June 5, 2018
What the Ontario Election Means for Housing Affordability
UPDATE: The Progressive Conservatives won a majority leadership in Ontario on June 7, 2018. At press time, Premier-Designate Doug Ford has not elaborated on the party’s plans for housing policy in the province.
When it comes to affordable housing in Ontario, it’s hard not to get a little political. While transit, hydro rates and minimum wage will be top of mind for voters choosing Ontario’s next Premier on June 7, so too will be their ability to buy real estate; according to survey data released by the Toronto Real Estate Board, 69 per cent of residents said their vote will be influenced by a party’s housing platform.
It’s also evident voters are hungry for a fresh take on housing policy, with 56 per cent agreeing future government intervention to cool markets should focus equally on creating new housing supply, rather than just curbing buyer demand.
“Housing and real estate issues are top of mind for many Ontarians and GTA voters, and they often turn to their realtor for opinions on these matters,” stated Toronto Real Estate Board President Tim Syrianos.
How are these concerns set to be met by the three front runners in this week’s provincial election? Let’s take a look at how some of the most pressing issues facing the market are being addressed by the campaigning Liberal, NDP, and Progressive Conservative candidates.
Progressive Conservatives: Return to a Free Market
PC leader Doug Ford has stated that, if elected Premier, he’ll repeal the 15-per-cent Non-Resident Speculation Tax implemented by the Liberal government as part of the Ontario Fair Housing Plan. According to Ford, governments shouldn’t have a hand in regulating the real estate market, and that good old supply and demand should be enough to keep things in check.
“I just don’t like the government getting involved,” Ford said to the Globe and Mail in March. “I believe in the market dictating.”
His stance, however, has been discredited by housing analysts as dubious. In a note to investors, Bank of Montreal Chief Economist Doug Porter responded to Ford’s plan, writing, “How that can possibly be a top priority, especially given very compelling evidence that said tax played a huge role in deflating the Toronto housing bubble in the past year, is a mystery.”
The PCs have also run a developer-friendly campaign, saying they’ll reduce red tape for builders seeking municipal and provincial approval, and better align planning with municipalities to reduce the number of appeals that go to the newly revamped LPAT (formerly the Ontario Municipal Board).
Ford also infamously promised early in his campaign that he would open up lands within the Greenbelt for development – a statement he quickly backtracked on under heavy criticism from environmentalists and allegations the claim was the result of backroom negotiations.
The Conservatives also plan to review the province’s own real estate holdings in order to free up more land for affordable housing developments, and empower municipalities to lead their own affordable housing efforts.
The New Democratic Party: Targeting Real Estate Speculation
The NDP has come out swinging, announcing their intent to introduce a new housing speculation tax throughout the province, similar to the one introduced in British Columbia. Such a tax would apply to real estate owners of secondary homes (excluding cottages) who don’t pay income tax within the province, to discourage speculative real estate activity.
In addition to promising the creation of 65,000 affordable homes and rental purpose developments over the next 10 years, the NDP would also double down on the rent controls introduced by the Liberals’ FHP, with additional limitations on above-guideline rent increases and “renovictions”, which occur when landlords apply to raise rents for renovations, with the intent of making it unaffordable to the current tenant.
Perhaps most interestingly, the NDP plans to empower homeowners to contribute to greater “gentle density” in their neighbourhoods with the Resident’s Rights Act, which would make it easier to create legal apartments, laneway houses, and “granny flats”.
Liberals: Building Upon the Fair Housing Plan
While the future of the Liberal Party is hazy following the pre-election concession of sitting Premier Kathleen Wynne, the party has been clear with their intentions to elaborate on the groundwork they’ve established with the Fair Housing Plan, which went into effect last April. While initially controversial, the 16-part plan, which included the NRST and rent controls, has effectively returned the housing market to balanced conditions from unsustainably hot sales and price growth in early 2017.
The Liberals intend to supplement the FHP with a $1-billion investment in affordable housing creation, including $547million earmarked to repair and improve social housing over the next five years, and have committed to a bi-lateral agreement with the federal government as part of the National Housing Strategy.
OREA and TREB: Lobbying Against LTT, Lack of Supply
They may not be running for Premier, but the heads of Ontario’s real estate governing bodies have been far from quiet in the weeks leading up to the vote, imploring candidates from all parties to make housing affordability a priority in their campaigns – and stoking pre-election drama of their own.
The Ontario Real Estate Association, the CEO of which is former Conservative member Tim Hudak, has even gone as far as to launch its own awareness campaign, titled Keep the Dream Alive.
It has used this platform to release statistics in conjunction with Ryerson University, that find Ontario housing stock will fall 70,000 units short of home buyer demand over the next 10 years. The association had also intended to call out candidates’ histories and intentions on housing issues via billboard signage, but backed away following disapproval from TREB. The board warned OREA to “stay in its lane” on promoting housing in the province, and avoid releasing negative messaging that could lead to “psychological consequences for consumers, and could provoke further unwarranted negative government intervention.”
“It is naïve to suggest the dream of home-ownership is dead or dying,” wrote Syrianos to OREA president David Reid in a letter obtained by the Canadian Press. “It’s alive and well in every Canadian city and beyond. To state otherwise is misleading to the consumer.”
However, the two forces soon made nice, releasing a joint statement that the spat was “not reflective” of their long standing and positive relationship. They then took a two-pronged offense against the emerging issue of municipal land transfer tax in York region, which regional councilors have demanded from the province.
TREB and OREA argue such a tax would add $15,000 to the average home transaction in York region, and set a “dangerous precedent” for other municipalities throughout the GTA.
“This tax does nothing to address the real estate issue facing the GTA housing market: the need for supply,” they jointly stated. “This sort of tax is also an unreliable revenue source.”
Currently, the City of Toronto is the only municipality in Ontario to have a municipal land transfer tax in addition to the one charged by the province. Introduced in 2008 under Mayor David Miller, this effectively doubles closing cost taxes for Toronto homeowners and remains hugely unpopular to this day.
However, despite TREB data that reveals 77 per cent of voters want to see the MLTT reduced, and 68 per cent want it abolished altogether, it’s unlikely that the tax is on its way out in the City of Toronto, regardless of who is voted in – it generated $800 million in revenue for the city in 2017.
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