There is no shortage of ideas to curb runaway house-price increases in the Greater Toronto Area, but governments at all levels have been moving slowly as they review proposals that veer in many different directions, and even conflict in their advice.
Many real estate players disagree about which reforms would be effective to slow the pace of price growth, and policy makers complain that a lack of data makes it hard to model the impacts of various ideas, including taxes targeting foreign buyers or vacant homes. As federal Finance Minister Bill Morneau prepares to meet with provincial and municipal leaders about the rapid acceleration of home prices in Toronto, here are some of the prescriptions being touted to address the housing crisis.
- Create a national housing strategy to co-ordinate with the provinces and municipalities on issues of housing affordability, going beyond the existing strategy on social housing for low-income earners.
- Raise the portion of profits subject to capital gains tax on sales of non-principal residences to deter speculation and flipping.
- Increase the first-time home-buyer RRSP deduction above the $25,000 limit, allowing people to withdraw more to fund the down payment on their first home. Also allow “inter-generational RRSP transfers” under the plan, giving parents an efficient way to help with down payments.
- Remove the GST paid on municipal development taxes – a tax on a tax, according to the Canadian Home Builders’ Association – to make buying more affordable.
- Impose a speculation tax on people who flip houses within a short period, perhaps within two or four years of purchase. The tax could apply to all homes or be limited to non-principal residences.
- Introduce a tax on foreign buyers who buy residential homes in the GTA, similar to the 15-per-cent tax imposed last year in British Columbia.
- Develop a progressive property tax for foreign owners, requiring people who own homes but do not live or work in Canada to pay an annual property tax surcharge.
- Prohibit foreigners from buying resale homes, except under limited circumstances, to curb speculation, but allow them to buy newly built homes to encourage investment in new housing stock.
- Expand rent control rules to cover more homes, helping to moderate rent increases for people who cannot buy.
- Give municipalities a break from high-density development requirements to improve the supply of detached, single-family homes, while also encouraging more innovative housing solutions. Target infrastructure like transit to places where it is most needed to help get land developed.
Toronto and other municipalities
- Impose a vacancy tax on homes left unoccupied by the owners, which would be collected by municipalities but would require provincial approval to implement. Vancouver is introducing a vacancy tax this year, set at 1 per cent of the assessed value of the home. It relies on the homeowner to declare whether a house is occupied or not.
- Reduce development charges to make new homes more affordable. Development charges are paid by a builder to the local municipality to fund infrastructure costs like roads and transit, and builders pass along the costs to new home buyers.
- Fast-track zoning approvals for residential development and streamline other approval times for all stages of projects to help get more housing units constructed.