It’s one of the biggest news stories of the year for Toronto’s housing market. This past Thursday, Ontario Premier Kathleen Wynne unveiled the Fair Housing Plan to potentially cool down Toronto’s red-hot housing market.
In response to soaring housing prices, the Ontario government is now looking to curb that growth for those living in Toronto and the “Golden Horseshoe” (from Peterborough to Niagara). Here’s everything you need to know about these new plans, and how they might affect you and your dreams of home ownership in Toronto:
The Non-Resident Speculation Tax
Much of Ontario’s Fair Housing Plan borrows heavily from tactics implemented in British Columbia, which sought to crack down on real estate speculation driving up the prices of property for residents – particularly from foreign buyers.
The “Non-Resident Speculation Tax” will provide a 15% tax levied against foreign buyers who are not Canadian citizens or permanent residents of Canada – with a rebate available for those who do attain either within a certain timeframe. The immediate results in BC were jarring, where sales immediately plunged, but with fewer foreign buyers it appears that time will tell if it has the same effect in Ontario.
Overall, it is a step in the right direction to curb property speculation and to make housing slightly more affordable for those who hope to one day own a home in Toronto.
A Vacancy Tax
Another piece of legislation inspired by measures placed in Vancouver is a long-awaited vacancy tax. It is currently difficult to know how many properties go unoccupied in Toronto. Census data is not always consistent or reliable, but the city is taking steps to understand more about unmanned properties using hydro and water usage to better understand who is living where (and who is not).
It is hard to know just how effective a vacancy tax might be, and who it would detract from holding onto real estate for investment purposes. It is relatively untested throughout the world, and it can also be difficult to track. At the same time, a tax on vacant land held by developers might inspire faster development, so it’s a proposal that cuts both ways.
Rent Control for All
The Ontario government is responding to legislation that previously only allowed for rent control in buildings built before the early ’90s. Instead, all rental properties will now be held to rent increased by inflation (capped at 2.5% per year), substantial renovations, or when a tenant finally moves out.
While this may help current renters, the long-term effects might hurt the development of rental properties – which are already sorely lacking for many residents on the hunt. Prices might become more affordable year over year, but they may decrease tenant mobility between properties (due to rent increase), and could curb the construction of newer developments that are no longer financially viable for developers.
Understand the Market, Understand Your Options
If passed, the Fair Housing Plan will carry with it many questions for the long-term future of the Toronto housing market. As we learn more about the future of Toronto real estate, now is your chance to work with a real estate team that knows about the market and how it operates.
With experience, insight, and success, contact us and see how our team of local specialists can make your real estate experience less stressful and more successful. Contact us at info@christensengroup.ca, or call at 416-441-2888, we would be happy to help.
