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PostPosted: Thu Apr 20, 2017 10:18 am
 


Quote:
We know we have a problem': Ontario lays out sweeping measures to curb high rents, home prices
Premier Wynne promises 15% foreign buyers tax and expansion of rent control

Updated
CBC News
5 Minutes Ago
Ont Housing Wynne 20170420

Ontario Premier Kathleen Wynne said new measures are need to cool rents and home prices which are rising far faster that people's paycheques. (Christopher Katsarov/Canadian Press)
1.2k shares 550 comments

Worried that too many Ontarians are getting priced out by fast-rising rents and surging home prices, Ontario Kathleen Wynne unveiled sweeping measures Thursday aimed at cooling red-hot markets she admits have become "a problem."

Wynne said it's hoped the 16 measures — most of which will be contained in legislation that must first pass before they proceed — will curb housing costs that are rising "way faster than people's paycheques."

"When young people can't afford their own apartment or can't imagine ever owning their own home, we know we have a problem," she said. "And when the rising cost of housing is making more and more people insecure about their future, and about their quality of life in Ontario, we know we have to act."

Foreign buyers tax, expanded rent control coming to Ontario
Can anything be done to cool Toronto's hot rental market?

Many of the measures were reported earlier today by CBC's Queen's Park reporter, Mike Crawley, before they were outlined by Wynne.

They include:

A 15 per cent tax on home purchases by non-resident foreigners in Toronto and the Greater Golden Horseshoe. Wynne said the tax would not apply to new immigrants who plan to live here, but are instead aimed at speculators who will "never set foot in Ontario." The proposed tax would apply to transfers of land that contain at least one and not more than six single-family residences, including semi-detached homes, townhomes and condos. It would not apply to transfers of other types of land including multi-residential rental apartment buildings, agricultural land or commercial/industrial land. A rebate would be available for those who later become citizens or permanent residents, as a well as foreign nationals working in Ontario and international students.

A move to expand rent control to all private rental units in Ontario, including those built after 1991, which are currently excluded. CBC Toronto first broke the news when Housing Minister Chris Ballard said the government would move to remove the 1991 rule after residents complained of massive rent spikes. The issue that was highlighted in a CBC Toronto series of stories called "No Fixed Address." The rent controls must come through approved legislation, but will take effect today, April 20. Annual rent increase for an existing tenant can be no higher than the rate of inflation. Rent increases will be capped at 2.5 per cent, even if the rate of inflation is higher.

A rebate of development cost charges to encourage building of more rental housing.

A standardized lease document for all tenants.

A plan to look at 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.

New powers for Toronto and other municipalities to introduce a tax on vacant homes to encourage owners to sell or rent unoccupied units.

A move to identify provincially owned surplus lands that could be used for affordable and rental housing development. in Toronto the areas identified include the West Don Lands and 27 Grosvenor St. and 26 Grenville St.

A $125-million, five-year program to encourage the construction of new purpose-built rental apartment buildings by rebating a portion of development charges.

A review of the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions. A government backgrounder on the measures announced today specifically mentions the practice of double-ending, when one agent represents more than one party in a transaction.
Toronto Mayor John Tory has been calling for a tax on vacant homes, and Wynne says Ontario will give Toronto and other interested municipalities the power to impose such a tax to encourage owners to sell or rent such spaces.

The moves come as Ontario residents — particularly those in larger cities — find themselves struggling to keep up with rents and home prices that have far outpaced wage increases.

The average price of detached houses in the Greater Toronto Area rose to $1.21 million last month, up 33.4 per cent from a year ago. The news is no better in the Toronto rental market where some tenants are facing massive and sudden rent increases. Earlier this month, CBC Toronto reported about a tenant in a two-bedroom condo in Liberty Village — the same neighbourhood where Wynne made Thursday's announcement — jump from $1,660 to $3,320.

Wynne was asked how effective the measures will be when demand for homes continues to outstrip supply and bidding wars on downtown homes are commonplace.

"We are not interested in controlling the market," said Wynne. "That is not the aim. But we do believe that there is a need for interventions right now to calm what is going on, to put protections in place."

Wynne said she would not rule out other measures if she sees the need.

"Right now we believe these are the measures needed to help people find a place to live that they can afford," she said.

​Why Toronto's condo rental market is described as 'ridiculous'

ANALYSIS | What governments could do to cool GTA real estate market


With files from CBC Toronto's Mike Crawley, The Canadian Press

http://www.cbc.ca/beta/news/canada/toro ... -1.4077094


Last edited by BeaverFever on Thu Apr 20, 2017 10:49 am, edited 1 time in total.

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PostPosted: Thu Apr 20, 2017 10:30 am
 


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Last edited by Lemmy on Wed May 03, 2017 7:02 am, edited 1 time in total.

