This article was submitted by Kevin Crigger, Chair, Toronto Regional Real Estate Board
Housing affordability is one of the biggest challenges facing Toronto and the entire region. Governments at all levels have begun to make this issue a priority, thanks in part to the many public calls to action issued by the Toronto Regional Real Estate Board (TRREB). We are grateful for this, but it is essential that governments find the right solutions so as not to create new or worse problems.
READ: ‘It’s the Wild West here in Toronto’: City councilor calls for tax on speculation
Recently, Toronto City Councilor Mike Colle publicly indicated his intention to ask city council to formally ask the provincial government to introduce another tax for investors, called the “speculation tax”, which would be taxed on the sale of property other than principal residences. This is a bad idea for the following reasons:
- Experts, including the TRREB, agree that today’s affordability challenges are largely the result of an insufficient supply of housing available for sale and rental, and as such policies aimed at market demand will have no long-term sustainable benefit;
- Discouraging small-scale, investor-owned housing also discourages the creation of rental supply, which will drive up rents (the current average rent for a one-bedroom condominium apartment in Toronto is $2,080 per month and $2,885 per month for a two bedroom condo); and
- Past experience with the provincial speculation tax in 1974 indicates that such a tax could have ripple effects that would negatively impact not only investor-owned homes, but also value and net worth. from other owners.
The real solution to housing affordability problems is to ensure an adequate supply of homes for sale and for rent. From the City of Toronto’s perspective, the best option would be for City Council to accelerate the implementation of its “Expanding Housing Options in Neighborhoods” initiative, which aims to facilitate greater diversity and housing units in existing neighborhoods.
TRREB is encouraged that governments are taking this issue seriously, but we urge caution to ensure policy actions target the real causes and do not have unintended consequences.