Housing is all the rage in our province these days. Everyone is talking about it. Markets are at all-time highs and there seems to be no end in sight. It has also become extremely unaffordable in markets like the Greater Toronto Area (GTA). Naturally, the governing Liberal party has decided to do something about it. Last month they introduced a comprehensive package of measures to stabilize the market called the Ontario Fair Housing Plan. Today, we are going to review some these measures.
A 15% Foreign Buyers Tax In The GTA
This is the big one you probably saw in all the headlines. Essentially, they are imposing a 15% non-resident speculation tax on the price of homes in the Greater Golden Horseshoe Area of Ontario. The tax will apply to individuals who are not citizens or permanent residents of Canada and foreign corporations. This will only apply to single family homes (or condominiums), and not to multifamily, agricultural land, or commercial/industrial property. It will also not apply to the rest of Ontario (including our hometown of Windsor).
Expanding Rent Controls
Previously, rent control only applied to rental units built before 1991 in Ontario, but this will no longer be the case. The allowable rent increases will be at the rate posted in annual provincial rent increase guidelines and run in-line with the Consumer Price Index (CPI) rate (also referred to as inflation). These increases will also be capped at 2.5% per year. For example, if you had a rental unit that was tenanted, when you come up to the 1 year anniversary date from your lease, you will only be allowed to increase the rent by this provincial guideline rate (say 2%). So if you charged $1000/month, you could increase the rent to a maximum of $1020/month.
Changes To The Landlord Tenant Act
The Landlord Tenant Act is the legislation that governs the relationship between Landlords and Tenants in Ontario. These changes to the Act will include developing a standard lease in multiple languages, tightening provisions for “Landlord’s own use” evictions, ensuring tenants are adequately compensated if asked to vacate under this rule, and technical changes at the Landlord-Tenant Board. Landlords will no longer be able to use their own leases with their own clauses and will need to use this standard lease that is being introduced. The tightening of "Landlord's own use" evictions will make it more difficult for Landlords to evict Tenants when they claim to need the unit for themselves or an immediate family member. This has been used in the past in questionable manners at times to get around rent controls.
Vacant Home Tax
Introducing legislation that would empower municipalities to impose a tax on vacant homes to encourage property owners to sell or rent unoccupied units. This is pretty self-explanatory with the hopes of stopping speculation and to increase supply of properties for sale and for rent.
Levelling Property Tax Levels For New Multi-Residential Buildings
Ensuring that property tax for new multi-residential apartment buildings is charged at a rate similar to residential properties. High property taxes on apartment buildings lead to higher rents for tenants and also make it less economical for developers to build new rental supply. This measure hopes to encourage more rental unit developments.
Those are the big measures to take away from the Ontario Fair Housing Plan. Next week, we are going to talk about some of the takeaways from these measures as they affect our local market. What are your thoughts on these measures?
