Ontario’s Fair Housing Plan: 16 New Measures
In response to the hot Toronto real estate market, Ontario government introduced 16 new measures within the Fair Housing Plan. These new measures are expected to address the issue of demand, and supply for real estate markets within the Greater Golden Horseshoe (GGH). Record breaking prices had government officials and economists concerned about the sustainability of the housing markets.
The highlight of the Ontario Fair Housing Plan is the new 15% “foreign buyer tax,” introduced by Premier Kathleen Wynne.
The following 16 New Measures are:
A Non-Resident Speculation Tax (NRST) would charge 15% on the price of homes within the (GGH) area. This tax applies to who are not a Canadian citizen, or a Permanent Resident. However, refugees and nominees under the Ontario Immigrant Nominee Program would not be subject to the NRST.
Rent control will be expanded to all private rental units built after 1991. The yearly rental increase would be capped at a maximum of 2.5%.
Protection of Tenants
The Residential Tenancies Act would be updated, including a standardized lease and tightening provisions for “landlord’s own use.”
Increasing the Housing Supply
There will be a new program in place to take advantage of surplus provincial land assets, in order to build more mixed use, affordable housing (ownership and rental).
A new legislation will be in place to provide Toronto (and other municipalities) the authority to tax vacant homes by speculators. This would encourage property owners to sell or rent their homes.
Property Tax for Multi-Residential Apartments
To encourage development of new rental apartment buildings, property tax would be charged at around the same rate as residential properties.
Rental Apartment Construction Rebate
A five-year, $125 million program will be in place to encourage the construction of more rental apartment buildings. The grants will go towards rebating a portion of development charges.
New Property Tax Tools
Property tax tools will be in place for municipalities to encourage new development (i.e. charging a higher tax on vacant lands that have been zoned for new housing).
Housing Supply Team
The creation of a new Housing Supply team will investigate into the barriers of specific housing developments. This team will be working with developments and municipalities to find solutions in respect to the declining supply of homes.
Cracking down on “Paper Flipping”
The Ontario government will be looking into the different speculative measures amid collecting data. Paper flipping refers to selling an assignment of a pre-construction home before it is completed – this practice is typically more common for condos.
Updating the Real Estate Rules
Working with real estate professionals and consumers, the Ontario government will be reviewing the rules that agents follow – in order to ensure that they are ‘fair’ for consumers.
Housing Advisory Group
This new Housing Advisory Group will be meeting quarterly, to discuss real estate related issues, and to evaluate the impact of the Fair Housing Plan.
Educating Consumers (homebuyers and tenants)
Consumers will be educated on their rights in respect to real estate transactions. This measure specifically targets the issue of real estate professionals representing more than one party in a real estate transaction.
Partnership with the Canada Revenue Agency (CRA)
The goal of this partnership is to ensure sufficient data is collected through comprehensive reporting requirements. The objective of this measure is to ensure the correct amount of tax is paid for the purchases and sales of real estate within Ontario.
More Reliable Elevators
This measure will ensure that elevators in buildings (condos and apartments) are more reliable. This will be accomplished by enforcing timelines for elevator repairs, in consultation with the sector and Technical Standards & Safety Authority (TSSA).
New provisions would require to look into diversifying the range of unit sizes in higher density residential buildings. The main objective is to accommodate a diverse range of household sizes and incomes, and to have higher density development near transit hubs.
Will these new measures cool the housing market and increase supply? Recently Vancouver implemented a foreign buyer tax (similar to the NRST) to cool the housing markets. However, the effects are dissipating, as March home sales surge by 50%.
There are various components to the new Ontario Fair Housing Plan that address supply, especially in the rental market – where there is a 2.1% vacancy rate as of fall 2016 (Government of Ontario). In the Greater Toronto Area, the average rent for new leases rose 11 year over year in the last quarter of 2016 (Urbanation). It may take a few years before the real estate market sees the effect of an increase in supply, after the completion of new multi-residential housing projects. Within the short term, the objective of the new Fair Housing Plan is to address affordability, and increase the supply of residential homes within the Greater Golden Horseshoe.
You May Also Be Interested In: Hot Toronto Real Estate Market: What Will the Governments Do?
Writer: Jelani Smith
Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.
Bay Street Blog Newsletter
Click here to subscribe for a financial savvy experience.
Please check your email to confirm subscription!