Toronto real estate board opposes investment tax meant to cool prices

Board of Directors representing 64,000 real estate agents says speculative tax will hurt ‘mom and pop’ investors

The Toronto Regional Real Estate Board (TRREB) opposes Councilor Mike Colle’s motion to implement a speculation tax on investment buyers that pushes up property prices and makes the city impossible for first-time homebuyers trying to gain a foothold.

“A speculation tax could primarily impact small ‘mom and pop’ investors who also happen to be a key source of supply for an already tight rental market,” said TRREB chairman Kevin Crigger. a picturesque picture of investors pushing up prices. in the Toronto real estate market. The average price of a home was $ 1,163,323 in November, with 416 single-family homes averaging $ 1,807,983. “Experts, including TRREB, agree that policies aimed at market demand will have no lasting benefits in the long run. “

Colle, the Ward 8 councilor who oversees rapidly developing regions like Yonge, Eglinton and Yorkdale, presented the motion at City Hall on December 15. The motion, which would call on the Ontario government to introduce a new tax beyond capital gains on palms and speculators, has been referred to an executive committee. The motion did not get the required two-thirds of the votes to bypass a special committee, although the majority of current board members, including Kristyn Wong-Tam, Michael Thompson, Joe Cressy, Gord Perks, Brad Bradford and chairman of the Affordable Housing Committee Ana Bailão voted in favor. Those who oppose it include Doug Ford’s nephew, Michael Ford, and Denzil Minnan-Wong. Mayor John Tory was absent.

The motion came just as Bank of Canada investment buyers (who make up a quarter of the buying pool) are pushing up real estate prices in Toronto and beyond by competing with buyers from a first home for a limited supply. They make the housing market even more vulnerable to a correction. Earlier this year, economists at RBC and BMO made proposals that would prevent some buyers of investment property from fueling a real estate bubble, including a tax on speculation.

But the TRREB, which represents some 64,000 real estate agents in the Toronto area, is opposed as one would expect. They, along with the Canadian Real Estate Association and the Ontario Real Estate Association, routinely reject all possible solutions to cool an unaffordable market other than creating an offer more than they can sell. .

In an open letter addressed to Colle, TRREB warns that a speculative tax could drive out owners of independent investment properties putting houses on the rental market.

“Investor-owned units represent a significant portion of Toronto’s tight supply of rental housing,” the letter said, citing the average rent for a one-bedroom condominium at $ 2,080. Their warning that rents could go up ignores the possibility that as house prices continue to rise without intervention, investment property owners who pay more charge more.

The TRREB also cites a provincial speculation tax abandoned since 1974 that has affected home equity. A similar result would be substantial today, as homeowners are heavily in debt, maximizing the equity in their overpriced homes.

“The best option would be for the city council to speed up the implementation of its Expanding housing options in neighborhoods initiative to facilitate greater diversity and more housing units in existing neighborhoods, ”said TRREB CEO John DiMichele, a sentiment shared with other experts who spoke to NOW.

The initiative is looking for ways to build more density in current Toronto neighborhoods that could support them, fighting NIMBYism to introduce more low-rise multi-unit properties as well as duplexes, triplexes and laneway homes in areas where spacious, semi-detached houses take up too much real estate.



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