Ontario brings in foreign housing tax to cool Toronto market

Homes under construction in a new subdivision THE CANADIAN PRESS  Jeff McIntosh

Rents are based on what the market can bear and, going by the very low vacancy rates in the GTA, Lobo thinks they're fair.

In the Ontario move, the tax will apply to non-Canadian citizens, non-permanent residents and non-Canadian corporations that buy residential properties of one to six units in the GGH. These range from a foreign buyers' tax, to broadening rent control, to setting deadlines for how quickly elevator repairs must be done.

Home prices in the Toronto area climbed 6.2% in March, the biggest one-month gain on record, according to a benchmark price index released on April 18 by the Canadian Real Estate Association, and are up nearly 30% over the past 12 months.

The province is also setting up a Housing Supply Team to look into measures that can be taken to improve the supply of new homes and condos.

The Ontario government, concerned about bulging housing prices in Toronto, has laid out a massive set of reforms that could affect the entire province.

Recent figures show Canada's soaring home prices are more than just a Toronto-area problem - and if the real-estate bubble bursts, few parts of the country would escape the economic blow.

"There is a need for interventions right now in order to calm what's going on", said Wynne.

Murphy said 30 per cent of condominium units in the Toronto area are rented and new controls could hurt small investors who own one or two units to supplement their income.

By comparison, Greater Vancouver continued to slow down, partly due to the province's cooling measures, including a 15% foreign buyers' transfer tax that went into effect last August.

The provincial government is also considering an overhaul of its rent control policy that would expand the cap on annual rent increases to units constructed after 1991.

"The non-resident speculation tax has nothing to do with new Canadians and people who want to make Ontario their home".

"I think that people are anxious about their ability to find a place to live, because that's what this is about, whether we're talking about rental or being able to purchase a home".

While no immediate action is expected from the gathering of Sousa and Toronto Mayor John Tory, the first concerted effort to Finance Minister Bill Morneau, Ontario Finance Minister Charles rein in Toronto house prices, all three are pushing for policy options to cool prices without crashing the market.

Strengthen the Residential Tenancies Act, including a standard lease with multilingual information, tightening provisions for "landlord's own use" evictions, and ensuring adequate tenant compensation if evicted.

Providing municipalities with the flexibility to use property tax tools to help unlock development opportunities.

Sousa says the province needs a "Made in Ontario" solution to the housing crisis and it needs it now.

"This report is a look inside the heads and homes of Canadians, and should be a companion piece for those seeking a more in-depth understanding of our housing market and how it affects Canadians".

- The launch of a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures and any additional steps that are needed.

The issue has become a headache for the province's Liberal government, which is trailing the Progressive Conservatives in polls ahead of an election in June next year, and lawmakers face a hard balancing act to find policies that will stabilise prices without crashing the market.

- Provisions that would require municipalities to consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes, among other things.

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