Ontario, Canada brings in foreign housing tax to cool market

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Experts say measures introduced by the Ontario government to cool the red-hot housing market are likely to leave a lot of the buyers on the sidelines as they await to see the impact of the changes.

Are foreign homebuyers going to descend on Montreal now that they face additional taxes in Vancouver and Toronto?

The tax would not target immigrants and a rebate would be available to people who subsequently get citizenship or permanent resident status, as well as foreign nationals working in Ontario and global students.

Canadians fretted for years that home prices in the country's largest city are rising at an unsustainable rate.

The changes are not about addressing her poor approval numbers, she insisted, adding, "my objective is to make sure what we do helps people". "Things have gotten insane", she said.

"If we look at what economists are saying, look at what folks who are trying to buy a home are saying, it's really gotten to the point where it is out of control and we need to do something".

NDP MPP Peter Tabuns slammed the government failing to move faster to address the rent control loophole.

Policy-makers, think tanks and the Bank of Canada have issued repeated warnings that while concerns of an overheated housing market may be confined to the Toronto area, a correction could have repercussions for the national economy given the sheer scale of the city's real estate industry.

- With files from The Canadian Press. The government will also work to better understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market, such as "paper flipping" - a practice that includes entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.

Premier Kathleen Wynne's Liberals are widely expected to reveal housing policy measures when Sousa issues his budget on April 27. The opposition parties are staking out their ground, with the NDP hammering away on rent controls and the Progressive Conservatives zeroing in on red tape around real estate development.

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The top four were low interest rates, higher incomes, people willing to spend a greater percentage of their income financing a mortgage than in the past, and more baby boomers gifting their children with the down payment on a mortgage, compared to previous generations.

So we're going to be sucked into solutions for a problem we don't appear to have.

By comparison, Greater Vancouver continued to slow down, partly due to the province's cooling measures, including a 15% foreign buyers' transfer tax that went into effect last August.

Ontario's government also said it would expand rent controls to all private rental units, including those built after 1991, which are exempted under existing rules.

Strengthen the Residential Tenancies Act, including a standard lease with multilingual information, tightening provisions for "landlord's own use" evictions, and ensuring adequate tenant compensation if evicted.

- A program to leverage the value of surplus provincial land assets across the province to develop a mix of market-price housing and affordable housing.

Ontario is also giving Toronto and other interested municipalities the power to impose a vacant homes tax to encourage owners to sell or rent such spaces.

The government will spend some Can$125 million on building new rental units after a decades-long lull in new construction.

One of the outcomes of the much ballyhooed housing summit earlier this week between Sousa, his federal counterpart Bill Morneau and Toronto mayor John Tory was a commitment to "sharing relevant data more regularly between governments to enhance understanding", a move that seems comically late after prices in the region have surged double-digits over the past few months.

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