Wynne Not helping Sellers Win!
The non resident buyers tax is really a measure to try and eliminate speculative participation in the residential real estate market in Ontario. Sousa said that they estimate foreign buyers account for approx 8% of purchases being made. This may account for a reduction in offers from these sorts of individuals but the government is trying to funnel the foreign investment into commercial real estate and large multi family projects. This pushes it from speculation to investment. As such much like BC they are likely to just pivot their money into other areas. Luckily people who are here on Work Visa's are not being charged this tax from my reading of the releases. It would be an unintended effect to not allow these people to buy, same goes for people buying for their children to attend school. The collecting of citizenship data will help with this. But much like in BC people will look for a way around this. It will likely increase the incidence of "Straw Buyers" where someone uses a Canadian to buy the home in their name with a joint venture agreement behind it that is not registered. This is something people do to avoid capital gains as well. Its not something that occurs a lot right now but it will certainly rise.
The rent control measures now including properties built after 1991 is something that should be expected. A fair market rent can be established every time a property is vacated. Until then it is fair and just to keep the monthly rent costs in line with a reasonable annual increase. Landlords will always be able to apply to have an increase higher than the prescribed amount if they have done substantial renovations. If the landlord is buying a property that already has a tenant there is no legal obligation to retain that tenant if the property will be used by the owner for their own purposes. Owners will likely use this loop hole to remove low rent tenants and re fill the property at market value.
Another really interesting thing that came out of today was the review of the multiple representation process in real estate sales. Multiple representation is not the actual issue here, its blind bids. A seller is often inclined to take a multiple representation offer because it usually saves them at least 1% in total commissions. The realtor is motivated by making 4% versus 2.5% on their sale. So you can see how the invisible hand may lead to some misappropriation here. But if other participating realtors are made aware of the offers received they are more likely to advise their clients to make a more prudent offer versus some of these deals that are being done today, where the winning bid is 100k plus over the closest competing offer. Until there is bid transparency we can't expect people to not make uneducated offers. Home buying is an emotional transaction where emotion often takes over. The transparency of offers would make it much more likely that a home is sold at or near its market value. Not its future value.
For future value what a lot of people are doing is making an offer for what they believe the home may be worth 1 or 2 years from now, the way they look at it is that the market will "catch up" to what they've paid for it. This is a very dangerous practice and could be avoided by having a transparent buying process.
Cheers, i'd be happy to expand on any of my opinions here.