Ontario sets tax on foreign buyers to cool Toronto housing market

Premier Kathleen Wynne announced more than a dozen new initiatives aimed at reining in prices that have soared out of reach for many homebuyers, including a 15 per cent tax on non-resident speculators in the Greater Golden Horseshoe, a fast-growing region that stretches from the Niagara Region to Peterborough, Ont.

The Ontario government is unveiling a suite of calming measures to address soaring housing prices in the red hot Greater Toronto Area market on Thursday.

In Vancouver, home sales plunged and price growth stalled for several months following the B.C. government's introduction of a 15 per cent tax on foreign buyers.

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 worldwide students.

The Canadian Real Estate Association says home sales last month hit a record high.The association says home sales over its Multiple Listings Service system increased by 1.1 per cent in March to top the previous monthly record set in April 2016.

The plan could come as soon as tomorrow and is expected to include rent controls, some type of levy on housing speculators, potentially a vacancy tax, rules to curb bidding wars and measures to discourage foreign buyers. "If there's more that we need to do, if there's changes we need to make, then we will make them". Rent control will be imposed on buildings constructed after 1991, which limits annual increases.

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.

FRPO warned that roughly 9,000 objective built rental suites in Ontario, represents $2.7 billion in gross investment, will be exposed to risk in the event of rent control rule changes.

A highlight of the Ontario government's response is a 15% tax on foreign buying. "We quickly discovered the pre-build market is very heated, too", he said.

"(Investing in infrastructure in rural Ontario) is critical for the Toronto housing market.

Paul Kershaw, leader of youth advocacy group Generation Squeeze that campaigned to end the exemption, called it "a win for renters".

"Taxing foreign home buyers is a way for the government to score cheap political points with GTA voters, and bring in more money for their own coffers, but it won't solve the problem", continued Van Geyn.

The Fair Housing Plan will also include a new Housing Supply Team of dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions. The increase is capped at a maximum of 2.5 per cent.

The good news is that the measures announced today are unlikely to send the market into a tailspin.

While cash-strapped tenants and home-seekers are fundamentally in favour of these new measures, the question remains, what will it all mean for Ontario's purpose-build rental industry? Now with Canada's economy hurt by declining commodity prices, it will be hard for the Bank of Canada to raise interest rates enough to quell real estate speculation.

"Today's announcement by the Wynne government will put thousands of units, and millions of dollars in provincial revenues at risk", said Jim Murphy, president and CEO of the Federation of Rental-housing Providers of Ontario, in a statement.