangi,

      Thanks for reaching out to us. We can definitely help with your house hunt! One of TheRedPin’s salaried agents will be reaching out to you soon to gain more insight into your search and promptly set you up to receive email updates of Mississauga and Brampton homes in your budget.

      Best,

      TheRedPin

  7. Sekura

    What exactly is this standardized lease? Tenants already have all the rights! It took us 7 months to get rid of a tenant who moved in and paid only first and last and not a single penny more! We are out $7400 plus costs to evict and clean up and repair the damage and mess he left behind! We will never get a dime out of him. How much more protection will professional tenants receive? And, NO, I’m not a slumlord!! How about a little protection for landlords who find them selves with a tenant who does not pay? The current tenant board is a joke!

  8. Zohra Gulestani

    Hello we found the reasonable price $259.990 condo 3bed 2 wr in black Greek Toronto we tried put offer the owner riser the price to $ 3150000 pluse the building fees up to 250. is that supposed be because the condos price rises

    1. Author
      TheRedPin

      Hi Zohra,

      Congratulations on finding a condo that fits your price range.

      In terms of why the figure went up, there are a myriad of possible factors to why the seller chose to increase the price. After all, sellers can increase the price as they choose, and are not required to actually sell their property at the price they listed for.

      On the matter of building fees, we are not sure what you are referring to exactly. If it is condo fees, it’s unlikely such a drastic increase occurred in such a brief period; unless a new budget was set by the residence’s condo board that led to a sharp jump. If you get access to the condo’s Status Certificate, which can provide some insight into the reserve fund, insurance policies etc. (which all impact on condo fee rates), you can have a more informed look into why fees went up substantially.

      If you have any more questions, please feel free to reach out to us at inquiry@theredpin.com or call us at 647-827-1075.

      Best,

      TheRedPin

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