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PostPosted: Thu Apr 20, 2017 10:50 am
 


So you don't think supply and demand, coupled with speculation, have anything to do with it?

The things you talk about aren't new but the bubble is (relatively speaking).


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PostPosted: Thu Apr 20, 2017 10:56 am
 


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Last edited by Lemmy on Wed May 03, 2017 7:02 am, edited 2 times in total.

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PostPosted: Thu Apr 20, 2017 10:59 am
 


Lemmy wrote:
Supply and demand aren't things that'll be altered by government policy. The government can do the 2 things I suggested above and those 2 things will a) stop the government-induced inflation; and (b) cut 5% off pricing immediately, across the board. Why not start with that before going to things, like a foreign-buyers' tax, which'll only complicate matters.


FBT seems to have helped in BC. I wonder why nobody talks about domestic speculators though....


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PostPosted: Thu Apr 20, 2017 11:01 am
 


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Last edited by Lemmy on Wed May 03, 2017 7:04 am, edited 1 time in total.

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PostPosted: Thu Apr 20, 2017 11:14 am
 


Yay, expanded rent control. Because it's not like the cost for things like hydro aren't already eating into whatever meagre revenue renters outside of the GTA are making.

Which reminds me I should really print out those rent increases for the long term tenants here before it's too late.


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PostPosted: Thu Apr 20, 2017 11:20 am
 


BeaverFever wrote:
Lemmy wrote:
Supply and demand aren't things that'll be altered by government policy. The government can do the 2 things I suggested above and those 2 things will a) stop the government-induced inflation; and (b) cut 5% off pricing immediately, across the board. Why not start with that before going to things, like a foreign-buyers' tax, which'll only complicate matters.


FBT seems to have helped in BC. I wonder why nobody talks about domestic speculators though....



No.
It moved the problem from Vancouver to Victoria.


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PostPosted: Thu Apr 20, 2017 11:48 am
 


Well I would not limit it to any one city so there would be no pushing the problem to another town. And I'm sure if the tax was high enough it would impact demand.

I would make it simple: if you purchase a year-round residential property (ie I'm excluding cottages, time-shares, etc.) AND said property has not been your primary residence for at least 5 consecutive years, then at the time of sale, any gain above a certificate formula would be subject to a steep windfall tax. Steep enough to eliminate the profit incentive for anyone buying a house/condo strictly for the purpose of reselling ot a higher price.


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PostPosted: Thu Apr 20, 2017 12:18 pm
 


BeaverFever wrote:
Well I would not limit it to any one city so there would be no pushing the problem to another town. And I'm sure if the tax was high enough it would impact demand.

I would make it simple: if you purchase a year-round residential property (ie I'm excluding cottages, time-shares, etc.) AND said property has not been your primary residence for at least 5 consecutive years, then at the time of sale, any gain above a certificate formula would be subject to a steep windfall tax. Steep enough to eliminate the profit incentive for anyone buying a house/condo strictly for the purpose of reselling ot a higher price.


You realize this would hurt the availability of rental properties, right? You're setting conditions where prospective landlords will be penalized in the future when they decide to retire, or get sick of dealing with tenants. Why bother making updates to the house when any increased value would just be taxed away? Why take the risk of tying up so much of their wealth into this investment rental property, if they can't sell out and receive fair market value for the property if they are unwilling or unable to continue managing it?

The only groups who would be able to stand this burden are large property management corporations, as they're unlikely to sell their properties unless they receive a really good offer for it.


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PostPosted: Thu Apr 20, 2017 12:45 pm
 


commanderkai wrote:
BeaverFever wrote:
Well I would not limit it to any one city so there would be no pushing the problem to another town. And I'm sure if the tax was high enough it would impact demand.

I would make it simple: if you purchase a year-round residential property (ie I'm excluding cottages, time-shares, etc.) AND said property has not been your primary residence for at least 5 consecutive years, then at the time of sale, any gain above a certificate formula would be subject to a steep windfall tax. Steep enough to eliminate the profit incentive for anyone buying a house/condo strictly for the purpose of reselling ot a higher price.


You realize this would hurt the availability of rental properties, right? You're setting conditions where prospective landlords will be penalized in the future when they decide to retire, or get sick of dealing with tenants. Why bother making updates to the house when any increased value would just be taxed away? Why take the risk of tying up so much of their wealth into this investment rental property, if they can't sell out and receive fair market value for the property if they are unwilling or unable to continue managing it?

The only groups who would be able to stand this burden are large property management corporations, as they're unlikely to sell their properties unless they receive a really good offer for it.


