Foreign Buyer Policies in Toronto
As Toronto City Council and the Government of Canada intensify efforts to regulate foreign home buyers with new taxes and extended bans, The RYZE Group takes a critical look at these measures and their actual impact on the housing market. Despite the good intentions behind these policies, there's a growing consensus among housing market stakeholders that such strategies might be more about political optics than solving the core issues of affordability and supply.
This week, Toronto City Council approved a new Municipal Non-Resident Speculation Tax (MNRST), hot on the heels of the federal government's decision to extend its foreign buyer ban. These moves have reignited debates about the effectiveness of targeting foreign buyers as a solution to the housing crisis.
Alex Beheshti, an Urban Planner and Land Economist at Altus Group, expresses skepticism about the efficacy of these policies. Despite their implementation, measurable impacts on affordability remain elusive. Beheshti criticizes the MNRST for not addressing the real challenges facing Toronto's housing market, fearing it may portray the city as unwelcoming and non-competitive.
Toronto now faces a multi-layered approach to foreign buyer restrictions, including the federal ban extended until 2027, the incoming MNRST at a 10% rate, and Ontario's existing Non-Resident Speculation Tax (NRST), which was increased to 25% recently. These overlapping measures complicate the landscape, potentially reducing revenue and failing to significantly influence market dynamics.
Stephen Conforti, Toronto’s Chief Financial Officer and Treasurer, reports a projected decline in NRST revenue, with the extension of the federal foreign buyer ban expected to further impact the city's new MNRST revenue. This scenario highlights the complexity and potential redundancy of multiple taxes targeting the same issue.
Data from Statistics Canada shows that non-resident participation in Ontario's housing market is minimal, further questioning the focus on foreign buyers. Eric Lombardi, a housing advocate, argues that the real problem lies in domestic speculation fueled by tight supply-demand conditions. Lombardi points out that government policies have failed to address the fundamental issues of housing supply and affordability, suggesting that restrictions on foreign buyers may ultimately reduce the capital available for new housing projects, exacerbating supply shortages and driving up prices.
The RYZE Group believes that a comprehensive approach to housing affordability must address supply issues, streamline development processes, and foster a competitive and inclusive market. While foreign buyer policies may serve as political leverage, the real solutions lie in collaborative efforts to increase supply, reform land-use policies, and support sustainable urban growth.
As Toronto strives to make housing more accessible and affordable, The RYZE Group remains committed to providing insights and solutions that reflect the complexities of the market. It's time to move beyond surface-level measures and tackle the root causes of the housing affordability crisis head-on.
