Ontario’s Finance Minister has given the strongest hints yet that the Ontario Government’s ‘home affordability package’ will target real estate speculators. The use of assignment clauses is causing particular concern.
The finance minister said: “There are those who go into new developments, buy up a slew of properties, and then flip them, while avoiding paying their fair share of taxes, I call them property scalpers.”
However, the finance minister admitted there’s no data to show how widespread `property scalping’ is in Ontario.
Sousa’s office would not comment on whether the government would introduce rules similar to those imposed in British Columbia, but the finance minister has floated a number of possible measures, including implementing a tax on foreign buyers, vacant homes and speculators. All aimed at home affordability.
He has said that at least some of the housing measures will be included in the Ontario budget, set to be tabled April 27.
Assignment sales are not illegal, but Sousa said he wants to close a loophole that allows so-called property scalpers to treat their profits as capital gains – which means only 50 per cent is taxable. His efforts to get the Federal Finance Minister Bill Morneau to include capital gains changes in the federal budget were unsuccessful.
The provincial Liberal government has come under increased pressure to do something about housing in the Greater Toronto Area, where the average price of detached houses was $1.21 million in March, up 33.4 per cent from last year. In Toronto, the average price of detached properties hit $1.56 million, an increase of 32.8 per cent from March 2016.
Bank of Canada governor Stephen Poloz said last week that the current rate of price increases suggests demand is being driven more by real estate speculators and investors than homebuyers. Poloz said the rate increase was unsustainable and reminded homebuyers that house prices “can go down as well as up.”