Well for starters the formula would be based on total investment, not just purchase price so if you bought a $400k home and at some point put an additional $50k of investment then your starting point is $450k not $400k. Second, the formula would allow for a reasonable rate of return before any applicable tax, say (totally hypothetically) 5% for every year you owned the property. So you bought a rental property for $400k, put an additional $50k of upgrades into it, and sell it 6 years later: $450k x (5% x 6 years) = $585k profit without any windfall tax applying. Anything above that amount would be taxed at (say) 50% so if you sold it for $595k, that extra $10k profit would require you to pay a $5k windfall tax.


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PostPosted: Thu Apr 20, 2017 1:23 pm
 


BeaverFever wrote:
Well for starters the formula would be based on total investment, not just purchase price so if you bought a $400k home and at some point put an additional $50k of investment then your starting point is $450k not $400k. Second, the formula would allow for a reasonable rate of return before any applicable tax, say (totally hypothetically) 5% for every year you owned the property. So you bought a rental property for $400k, put an additional $50k of upgrades into it, and sell it 6 years later: $450k x (5% x 6 years) = $585k profit without any windfall tax applying. Anything above that amount would be taxed at (say) 50% so if you sold it for $595k, that extra $10k profit would require you to pay a $5k windfall tax.


Except it's not a $585k profit. That's just the money they receive from the sale of the property. Unless the seller is hilariously wealthy, they likely got a mortgage. Even factoring in that 50k investment, which would no doubt be abused by landlords so they don't face any tax on their investments (and it would be),Paying off that mortgage would be a huge chunk of where the revenue would go to.

So the profit would be around 135k....except that's not really the case either, since there no doubt would be numerous other things bringing out the seller's revenue. Real estate fees, covering any line of credit that might cover damage or repairs from bad tenants or issues that might arise (leaking pipes and these sorts of things).

Plus, these property owners are going to be taxed on whatever income (not profit) from the sell of the property, so even though they made, hypothetically, 135k, they're going to be taxed on it through capital gains tax.

Basically you're adding another layer of tax on people who would consider buying rental property. This will discourage small landlords from making these investments, but property management firms will gobble up more and more of the rental market. Since they have little incentive to sell, and less so with this new tax, they have further control of the market. Less competition isn't going to decrease rent, and putting taxes that would hurt private individuals selling property would only take more and more property off the market and into the hands of property management firms, who have very little incentive to sell.


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PostPosted: Thu Apr 20, 2017 2:06 pm
 


Lemmy wrote:
Supply and demand aren't things that'll be altered by government policy.


It's 4/20 so I'll just take it for granted that you're celebrating when you say this. [drunk]

In this particular case I think I'll let a Canadian explain this to you:

http://urbantoronto.ca/news/2017/03/tor ... -or-demand

It's deep into the article but the author sums up the core problem right here:

Quote:
Many of the problems with Toronto's planning policies were laid out by Metropolitan Toronto's pre-amalgamation planning commissioner David Gurin. Writing in the Toronto Star in 2007, Gurin noted that "Toronto's zoning continues to "allow one or two-storey buildings, reflecting what was here in the 1950s."

And while the last decade has brought numerous—and often successful—new planning policies like the Tall Buildings Guidelines and the evolving TOCore framework, the City's zoning remains unchanged. This means that practically every new development requires amendments to zoning policy.


Toronto's government policy is purposefully limiting housing by preventing high rise buildings from being erected with a zoning code that favors small housing structures and that eschews the kind of high density housing that makes sense in an urban core.

Thus creating a government-induced spike in competition for a limited supply of housing.

And the "solution" of adding rent control into the mix will dissuade even more investors away from building anything in Toronto if the socialists are just going to take it away with a legal sleight of hand.


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PostPosted: Thu Apr 20, 2017 2:20 pm
 


commanderkai wrote:
BeaverFever wrote:
Well for starters the formula would be based on total investment, not just purchase price so if you bought a $400k home and at some point put an additional $50k of investment then your starting point is $450k not $400k. Second, the formula would allow for a reasonable rate of return before any applicable tax, say (totally hypothetically) 5% for every year you owned the property. So you bought a rental property for $400k, put an additional $50k of upgrades into it, and sell it 6 years later: $450k x (5% x 6 years) = $585k profit without any windfall tax applying. Anything above that amount would be taxed at (say) 50% so if you sold it for $595k, that extra $10k profit would require you to pay a $5k windfall tax.


Except it's not a $585k profit. That's just the money they receive from the sale of the property. Unless the seller is hilariously wealthy, they likely got a mortgage. Even factoring in that 50k investment, which would no doubt be abused by landlords so they don't face any tax on their investments (and it would be),Paying off that mortgage would be a huge chunk of where the revenue would go to.

So the profit would be around 135k....except that's not really the case either, since there no doubt would be numerous other things bringing out the seller's revenue. Real estate fees, covering any line of credit that might cover damage or repairs from bad tenants or issues that might arise (leaking pipes and these sorts of things).

