Ontario’s government has decided to increase its Non-Resident Speculation Tax (NRST) rate to 20% from its previous level of 15%, and expand the application of the tax across the province. The tax currently just applies to properties in the Greater Golden Horseshoe Region.
The change is part of the government’s housing supply action plan under the More Homes for Everyone Act which is expected to increase housing stocks. This move has been driven by the ongoing housing affordability crisis that has seen more prospective homebuyers struggle to find appropriate housing. It is expected to discourage speculative buying of homes by non-resident investors and allow more residents to achieve homeownership.
Minister of Finance, Peter Bethlenfalvy, has said that young families, workers and seniors were becoming desperate due to a lack of housing supply and rising costs, putting their dreams of homeownership out of reach. He added that the government was working to increase supply and help keep costs low for Ontario families, not foreign speculators hoping to turn a quick profit.
Only those that are committed to living long term in Ontario may be entitled to relief from this tax. New permanent residents of Canada, together with foreigners studying and working in Ontario, may be able to qualify for this rebate and other related exemptions. Eligibility for the rebate requires the foreign national to become a permanent resident within four years, once the tax becomes payable. It is also possible to qualify for exemptions if under the Ontario Immigrant Nominee Program, as the spouse of an individual not subject to the tax, and as a refugee.
Another measure that the government is advancing to boost housing supply is by supporting municipalities that want to introduce the Vacant Home Tax. Under the Municipal Act, municipalities may seek to introduce this measure. The City of Toronto has already instituted the Vacant Home tax, with others like Ottawa on course to do the same. The government is also committing $19 million to be used over the next three years on helping clear the backlogs at the Landlord and Tenant Board and Ontario Land Tribunal. This is expected to help speed up planning processes for the cities.
According to a report by the Ontario Housing Affordability Task Force, building 1.5 million new homes over the next 10 years will be a key part of the solution to the housing crisis. The report found that the province had not built enough new homes to meet the demands of the growing population and that the problem had spread from the large cities into more rural towns and communities.
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