Ontario's Fair Housing Plan
On Thursday, April 20th, the Ontario Government announced a series of measures to stabilize the housing market in the GTA, assist renters & buyers, increase housing supply & improve housing affordability. This was welcome news to those who have suggested that Toronto is in the throes of a real estate bubble. Key items in the plan to moderate real estate price increases include the following:
Implementing a 15% nonresident speculator’s tax (NRST) on buyers who are not citizens or permanent residents of Canada or by foreign corporations.
Protection for Tenants:
Rent control will be expanded to all units, including those built after 1991. Up to now, units built after 1991 were exempt from rent control, which resulted in some tenants being hit with significant above inflation rent increases once their initial rental term (usually one year) was up. The increase is capped at 2.5%, although landlords can ask for increases above this amount under exceptional circumstances.
There are measures that will be put in place to strengthen the Residential Tenancies Act in order to protect tenants. A standard lease with instructions in multiple languages will be created, and landlords who ask tenants to leave in order to use the property for their own purposes will now have to offer compensation.
Housing Supply Provisions:
Measures to facilitate the maximization of land supply owned by the province to develop a mix of market housing and new, permanent, sustainable and affordable housing supply
Introduce legislation to empower the municipalities to levy a vacancy tax to encourage property owners to sell unoccupied units or rent them out.
Introduce legislation to ensure that property tax for multi-apartment units is charged at the same rate as other types of housing, to encourage construction of these types of units.
Introduce a targeted $125-million, five-year program to further encourage the construction of new rental apartment buildings by rebating a portion of development charges.
Introduce legislation to allow municipalities to impose a higher tax on vacant land that has been approved for new housing.
Create a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.
The province will study behavior that may be contributing to tax avoidance and excess speculation, including ‘paper flipping’. This is the practice where a speculator purchases a pre-construction condo and then ‘flips’ it prior to closing, thereby making a paper profit.
Reviewing the real estate profession’s rules to ensure adequate consumer protection. This includes rules around so called ‘double ending’.
Establish a Housing Advisory Group of experts from the Economics, Real Estate, Academic, Developer, & Community areas 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 in the Fair Housing Plan and any additional steps that are needed.
Ensure that consumers are properly educated on the situation when one realtor represents more than one party in a real estate transaction.
Work with CRA to ensure that tax policies are adequately communicated and followed.
Make elevators in Ontario buildings more reliable by establishing timelines for elevator repair.
Work with municipalities to develop an updated and comprehensive Growth Plan which will ensure sufficient housing density in residential developments to meet estimated needs.
“I personally welcome these measures, and believe they are a positive step. Implementing the foreign buyer’s tax will equalize the tax scenario with Vancouver, and help to balance the demand vs. supply situation. I trust the province will closely review the housing data over the next few months to determine what impact these measures are having, and readjust policy as required based on the results vs. what was intended.”
Ram Rajendram is a Toronto Real Estate Broker with Century 21 Harvest Realty Ltd., Brokerage. He sells condos & houses throughout the GTA & assists home & condo buyers with their purchasing needs. He is also a Canadian Chartered Accountant (CA) & holds a Bachelors Degree in Economics from the London School of Economics (LSE)