Ontario, Canada Brings in Foreign Housing Tax to Cool Market

  • Ontario, Canada Brings in Foreign Housing Tax to Cool Market

Ontario, Canada Brings in Foreign Housing Tax to Cool Market

The tax is not about targeting immigrants, Wynne said, and a rebate would be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and global students.

It matches the 15 percent tax the Pacific coast city of Vancouver has implemented.

"What's worse is young families who are actually trying to get into the queue, into the lineup to buy that first home, are getting crowded out".

Skyrocketing demand and rising cost of housing is the "unwanted consequence" of a growing economy, but the province's new measures will make the process of finding a place to live a little easier, a little less frantic and a lot fairer, Wynne said.

The average price of detached houses in the Greater Toronto Area rose to $1.21 million last month, up 33.4 per cent from a year ago, but Wynne says the issue extends throughout the Golden Horseshoe area.

Wein said everyone, government included, needs to be careful not to rely on "anecdotal" stories about the real estate market.

"There is a need for interventions right now in order to calm what's going on", Wynne said.

Ontario's move comes after Ottawa tried to rein in the market by tightening mortgage requirements and closing tax loopholes used by speculators, and after British Columbia imposed a 15 per cent foreign buyers tax on Vancouver-area homes. Once the legislation passes, the foreign tax would be effective retroactively to April 21.

Toronto's surging real estate market has triggered debate over whether non-Canadian speculators are bidding up homes and fuelling unsustainable record price gains, or if a lack of housing supply and inadequate urban planning is more to blame.

The province will also expand rent control to all private rental units, including those built after 1991.

As well, rent controls limiting increases on all buildings to the rate of inflation - as long as it is 2.5 per cent or lower - will be introduced. "I'm very mindful of any unintended consequences from the measures that we take", he said.

The government doesn't keep statistics on the number of foreign buyers. "But if Vancouver is any guide, we might see a short period in which domestic buyers will sit on the sidelines while assessing the impact of the tax".

"We expect the measures to slow down activity in Toronto's housing market in the near term, not only due to their direct impact but also due to the impact of the uncertainty regarding their ultimate impact on potential buyers", he said.

Before imposing any new measures on real estate agents, Ontario government said, it will review the regulations governing the industry, including the body representing agents (the Ontario Real Estate Association) and the provincial regulator (The Real Estate Council of Ontario), CBCNews reports said.

Prem Watsa, head of Canadian investment firm Fairfax Financial Holdings Inc., said the Toronto property market is in a bubble that will end with pain for banks that financed the growth.