The Ford government is giving municipalities new powers to tax vacant homes amid a housing affordability crisis across the province.
Currently, only Toronto, Ottawa and Hamilton have the provincial authority to impose a tax on homes that remain unoccupied. The provincial budget, tabled at Queen’s Park on Tuesday, will extend those powers to all single and upper-tier municipalities.
“An unoccupied home is unacceptable in a housing crisis,” the budget reads. “This measure will increase housing supply, address housing affordability and ensure more Ontario families can afford a home.”
The finance minister gave powers to Ottawa and Hamilton to levy a vacant home tax through regulation in 2022.
The budget said a new provincial policy framework would set out how municipalities could best impose a vacant home tax, along with higher rates for foreign-owned homes that remain unoccupied.
The government also said it plans to strengthen and tighten how its non-resident speculation tax is administered. The tax sits at 25 per cent for foreign nationals who buy property in Ontario.
The tax increased from 15 per cent and was expanded to cover the whole province, after initially only setting it on homes bought in the Greater Golden Horseshoe area of southern Ontario.
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The changes are particularly targeted at people who try to bundle or unbundle purchases of things like parking spaces or lockers with condos and apartments. Tightening the rules, officials say, will ensure similar loopholes disappear and that foreign buyers speculating on the property are subject to the full force of the tax and not able to move parts of their property out of it.
In other changes, municipalities would also be given the power to reduce property taxes on new multi-residential rental properties, according to the budget. That tool, the budget said, is designed to boost the construction of purpose-built rentals.
The plans to expand the vacant homes tax come as the latest budget shows an improvement in Ontario’s housing starts over the next several years without it being able to hit its ambitious, long-term housing goals.
The government’s 2024 budget projects a total of 274,000 housing starts over the next three years, compared to 245,000 projected in the 2023 budget.
The difference is an increase of 12 per cent.
The forecasts, based on private-sector projections, predicted 87,900 housing starts in 2024, 90,000 starts in 2025 and 94,000 housing starts in 2026. While better than previously expected, that number still falls short of the province’s own target over that period of 300,000 new homes.
The government is working toward a goal of building 1.5 million homes by 2031.
The budget also contains $1.6 billion in new money for housing-enabling infrastructure. Municipalities will be able to use the funds to build infrastructure such as water lines and roads, something they have said has been lacking and has been a hurdle to building new housing.
Municipal Affairs and Housing Minister Paul Calandra is expected to soon introduce new housing legislation aimed at boosting supply, though the premier has already adamantly ruled out automatically allowing fourplexes in municipalities across the province.
— with files from The Canadian Press
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