What Ontario’s Fair Housing Plan Means for Homebuyers
It’s hard to read the newspaper these days without encountering a headline about real estate. Real estate is making the news for all the wrong reasons. Home prices in Southern Ontario are increasingly at an astonishing pace. For instance, in March 2017, they were up 33 percent year-over-year in Toronto and are on pace to double every three years – yikes!
Up until this point, the government had been taking a wait-and-see approach. March’s numbers changed everything. The government decided now was finally the time to step in and do something. Last month, the Ontario Liberals released a 16-point plan aimed at cooling the red-hot real estate market. Let’s take a closer look at some of the key measures they implemented and what they mean for parents in the real estate market.
Real estate psychology
Even before the government introduced measures to cool the real estate market, all three levels of government had voiced their concerns about the rapidly rising home prices. The government had hinted measures would soon be coming to cool the market. With that in mind, many homeowners looked to cash-in on their investments. This led to a large uptick in listings for April. This is good news for homebuyers, because a greater number of listings means there’s less of a chance you’ll get into a bidding war for your dream home. Will this trend continue? Only time will tell.
The provincial government is cracking down on those speculating in the real estate market. Provincial finance minister Charles Sousa specifically called out those using assignment clauses, where buyers “paper flip” properties for profit even before the deal closes. Buyers who paper flip properties are buying with the assumption that home prices will go up forever, which isn’t in all likelihood true.
If you’re in the business of flipping real estate, the government wants to make sure you’re paying your fair share of taxes. To do that, the government is working closely with the Canada Revenue Agency to catch any tax cheats.
Foreign buyer’s tax
Ontario is following Vancouver’s lead and is introducing a 15 percent foreign buyer’s tax to properties bought and sold in the Greater Golden Horseshoe area. There are some exemptions, such as international students going to school in Canada. This measure is also aimed at stopping speculation in the real estate market.
The government closed a previous loophole in rent control. Previously, if a rental unit was built before 1991, strict rent controls were enforced. For any unit built after that, landlords could raise the rent as they saw fit. That’s no longer the case. Rent control now applies to units built after 1991. This should better protect tenants, especially with some landlords doubling the rent overnight on some units.
Investing in your child’s future
With today’s sky-high real estate prices in big cities, it can be tempting to spend the maximum amount you’ve been approved for by the bank to buy a home. In many cases that’s not a good idea. When you do that, you run the risk of “house rich, cash poor,” and you’ll have little money to save for your children’s education, let alone enjoy life.
Make sure you leave yourself some financial wiggle room and make saving for your children’s education a priority. The best way to do this is through an RESP. To encourage parents to save, the government offers grants on your contributions. You’ll be hard-pressed to find a better return on investment than your children’s future.