Ontario brings in foreign housing tax to cool Toronto market

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"Frankly, it's a free market and market forces will prevail ultimately as we proceed forward", Sousa said.

"People work hard to provide for their families".

Resales of Canadian homes rose 1.1 percent in March from February and prices were up 18.6 percent from a year earlier as strong demand in Toronto offset cooling elsewhere, a report from the Canadian Real Estate Association showed on Tuesday.

As well, with house prices in Greater Toronto up 33 per cent year over year, the government plans to work with realtors to boost the transparency surrounding bidding wars to protect buyers.

"That's also a national issue we took to Members of Parliament (on March 23, 2017) because the federal government is going to be working with the provinces on carbon pricing", he said.

It would apply to all individuals who are not citizens or permanent residents of Canada and foreign corporations.

The foreign-buyer tax would be effective in all markets within Greater Golden Horseshoe, which is bounded by Peterborough to the east, the Niagara region to the south, Waterloo to the west and Orillia to the north.

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He says the measures will also look at how to expedite housing supply, and he has appeared receptive to Toronto Mayor John Tory's talk of a vacant homes tax.

The province will also expand rent control, which now only applies to units built before November 1991, after tenants in newer units complained of dramatic spikes in rent. Under the new regime, rent increases will now be limited to 1.5-2.5 per cent annually - roughly the rate of inflation - for all rental units.

British Columbia applied a 15 per cent tax against foreign buyers a year ago and saw the price of homes drop.

The number of sales in Metro Vancouver plunged in the months after the new tax, though signs have since cropped up that the market may be bouncing back.

"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". "They themselves have said, you know, we want to make sure our sales practices are appropriate, they're transparent, that buyers and sellers understand what's happening in the marketplace". It typically involved a real estate agent reselling the same previously owned home multiple times before the closing date, driving up the price of the house, sometimes by hundreds of thousands of dollars. "Those taxes and fees, especially Toronto's double land transfer tax, have added huge unnecessary costs". "But for those who have the money to invest and see the high growth potential in Toronto, which is repeatedly voted as the best city to live in, I don't think the 15 percent will be enough of a deterrent".

Tory said he has committed to streamlining and speeding up building approvals, in particular for new affordable rental housing and he is also looking at a vacant homes tax.

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