Toronto latest to cool housing market by taxing foreign buyers

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Foreigners who buy homes in the greater Toronto area are to face a new 15% extra tax, as the government of the Canadian province of Ontario moves to cool the region’s housing market, just as Vancouver did previously. 

The new tax is included among a number of measures the Ontario government unveiled last week, as part of what it said was an “action to make housing more affordable for homebuyers and renters”.

According to the government, the new 15% “Non-Resident Speculation Tax”, or NRST, would be levied on “non-Canadian citizens, non-permanent residents and non-Canadian corporations buying residential properties containing one to six units” in an area including Toronto and its environs that is known as the “Greater Golden Horshoe”, which stretches down to Lake Erie and as far to the northeast as Peterborough.

Once the legislation is approved, the new tax would be applied retroactively to purchases made as of 21 April.

The new tax and other measures come as the cost of housing in certain markets in Canada, like those in such other cities in and around Hong Kong, Singapore, Sydney, New York and London, has been soaring in recent years, as investors pile into property.

According to the Ontario government, average house prices in the Toronto region reached C$916,567 in March, up 33.2% from a year earlier, and in the wake of two consecutive years of double-digit gains.

Last year, the West Coast Canadian province of British Columbia became the first in Canada to impose a 15% tax on foreigners buying homes in and around Vancouver, a city which has become popular among Chinese investors in particular.

In January, Vancouver was ranked the world’s third most expensive housing market among 406 major metropolitan regions in an annual ranking, the Demographia International Housing Affordability Survey, while Hong Kong held the top position for the seventh year in a row.

Vancouver house prices rose the equivalent of a full year’s household income in only a year, the Demographia researchers noted.