Photo: Kathleen Wynne/Twitter
Ontario Premier Kathleen Wynne today announced a foreign-buyer tax that would apply to a large swath of southern Ontario and expanded rent control across the province.
These forthcoming measures were among 16 the province unveiled today as Ontario’s Fair Housing Plan.
If passed, the 15-per-cent Non-Resident Speculation Tax would be applied to homebuyers who are neither Canadian citizens nor permanent residents when they purchase residential real estate in the Greater Golden Horseshoe.
The foreign-buyer tax would be effective in all markets within Greater Golden Horseshoe, which is bounded by Peterborough to the east, the Niagara region to the south, Waterloo to the west and Orillia to the north. The proposed tax targets dwellings that include one to six units.
With new legislation, the Wynne government also plans to limit rent increases to 2.5 per cent per year for all units in the province.
Currently, only rental units before November 1991 have been subject to rent control, which limits how much landlords can increase rent from year to year.
Tenants may be breathing a sigh of relief, but rent control was not welcome news for everyone. A provincial group representing landlords across the province criticized the action.
“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.
“It is a rash, politically motivated decision, which will hurt, not help, generations of Ontario renters,” Murphy continues.
BMO Senior Economist Robert Kavcic lauded the province for trying to cool the market but noted “it remains to be seen if these measures will materially change the price environment in the near term.”
Kavcic expects Ontario’s foreign-buyer tax will have less of an impact on the GTA market than BC’s did on Metro Vancouver as the share of non-resident home purchases is lower here.
BMO had concerns about rent control, noting that the change could slow the construction of rental units.
“Note that chronic underbuilding came to a swift end in the late-1990s when rent controls were removed,” says Kavcic.
Other government actions included in Ontario’s Fair Housing Plan include plans to make it possible for Toronto to apply a vacant-home tax and even setting a timeline for elevator repairs, which can be a headache for high-rise dwellers.