Ontario’s Fair Housing Plan – What You Need To Know
On April 20, 2017, a number of measures were announced by the Ontario Government in their attempt to make housing more affordable.
The Residential Tenancies Act limits the increase of rent on buildings built prior to November 1, 1991. The announcement by the Government of Ontario will now apply this rent control to all private rentals in Ontario specifically including buildings built after November 1, 1991.
Ontario is also proposing a new fifteen percent (15%) tax on the purchase of one to six family residencies completed on or after April 21, 2017. There are some exemptions should the purchasers become residents of Canada within a certain amount of time, but few details are known at this time.
Municipalities, specifically the city of Toronto but possibly others as well, will have the power to impose a tax if homes sit vacant.
The Government of Ontario is throwing darts at a dart board without knowing the effects of their proposals. British Columbia instituted the same non-resident, and vacancy tax which did cool the real estate market in the short term. However, after about six months, the real estate market in Vancouver and the surrounding areas has started to climb once again. There is also the concern that non-resident purchasers will simply find a way around this new tax.
Whether the non-resident tax truly makes an impact is unknown, but if the British Columbia experience occurs in Ontario, the market will cool and then start up again in about six months time.
Rent control is meant to keep spiralling rent prices under control for buildings built after November 1, 1991. Current tenants will be pleased with this measure as it limits the amount a landlord can increase rent by. However, new tenants and prospective tenants may get the worst of this measure. Developers have already signalled that rent control will halt all future rental buildings, and they will simply build condominiums instead.
If the above is true, then the supply of rental buildings will remain the same, while demand continues to increase due to immigration, and other factors. New tenants will be forced to pay higher rates and those currently inhabiting rental premises will choose to never move.
No one is sure (including the Ontario Government) what rent control will mean, but if supply stagnates or goes down while demand increases, those moving to Toronto and the surrounding areas will be hit the hardest.
What does this mean for you, and for your real estate investments? If you have tax questions relating to this new announcement, Rosen Kirshen Tax Law is here to help. Call us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.