Plus, these property owners are going to be taxed on whatever income (not profit) from the sell of the property, so even though they made, hypothetically, 135k, they're going to be taxed on it through capital gains tax.


I'm fine with that. That's still a reasonable return on investment. Nobody's entitled to unlimited profit at the expense of the rest of society. Besides Capital gains are still only 50% taxable so the landlord is still making more money than if he earned $135k of regular income

Quote:

Basically you're adding another layer of tax on people who would consider buying rental property.

This will discourage small landlords from making these investments, but property management firms will gobble up more and more of the rental market. Since they have little incentive to sell, and less so with this new tax, they have further control of the market. Less competition isn't going to decrease rent, and putting taxes that would hurt private individuals selling property would only take more and more property off the market and into the hands of property management firms, who have very little incentive to sell.


Yep. But only if they make more than a certain of gain. We can argue about what is reasonable: 3%, 5%, 8%, whatever.... the point is that there is a limit to what is reasonable for investors to demand as an entitlement. Yes, likely fewer people will decide to become hobby landlords and amateur property flippers, but these people see the housing bubble as a get rich quick scheme to which they're entitled. They think they're divinely entitled to buy a house/condo and sell it 3 years later for triple what they paid for it, and they don't give a damn about what effect that has on the city or economy. Well, they're not the only people who matter and I would put the needs of families who need housing above those who are just trying to make some easy extra cash.

The goal is to discourage flipping. Big property managers as you say aren't generally in the flipping business. And I'm not sure they'll buy up all the housing stock that is no longer being purchased by hobbyists. I think we'll just see more housing supply available to homebuyers generally as investment property becomes less of a jackpot scheme and as a result, better prices for everyone.


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PostPosted: Thu Apr 20, 2017 3:36 pm
 


BeaverFever wrote:
The goal is to discourage flipping.


Why would you do that? [huh]

In most cases when an investor 'flips' a house they've bought a house that was a blight on the community and then they've put their money and effort into it to improve it and then they sell it to someone who otherwise would never have been interested in that house.

The community benefits as the blighted home not only generates property tax revenue it also no longer sucks up municipal services from code enforcement officers, health inspectors, and police if the place had been used by criminals.

So let's say you put an end to flipping.

Who's going to do a better job of fixing up a neighborhood? The government? XD

Seriously, in Sacramento the city, county, state, and Federal governments have poured billions into the Oak Park neighborhood over the past fifty years and all for naught. The neighborhood from the 1970's into the late 2000's has been a shithole that decent people avoid and the neighborhood sucked up a disproportionate amount of the city's budget.

A few years back a guy named Tim Jordan opened up a coffee house ( http://www.oldsoulco.com/ ) in Oak Park and he had to do it against opposition from the city, the neighborhood thugs, the banks, and etc.

Everyone said it was a joke and it would be a failure. It wildly succeeded and Tim led the way with his gamble of an investment.

In just about eight years the neighborhood is reborn as the middle class community it was meant to be when it was first built in the 1900's.

Crime is down, unemployment is down, old homes are being refurbished, thugs and welfare queens are moving out and families, artists, and workers are moving in.

Now the scumbags who shit the place up for the past fifty years are whining about 'gentrification' as rents increase and low-rent bars are replaced by mid-to-high-end restaurants, boutiques, and art galleries.

I'm sure they'd love to have rent control so they could keep their stranglehold on the area.

Yet if they had their way they'd be right back at city council meetings demanding that the city do the things that private investors are doing as we speak.

Take my own experience in Victoria. I'd rolled over my profits from the sale of our Oak Bay house to two new condos on Douglas. We eventually sold one of them to a tenant (and on very favorable terms I might add) and then we were approached to buy into a proposed condo building across from Beacon Hill park. Our purchase enabled the builder to get the loan to get the place built.

And then when we figured it was time to get out of the market we made silly money because the property was in high demand. Property that would likely not have even been there had we not invested in it.

I don't care to get involved in real estate investment in Canada again. It's a pain in the ass and it's getting worse.

So I took CDN$1.3m out of your economy and put it in the US economy.

I could have put the money to better use reinvesting it in BC. But you don't want me to and given the circumstances of BC it was pretty clear that BC doesn't want me to either.

Toronto will see a flight of capital, too. That's the point of the measures you support is to put an end to investment.

Which will make the housing problem worse because the supply you have now is all you're going to have.

That means the housing for GTA will have to be built on the other side of the Greenbelt and that means insane commutes.

Oh, and rent controls quite often result in apartment buildings being converted into single-family homes or condominiums in order to remove the properties from the stupid rent control schemes. Which means even fewer places for people to rent.

But yeah, you do what makes you feel good.

That always works out well. [B-o]


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