Real estate groups lobby against calls for GTA foreign buyers tax

Calls for the implementation of a tax on foreign buyers of property in the Greater Toronto Area are "premature," a pair of real estate groups say.

In letters to Ontario Finance MinisterCharles Sousa and Toronto Mayor John Tory, the heads of the Toronto Real Estate Board (TREB)and the Ontario Real Estate Association (OREA) say introducing such atax would be "a knee-jerk reaction to a problem which we do not fully understand."

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TREBpresident Larry Cerquaand OREApresident Ray Ferris wrotethata foreign buyerstax willdo "little to address the growing affordability challenges facing many Ontarians and may have negative consequences for our broader economy."

The groups argue that more information is needed to get a better understanding of foreign buyer involvement in Toronto's housing market.

Slower activity

The government of British Columbia recentlyintroduced a 15 per cent tax on foreigners buyingproperty in Greater Vancouver. In the wake of the tax'sintroduction, housing activity in Vancouver area has slowed considerably. Reaction seems to have been swift theReal Estate Board of Greater Vancouver saidhouse purchases declined by 26 per cent in August compared with the same month a year earlier.

The arrival of the tax in Vancouver led to suggestions that foreign interest in real estate will shift to other markets, including Toronto, which has alreadyseensignificant home price gains, justnot on the same scale as Vancouver.High-end real estate sellerSotheby'srecently saidit expects a lot of demand in Vancouver's luxury market to move to Toronto.

Little choice: economist

There have been a pair of calls recently for a tax on foreignhomebuyersin the Toronto areato help cool the market.

CIBC economist Benjamin Tal said Ontario will have little choice but to implement a tax similar to that of British Columbia.Tal said the main reason behind higher prices around Toronto is a policy-driven lack of land supply, leavinga tax as one of the onlylevers available to influence the market.

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In addition,former federal finance minister Joe Oliver, writing in the National Post this week, said Ontario shouldquickly impose a 15 per cent tax on purchases by non-residents and foreigners of residential property in certain Toronto-areacommunities.

Sousasaid earlier this weekthere are no plans at the moment to implement a tax in Toronto similar to Vancouver's.

"Our government will continue monitoring the housing market in both Ontario and B.C. over the course of the next few months to see the impacts of the recent decision by the government of B.C.,"Sousasaid in a written statement.

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