Ontario Finally Cracks Down On Toronto Housing Bubble: Launches 15% Foreign Buyer Tax
Almost a year after Vancouver, ground zero of Canada's housing bubble inflated with Chinese "hot money", implemented a foreign buyer tax, and just weeks after Toronto's housing bubble officially went nuts as prices soared 33% Y/Y, prompting economists such as David Rosenberg to demand a government intervention, Ontario's Liberal government has finally cracked down on foreign buyers and according to CBC will join Vancouver in slapping a 15% tax on home purchases by non-resident foreigners, while expanding the province's existing rent control system to cover all tenants.
The moves come after the price of the average home in the Greater Toronto Area jumped 33 per cent in a year, triggering warnings of a real estate bubble, as well as after reporting by CBC Toronto revealed landlords slapping massive rent increases on tenants.
The announcement, which is expected to be made Thursday morning, will include in addition to the foreign buyers tax and expanded rent control, the following measures:
- A rebate of development cost charges to encourage building of more rental housing.
- A standardized lease document for all tenants.
- A ban on flipping of pre-construction units by speculators.
- A review of the rules governing the conduct of real estate agents.
The full details will be unveiled at 9 a.m. today by Premier Kathleen Wynne, in Toronto's neighbourhood of Liberty Village, along with Finance Minister Charles Sousa and Housing Minister Chris Ballard.
The highlight, however will be the 15% foreign buyer tax, which after being implemented in Vancouver halted the local housing bubble dead in its tracks and led to a sharp pullback in both home price appreciation and a torrid pace of transactions. Some more details:
Sources with knowledge of the announcement tell CBC News that Ontario will impose a 15 per cent tax on residential real estate purchases by anyone who is not a citizen or permanent resident, if they are not living in the province. Called the "Non-Resident Speculation Tax," it is similar to the tax imposed in Metro Vancouver last year, but with a rebate for homebuyers who become resident within a limited time period after the purchase.
The tax will apply to purchases in the Greater Golden Horseshoe, an expanse of land that includes the Greater Toronto and Hamilton Area, as well as the surrounding region stretching from Peterborough through Barrie, Waterloo and the Niagara Peninsula to the U.S. border.