A new policy report from the Ontario Real Estate Association (OREA) recommends that the government focus on implementing growth-friendly policies to stimulate recovery, including a Land Transfer Tax holiday and a new renovation tax credit.



“The aftermath of the COVID-19 pandemic reminds us how important the housing sector is to Ontario’s economic health,” says OREA CEO Tim Hudak. “The key instrument for economic recovery in Ontario is the sale of homes, which will result in an injection of more homes on the market and create spin-off jobs and consumer spending. The best way to do that is with policies that are focused on growth – including a Land Transfer Tax holiday, which would make Ontario homes more affordable by temporarily eliminating a punishing tax, bring more homes into market and help address our province’s supply shortage.”

OREA says that according to statistics from Altus Consulting Group, a six-month holiday on the payment of the Land Transfer Tax (LTT) for the first $600,000 of a home’s value could result in an additional 32,000 homes being sold and 31,000 jobs. The Nanos survey reports that those interviewed said they are likely (13 per cent) or somewhat likely (17 per cent) to purchase a home sooner if the province announced an LTT holiday.

The policy report also recommends permanently increasing the LTT rebate for first-time buyers to $6,000 from $4,000; providing preferential tax treatment for investments in struggling communities, including those in rural and Northern Ontario, to create new residential developments and businesses; and “expedite the implementation of Bill 108 building approval timelines by creating a time-limited municipal grant to help municipalities hire more planning and development staff to help municipalities meet these targets and get buildings under construction faster.”

It also calls for the introduction of a home renovation tax credit similar to the one implemented by the federal government in 2009. “If a sector-wide home renovation tax credit is deemed too expensive, the Ontario government should create a home renovation tax credit targeted at

renovations that allow Ontario’s seniors to age-in-place,” says the report. The credit would be refundable and only eligible for mobility or accessibility renovations for those 65 and over.

“Despite the uncertainty brought on by the COVID-19 pandemic, Ontarians continue to tell us that buying a home is a good investment; Ontarians want to be homeowners, and the health of our economy depends on their ability to be homeowners,” says Hudak. “Real estate saved our economy during the last downturn and it can once again be the locomotive that gets us back on track, stimulates the economy and gets Ontarians back to work.”

Among the other recommendations in the report:

  • The government should set a clear policy for re-opening the Landlord and Tenant Board “including a return of residential evictions for problem tenants and create a temporary assistance program for small landlords with tenants who cannot afford to pay rent for a prolonged period of time.”
  • “It should “address the province’s inconsistent business education tax rates, specifically on commercial properties, by phasing-in a lower ceiling rate which would save businesses money and create a fairer system between non-urban and urban municipalities competing for business investment.”
  • “The Ontario government should prioritize public health as it reopens the economy and listen to experts in each sector, including Realtors, as it continues to loosen restrictions on the real estate market.”

3 COMMENTS

  1. The Municipal Land Transfer Tax is a vicious and malicious idea. Approved by present-day non-payers for collection from non-approvers in the future.

    Toronto (city) approved it and 905’er councils continue to eye the opportunity to tax their ‘others/newcomers’ for municipal infrastructure renewals and replacements they didn’t/couldn’t/wouldn’t charge their past/existing ratepayers over the last 3 decades to build-up reasonable Reserve Funds for these fully-anticipatible current/near-future costs.

    Why does no municipality in Ontario (except Markham) have Reserve Funds that amount to much?

    Shouldn’t Mississauga be bursting at the fiscal seams after 40 years of boom? if not who was supervising the Budgets and their Reserves?

  2. An LTT holiday is a nice to have but the government is facing the highest debt load in Canadian history, with multi-billion economic stabilization programs that have to be paid from somewhere. While I’m as happy as the next person to receive a tax moratorium of any kind, especially in housing, an LTT holiday isn’t necessary. Of course, we all want to make housing more affordable but arguing that an LTT holiday would bring more homes into the market is naïve.

    Why would sellers care? They don’t pay the LTT so how would an LTT holiday encourage more housing? Developers don’t care either. More importantly, the demand is critically higher than the supply and there’s no reason to believe that the government has done or will do anything to create private sector incentives to increase supply. Billionaire developers and mega-developers don’t need the incentives. Half (49%) of purpose-built rental properties in Canada (CMHC stat) are in the hands of unincorporated entities … that is, small owner-operators. The government has ignored this market for decades and continues to do so.

    Reducing the LTT is not going to compel anyone to build more housing.

    Home renovation credit? Again, nice but I can tell you from personal hands-on experience that more renovators and trades-people are swamped with work because the cost of borrowing money is the lowest in living memory, possibly the lowest in history. Also, there are more people retiring from the construction and renovation sector than there are entering it so labour costs are going to continue to rise despite any incentive that might be offered. This suggestion too will have the opposite effect of the writer’s intended purpose.

    Mobility and accessibility credit for 65+ is a good suggestion. No one wants to build for this need because it generally doesn’t generate a return in investment.

    What do realtors know about public health? There’s very little altruism in this industry and their motivation to serve the public good would be highly suspect at best. This recommendation reflects a fundamental misperception of the human condition in general and the real estate market demographic in particular.

    There are so many ways that OREA could be promoting “good” policies that encourage an increase in housing supply yet OREA consistently misses the mark and demonstrates its lack of understanding of the marketplace dynamics. By extension, that means I’m saying I know better than OREA does about what needs to be done and that’s unabashedly arrogant. Well, in this case, I’m certain I do.

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