Watching the news conference events last week at Toronto’s Liberty Village, you could not help but note what a modern setting it would be for a wedding. This must have been just a rehearsal though as Premier Kathleen Wynne and Finance Minister Charles Sousa delivered their promises. They even had something borrowed to tell us and they both looked blue.
The premier and her treasurer were there to attempt to cool the rapidly rising prices in the real estate market in the Toronto area. They had a potpourri of solutions ranging from one borrowed from Vancouver and rent controls for income properties. What they did not have was realistic solutions for the Toronto area.
It hardly seemed to matter that the situation in Vancouver was quite different. With as many as 60,000 high-priced properties sitting vacant in the west coast city, these properties had become targets for vandalism and salvage. When a 15 per cent foreign-buyer tax was imposed by the province and the city increased real estate taxes for vacant homes, foreign buyers switched their interest to the Seattle market. And Vancouver is not sure how much home prices will go down, if at all.
The difference is that in Toronto foreign investors might be just under five per cent of the market and are hardly a major problem. The tax will unlikely earn much for the province. Nor would an additional city vacancy tax earn much for Toronto.
In all their plans, these politicians had no comment on the real estate flipping that is a constant headache in the Toronto market. Maybe there are fewer at current prices but the people who can buy cheap, put some lipstick on the property and then sell for a healthy profit are still a major cause of prices going up 33 per cent year over year.
While it would be difficult (and boring) to cover all 16 points of the Ontario government’s proposed program (that have yet to be passed in the Legislature). The only other important change will be the extended rental controls. These have now been extended to all rental properties in the area around Toronto.
These changes will limit landlords to a 2.5 per cent increase in rentals (which can be routinely applied every year). Owners will also be able to pass on the costs of major property improvements.
To allay the usual complaints that rent controls are a disincentive to developers, the province will be passing a number of tax incentives for developers and funding a $125 million worth of incentive payments. How long that will last, we do not know.
What probably makes the politicians blue is that they have caused havoc and confusion to the spring sales for about 45,000 real estate agents during their busiest season. They should have more political smarts.
Copyright 2017 © Peter Lowry
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