On April 20, 2017, the Government of Ontario unveiled a comprehensive, 16-point plan to reduce speculation, cool prices and rents, and to increase the supply of housing in the province. The plan was announced after much media speculation about the need for government action to reassure prospective buyers that they would have a shot at home ownership. In the interest of informing our audience, Tembo Financial Inc. has written this brief blog post to outline what the plan means and entails.
The first component of the plan is a 15% foreign buyer tax imposed on the sale prices of all residential properties sold within the Greater Golden Horseshoe region, effective April 21, 2017. This will apply to condos, detached and semi-detached homes, and townhouses. The area of the Greater Golden Horseshoe covers all of the GTA and includes much of the Niagara peninsula, Barrie, Peterborough, and Hamilton, see the map below for a better idea:
The foreign buyer tax follows moves the British Columbia government implemented in the Greater Vancouver area to cool prices. The second major initiative in the plan involves extending rental controls to every private rental property in the province, even those built after 1991. Now, all rental units will have to follow provincial guidelines on how much their rent can be increased year on year. The government will look to implement these new changes by April 21, 2017. The government also does not want rent increases to exceed inflation, in and around 2.5% a year.
The final set of initiatives involve increasing supply, incentivizing the construction of new rental units, a fairer tax approach to different kinds of properties, and giving big cities like Toronto the ability to tax vacant homes. The province will also look to develop surplus provincial land into residential areas and to look at ways to streamline the developmental approval process and to have bureaucrats look at barriers to housing construction. The government also mentioned it would look to curb the practice of ‘paper flipping’ to ease speculation. One new change will even see tighter rules on elevator repair guidelines for rental and condominium buildings. All in all, the government’s new package touches almost every facet of real estate and housing. From tax treatment to rental protection, to leases between renters and their landlords.