> Ontario will tax foreign buyers,
TORONTO — Ontario is following British Columbia’s lead, promising to introduce a tax on foreign homebuyers that the province hopes will help cool the frantic housing market, easing concerns about a potential bubble in Canada’s fastest growing urban region.
The 15 per cent “non-resident speculation tax” was among 16 housing measures Ontario announced Thursday, which also included a promise to expand rent control, allow Toronto to impose a tax on vacant homes and use surplus provincial lands for affordable housing.
Premier Kathleen Wynne said the new tax would not target immigrants, and a rebate would be available to foreigners who work in Ontario, those who subsequently get citizenship or permanent resident status and international students.
“With this tax, we are targeting people who aren’t looking for a place to raise a family — they’re looking only for a quick profit or a safe place to park their money,” Wynne said.
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 last year.
Wynne said the measures were designed to help people afford to rent or buy a home, brushing off a suggestion that the move was more about boosting her approval rating, which has recently plunged to just over 10 per cent, according to polls.
Some economists were skeptical Thursday about the impact the new tax on foreign speculators would have on soaring house prices, noting that all three levels of government have admitted they lack housing market data.
CIBC economist Benjamin Tal said he doesn’t believe there are enough foreign buyers in the Toronto-area market for the tax to have a lasting effect. However, he predicts a short-term slowdown in the market once the measures are implemented.
Wynne said the Liberals were not interested in controlling the market. “But we do believe there is a need for interventions right now in order to calm what’s going on,” she said.
The non-resident speculation tax will be imposed on buyers in Ontario’s Greater Golden Horseshoe — an area stretching from the Niagara Region to Peterborough — who are not citizens, permanent residents or Canadian corporations. Once legislation passes, it will be effective retroactively to April 21.
Another housing measure would expand rent control, which currently only applies only to units built before November 1991.
Rent control has been one of Toronto Mayor John Tory’s main concerns, especially after recent published reports about some tenants in the city receiving notices that their rent would double.
The building industry has warned that rent control will discourage the construction of new rental properties. To offset that, the government has also introduced a five-year, $125-million program to rebate a portion of development charges on new purpose-built rental properties in areas with low vacancy rates.
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.
Rules for real estate agents will also be reviewed, in particular practices such as double ending, where the agent represents both the buyer and the seller.
A real estate agent puts up a “sold” sign in front of a house in Toronto on Thursday.