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.”