Yesterday, the Provincial Liberal Government announced a series of policy changes in an effort to increase housing affordability in Ontario. Skyrocketing house prices and rents have created extremely stressful conditions for Millennials that are looking to buy or rent.
The new policy, titled “Ontario’s Fair Housing Plan” is one that contains 16 measures that are expected to make housing more affordable. Overall, the purpose of the plan is to reduce housing demand, increase housing supply, and increase tenant and buyer rights. The exact impact of these polices are uncertain, but economists believe that the collective changes will slow down price increases in the short and possibly, medium time horizons.
So what impacts will affect Millennials the most? Below are the measures that will likely have the largest impact on Millennials.
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Expanded Rent Control – Effective April 20th, 2017
This measure will expand rent control measures to all private rental units. Now, rent will only be able to increase by the rate announced in Ontario’s annual rent increase guidelines. Historically, this annual rate has been about 1.4-2% and is capped at 2.5%. However, landlords are able to receive exemptions in approved cases.
In the future, we can expect that the annual rent increase guidelines to be heavily debated and lobbied against. Many interested parties believe that rent control guidelines create a disincentive for new developments and instead reduce the housing supply.
Increased Renter Rights
Many measures are being implemented to increase the rights of renters. One such way is by introducing a standardized lease that clearly outlines a renter’s rights and restrictions. Available in multiple languages, this document will help protect the interests of the renter and prevent unlawful clauses.
Also, increased scrutiny will be given to cases where tenants are requested to vacate over the landlord-use provision. It’s expected that loop-hopes in this provision will be closed, and that renters will receive compensation.
Real Estate Agent Rules
Measures include reviewing and amending the rules that govern real estate agents. Special attention is being given to situations that may compromise a buyer’s interest, such as when an agent is representing both a buyer and seller associated with the same property.
The government will also extend educational programs to help buyers understand their rights when dealing with real estate agents.
This measure will allow Toronto and possibly other municipalities to levee a special tax on vacant housing units. The purpose of a vacancy tax would be to motivate owners to either sell or rent their vacant homes and increase the housing supply. To put the situation into perspective, the Mayor of Toronto has recently stated that Toronto has 65,000 vacant units, however this figure has been debated.
Very soon, we can expect vocal discussions about the vacancy tax as Toronto has an upcoming budget.
Foreign Buyers Tax – Effective April 21st, 2017
A fairly popular measure, a 15% tax will be leveed on non-resident and non-citizen buyers in the Greater Horseshoe area. This tax would be applied to property that have 1-to-6 single-family units, and would not include industrial or apartment buildings. Rebates for this tax are offered to buyers that acquire their citizenship or permanent resident status.
The impact of this measure is debated, and many believe that it will have a minimal impact. Direct comparisons to Vancouver cannot fully be made because Vancouver’s housing market was actually beginning to decline before they introduced a similar policy. Similarly, it is believed that Vancouver also has more foreign buyers than Toronto.
The plan includes many measures to increase future rental developments. Including using surplus provincial property to construct market-priced housing and affordable housing. One of the possible early pilot projects is Toronto’s West Donlands area.
A five-year, $125-million program aimed at promoting construction of new rental apartments properties is also being implemented. This program will rebate portions of development charges.
Creating new units will have a large impact by increasing the housing supply, but these developments will take several years to complete and will not make any short-term impacts. The amount of units that will be created may also create a minimal impact.
That’s it for today, but please feel free to share your thoughts about these new measures. Also, please don’t forget to sign-up to our newsletter below.