Ontario's provincial government on Thursday introduced a 15 percent tax on property purchases by foreign buyers as part of 16 measures created to cool Toronto's red-hot housing market.
The tax was not aimed at new Canadians or those looking to settle in Toronto, she stressed.
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.
Speaking today in Ottawa, Kathleen Wynne said it is meant to give people breathing space in the frenzied housing market in the Golden Horseshoe region without unintended consequences in other markets.
The tax, which is effective immediately, is aimed at preventing foreign investors from driving up real estate costs. The tax will need to be paid by non-residents and companies not based in Canada.
The new tax appears to have worked in Vancouver - Canada's hottest market and a magnet for Chinese buyers - which imposed a similar 15pc levy on foreigners in August, as sales have fallen as much as 40 per cent after the introduction of the levy. "With this tax, we're targeting people who aren't looking for a place to raise a family, they're looking only for a quick profit or a safe place to park their money".
CREA said the number of newly listed homes increased 2.5 per cent in March, led by gains in the Toronto region, Calgary, Edmonton and B.C.'s Lower Mainland.
The government is also planning to expand the province's existing rent control system to cover all tenants, ending the exemption that now allows unlimited rent increases, it added.More news: Microgaming New Releases for 2017
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To mitigate the potential negative impacts that closing the so-called 1991 loophole could have on new rental construction, Ontario's Fair Housing Plan will also introduce a targeted $125-million, five-year program, offering a rebate on a portion of development charges for rental apartment buildings. "I think they're already having an effect".
Alex Kenjeev, who also oversees Conservative leadership hopeful Kevin O'Leary's venture capital business, told CTV's Your Morning that Vancouver's abrupt about-face on sales activity and housing prices will be tough for the trio of policymakers to ignore.
"We think it will have an impact on reducing speculative behaviour because we're saying that we're serious", he said.
"The timing (of Wynne's plan) is most disappointing given that it's our spring market and we also have a real uptick in the last 10 days in terms of inventory", said Dianne Usher, senior vice-president of Johnston and Daniel, a division of Royal LePage. Numerous measures Premier Wynne will announce this morning were also reported by CBC's Queens Park reporter Mike Crawley.
Sousa has admitted the government doesn't have good data on the real estate market, even as he has prepared the package of market measures. In addition, it would empower Toronto and potentially other interested municipalities to introduce a tax on vacant homes to encourage owners to sell or rent unoccupied units. He stressed that the city is still examining such a tax and hasn't yet made a decision to implement one. Tory said in an e-mailed statement.
"I'm also gratified that the provincial government will allow the City to move forward with a vacant homes tax, subject to the results of our examination, and other measures to curtail speculation and add new supply into the marketplace right away".