> On­tario will tax for­eign buy­ers,

Times Colonist - - The Capital - JESSICA SMITH CROSS and ALLISON JONES

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.

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