It’s no secret Canadian real estate is growing too pricey for local buyers. It’s a pressing issue that several governments – including Ontario and British Columbia – attempted to address last year with initiatives to improve affordability. So it makes little sense, especially for cash-strapped first timers, that Toronto’s city council is looking to make real estate even more expensive.
A plan to hike municipal land transfer taxes (LTT) has been brought forth by the Toronto Budget Committee to help offset the city’s deficit woes (including $22 billion in pending unfunded projects). The proposal calls for a 0.5% increase on the portion of homes priced between $250,000 and $400,000, as well as removing altogether the rebate first-time buyers receive on homes priced over $700,000.
Strong Opposition from TREB
The Toronto Real Estate Board is vehemently opposed to the proposal, condemning it in several statements. They’ve also launched anotherobstacle.ca as a platform for those seeking more information and wishing to take action. They calculate such measures would equal a $750-increase (+7%) for repeat buyers in addition to the $11,000 they must already pay the city. First-time buyers would see increased costs of $450 (+6.5%), and potentially more should their rebate be revoked.
If you think Toronto buyers need more costs like a kick in the head, you’re not alone – TREB President Larry Cerqua stated, “The last thing people need is to dish out another $750 on top of the $11,000 that they already pay to City Hall. The City should be looking for more ways to make housing affordability better, not worse, especially for first-time buyers who could go backwards, or at best, be no better off.”
December real estate data finds buyers can expect to pay $1,252,069 for a detached house, $443,565 for a condo, and $627,690 for a townhouse in Toronto.
Torontonians Already on Hook for Double Tax
Toronto is the only city in Canada where buyers must pay municipal LTT in addition to the provincial tax. This hike would also wipe out any benefit buyers receive from the Ontario government’s November decision to double the provincial rebate to $4,000.
The majority of Torontonians, unsurprisingly, oppose the proposal; an Ipsos Public Affairs survey conducted on TREB’s behalf finds 59% oppose an increase of the LTT, 67% support an increase of a rebate for first-time buyers, while 58% say they oppose the 0.5% increase policy change.
TREB Says City Out of Touch on Rebate Rollback
That the Budget Committee wishes to retract the current rebate for homes priced over $700,000 is a particular point of contention with the real estate board, which points out that amount doesn’t go too far in Toronto’s market.
“The $700,000 is well BELOW the current average price of a home in Toronto. Under this potential scenario, a first-time buyer purchasing a home BELOW the current average price would see an unprecedented $3,725 increase, in addition to the $750 increase also being proposed, which would mean a $4,475 or 75% tax increase for a first-time buyer purchasing a below-average home,” states TREB’s release.
Tim Hudak, former Progressive Conservative member and now CEO of the Ontario Real Estate Association, also spoke against the tax hike, penning an open letter to City Council. “Dear Mayor Tory; Chair Crawford and Councillors,” it reads. “I am writing today to ask you to reject a proposal by city staff to increase the Toronto Land Transfer Tax (LTT). Housing in our city is expensive enough. City council should be working to make Toronto more affordable for young families, not less.”
Stay tuned for updates as the City Council makes its decision.