Wynne to slap 15 per cent tax on foreign real estate speculators

Premier Kathleen Wynne will roll out a 15 per cent “non-resident speculation” tax to help cool down southern Ontario’s real estate market.

Thestar.com
April 20, 2017
By Robert Benzie

Premier Kathleen Wynne is slapping a 15 per cent “non-resident speculation” tax on foreign investors to help cool down southern Ontario’s scorching real estate market, the Star has learned.

Wynne will join Finance Minister Charles Sousa and Housing Minister Chris Ballard on Thursday against a backdrop of condo towers in booming Liberty Village to launch a massive plan to improve housing affordability.

A key plank in that would be the 15 per cent surcharge on offshore speculators, who are estimated to make up just 5 per cent of the current market.

Modelled on British Columbia’s “foreign buyers’ tax” in Vancouver, the levy would apply to home purchasers in the so-called Greater Golden Horseshoe who are not citizens or permanent residents.

It would affect sales in and around the Greater Toronto and Hamilton Area, Niagara, Kitchener-Waterloo, and encompass everywhere north to Barrie and Orillia and east to Peterborough.

Speaking in Ottawa on Wednesday, Wynne indicated there wouldn’t be a one-size-fits-all solution for real estate throughout Ontario.

“One of the things that we have talked about within caucus is ... the interaction between the housing market in the Greater Golden Horseshoe and in Ottawa or London,” the premier said.

“The circumstances are different. Just as when this conversation began and we looked at what was happening in Vancouver, it was a different situation than in Toronto.”

“Now I think there are maybe some more similarities there than there were but we have to look at the evidence. We have to look at what’s actually happening in each of the communities and make a determination,” Wynne said.

“Right now in terms of the purchasing of a home, the really hot, frantic market is in the Greater Golden Horseshoe and ... we have to consistently assess what happens when we bring in the package of initiatives and what happens going forward.”

Among more than a dozen measures in the government’s housing affordability plan will be some kind of clampdown on domestic housing speculators - though they will not face a 15 per cent tax.

As well , with house prices in Greater Toronto up 33 per cent year over year, the government plans to work with realtors to boost the transparency surrounding bidding wars to protect buyers.

Also, there will be an expansion of rent controls to all buildings. Currently, only those built before 1991 are protected from massive increases.

Under the amendment developed by Ballard, rent hikes on all newer units would be limited to the inflation rate, which was at 2 per cent in February.

There would be some exemptions for landlords doing capital improvements to properties.

That’s more palatable for tenants than the doubling of rents that have been seen this year in some Toronto condos just steps from Thursday’s announcement.

Sousa, for his part, said he is not worried that capping rent increases will discourage developers from building new housing.

“We need to put mitigations in this system,” the treasurer said in Toronto where he announced an investment of almost $190 million over three years to support the “Career Kick-Start Strategy.”

That’s a program - part of next Thursday’s provincial budget - designed to create 40,000 “work-related learning opportunities” for students of all ages as well as recent graduates.

But the real estate news dominated his pre-budget announcement.

Toronto Mayor John Tory, who met with Sousa and federal Finance Minister Bill Morneau on Tuesday to discuss housing affordability, welcomed an expansion of rent controls.

“There are a lot of tenants who are finding it hard to make ends meet and there are some who have faced these extraordinary increases which are, in my view, kind of ridiculous,” said Tory.

“I encourage the landlords to voluntarily come forward and say they would voluntarily comply with the kind of limit . . . around the rate of inflation,” he said.

“I hope anything the government of Ontario does will be accompanied by measures that substantially encourage the construction of affordable rental housing. That will mean incentives they will have to provide at the same time as they announce whatever it is they are going to do about rent control to encourage people to build this housing.”