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Heapsestrin Real Estate Team

Ontario’s 16 Point Plan to Cool Housing Prices

Written On April 20, 2017

Ontario announced a slew of measures including a tax on foreign buyers and expanded rent control as part of a plan to temper escalating home prices in Toronto.

The 15 per cent levy will apply to non-Canadian citizens, non-permanent residents, and non-Canadian corporations buying residential properties containing one to six units in the greater Toronto area, the provincial government said in a statement Thursday. Rent control will be imposed on buildings constructed after 1991 — effective April 20 — which limits annual increases.

You can read the full article here.

Thoughts from The Lang Team:

The most pressing question being asked is about the 15% Non-Resident Speculation Tax (NRST) and the implementation details/timing.  The detailed Technical Bulletin published by the Ontario Ministry of Finance can be found at the following link ( Non-Resident Speculation Tax Technical Bulletin) and states the following:

NRST Effective Date

“Upon the enactment of legislation, the NRST will be effective as of April 21, 2017

Binding agreements of purchase and sale signed on or before April 20, 2017 are not subject to the NRST.”

While you should check with your lawyer to confirm the specifics, it appears that any binding agreements entered into on or before today will not be subject to the new tax.

 

Details of 16-Point Plan:

As noted, the Ontario government has introduced a 16-point plan to try and control the real estate market.  A summary of the 16 point can be found below, and the details can be accessed at the following Ontario Government Link

Implement a new 15% Non-Resident Speculation Tax (NRST).

Expand rent control to all private rental units (with “an increase capped at 2.5%”).

Introduce changes to the Residential Tenancies Act – including standardized leases.

Create new market housing and affordable-housing units with surplus provincial land.

Empower the City of Toronto “and potentially other interested municipalities” to introduce a vacant homes property tax.

Making sure multi-residential apartment buildings are charged property taxes at similar rates to other residential properties.

A $125-million program over five years “to further encourage the construction of new rental apartment buildings”.

Giving municipalities “flexibility” to use property taxes to fuel development.

Creating a “Housing Supply Team” to identify obstacles to housing developments and work with developers and municipalities to address them.

Working to “understand and tackle” real-estate practices that allow “paper flipping,” which includes using assignment clauses for real-estate speculation.

Reviewing rules for real-estate agents to “ensure that consumers are fairly represented”.

Establishing a “housing advisory group” to advise the government on the housing market and the effects of the newly announced changes.

Educating consumers on their rights in real-estate transactions.

Partnering with the Canada Revenue Agency to strengthen reporting requirements and make sure taxes are paid on real-estate purchases and sales.

Overhauling standards for elevator repair.

An updated Growth Plan with municipalities to address density and “an appropriate range of unit sizes”.

 

We hope the above is timely and helpful, and if you have any questions please don’t hesitate to contact anyone on The Lang Team or Heaps Estrin to discuss.

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