This week brought separate maneuvers from the City of Toronto and Government of Canada to crack down on foreign home buyers, but housing market stakeholders fear that it’s all not much more than “political feed-good.”There’s wariness in the air, for sure; housing market stakeholders are vocally concerned that these coinciding policy levers are not only redundant, but are yet to be proven effective.
Beheshti also points out that Ontario has a foreign buyer tax already in place. This essentially means that, as of this week, Toronto is due to be cloaked in three levels of restrictive foreign buyer policy: the federal ban, which is now in effect until 2027, the MNRST, which will go into effect in 2025 at 10%, and the Province’s Non-Resident Speculation Tax , which was introduced in 2017 and was hiked to 25% in late 2022.
In addition, the federal foreign ban will snake away revenues from Toronto’s new MNRST. Per Conforti’s report, prospective revenues from the MNRSTto support that non-resident investors actually have a notable or problematic presence in the housing market. In Ontario, for example, “non-resident participation” in the market only clocks in at 3.1% according to the latest available data from Statistics Canada.
Government can tax and ban foreign buyers to the high heavens, but Lombardi stresses that the real issue driving real estate speculation — and yanking affordability downhill — is supply-demand conditions, which continue to be remarkably tight across the country. He believes this is a matter which is being mishandled by government.
What’s more, to the extent that any of these foreign buyer measures are, or are going to be, effective in detering non-residents from homeownership, they would also compromise a degree of capital in the housing market.
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