Two major real estate industry groups in Ontario are speaking out against the possibility of a tax on foreign homebuyers in the province, offering up several other measures as alternatives to improve housing affordability.
Presidents of the Toronto Real Estate Board (TREB) and Ontario Real Estate Association (OREA) recently questioned the efficacy of such a levy in a letter addressed to Ontario Finance Minister Charles Sousa, who earlier this summer said the province was mulling cooling measures like a tax on foreign buyers.
“Increasing taxes on foreign homebuyers is a knee-jerk reaction to a problem which we do not fully understand, will do little to address the growing affordability challenges facing many Ontarians and may have negative consequences for our broader economy,” reads the letter, signed by TREB President Larry Cerqua and OREA President Ray Ferris.
Rather, Cerqua and Ferris suggest re-designating urban land for low-rise housing, reassessing legislation geared towards curbing urban sprawl — Place to Grow and the Greenbelt — reducing or doing away with land transfer taxes and ensuring the Provincial Policy Statement “as it relates to a ready and diverse supply of housing alternatives” is enforced.
Since the BC government imposed a 15-per-cent tax on foreign buyers of residential property in Metro Vancouver last month, the idea of a similar tax coming to Ontario has been at the fore of Canadian housing market talk.
Recently, CIBC Deputy Chief Economist Benjamin Tal said the province would be compelled to impose a tax similar to BC’s. “With other centres taxing foreign investment, Ontario will have little choice but to do the same,” he writes in a note, the Financial Post reports.
Ontario Premier Kathleen Wynne, who is copied on the letter, has voiced “concern” over how expensive the Toronto housing market is getting, and said the province was looking into the “potential impact” of a foreign-buyer tax, the Globe and Mail reports.
In July, Toronto Mayor John Tory, also copied on the letter, expressed similar concerns and didn’t rule out a municipal or provincial tax, according to the Toronto Sun.
The average selling price of a Toronto home soared to $710,410 in August, up 17.7 per cent from a year earlier.
However, TREB and OREA argue it’s too soon to move ahead with a foreign-homebuyer tax. They cite both a lack of local data and a need for more time to see the full impact of BC’s levy.
“Major policy decisions, like significant tax increases on a very important sector of our economy, should be made after careful consideration of relevant data and analysis,” the August 5th letter reads.
“Unfortunately, with respect to foreign activity, Canada and Ontario lack a wealth of good data or information.”
TREB is launching its own survey of realtors to gain insight into foreign ownership of Toronto real estate with plans to release the results once complete. It is not the only local realtor board that is looking into foreign ownership.
The Lakelands Association of Realtors, which covers Muskoka, Haliburton and Orillia, is working on a project to collect sales data, including where homebuyers are moving from, a spokesperson for the association told BuzzBuzzNews last month.