Foreign investment is often considered a major factor in high housing prices across Canada, especially in its major cities. Ontario recently began charging additional taxes for foreign real estate buyers. According to statistics from Toronto and the Golden Horseshoe, these steps may be working.
From May to August of 2017, foreign buyers were involved in 3.2 per cent of real estate activity in the region. The month the non-resident speculation tax was introduced, this rate sat at 4.7 per cent. Across Ontario, only 2.6 per cent of the 101,698 transactions over the summer months involved at least one foreign entity.
The real estate market has cooled down overall in Toronto and the Golden Horseshoe. However, experts say that this is not due to the new tax on foreign buyers. Other policies, like expanded rent controls and land for affordable housing, are making people think twice about buying new homes. Another reason for a slowing down of the real estate market could be tighter federal lending rules and rate hikes from two central banks over the past few months. The Ontario Real Estate Association (OREA) warns that too much red tape could cause problems keeping up with the supply side of housing.
Regulations that guard what taxes apply to real estate, how transactions should work, and what it may be used for after purchase are often being adjusting or changed. Even the most experienced real estate investor may be unaware of how to navigate emerging rules. A lawyer with a background in real estate can help a buyer understand what legal considerations are needed when purchasing a property in Ontario.
Source: The Toronto Star, “Foreign buyers drop in Toronto, Hamilton real estate deals“, Kristin Rushowy, Sept. 14, 2017