16-Point Housing Plan Explained – What Ontario Is Doing

Canada’s real estate is booming. Prices are skyrocketing, but supplies need replenishing. If the government will not act soon, expect humungous increases in prices – which economists fear might lead to a housing bubble burst.

The government’s response? A 16-point rent and housing plan reform on Ontario’s housing market. Will that rein in prices? Here’s what you must know about the new policies which your mortgage broker might be mum about.

Curbing Real-Estate Speculation (For Foreign Buyers)

This action from the government is tantamount to addressing issues on housing demands. Non-permanent residents and non-Canadian citizens are the primary targets for this initiative.

There are two key proposals aligned with this change:

  • Introduction of a 15% tax on properties sold in the Greater Golden Horseshoe.
  • Ensuring strengthened reporting requirements and payment of taxes for purchases and sales of properties.


The market’s response was instantaneous. Immediately after the announcement, housing sales plunged, giving authorities a momentary breather.

But elsewhere problems started brewing. For example, tax revenues for Ontario also started to fall. Tax revenues from property transfers are one of the province’s chief sources of earnings.

Condominiums, detached (and semi-detached) homes, and townhomes are the housing types directly hit by this provision.

Ensuring Protection to Renters and Buyers

“Shadow Flipping” was as an anomalous practice in renting and buying and the victims were the buyers and renters. The scheme allowed agents to earn multiple times in fees and commissions on a single property.

The first buyer in Toronto gets to buy the property, but agrees to sell it at a higher price to a second buyer. The second buyer does the same passing the property to a third buyer.

At every single sub-transaction, the agent gets commission. In the end, he earns commission three times on a single property and the property is sold at a price way higher than the value set in the first transaction. The practice became rampant in B.C. and resulted to an investigation by authorities.

Now, the government is tracking yet another form of scam. The newer version involves buying of a slew of properties. Later, the buyer “flips” them to another buyer, allowing him to avoid paying a fair part of the required taxes.

The government referred to the practice as “paper flipping”. They are focusing on people who purchase preconstruction homes. Then they sell the contracts for those homes at higher prices prior to construction.

Rent Housing Control Expansion

Ontario has a two-tiered rent control system, considered to be a loophole of the system that was implemented in the beginning of the 1990s.

The government back then let loose of control over new rental properties while retaining control over the old ones. The result was the construction of several new condos that enjoyed complete autonomy from the government.

With the new program placed in April 2017, the government hopes that construction of new buildings will still continue. They have allocated $125 million as a financial incentive to support new constructions.

However, owners of new rental properties are required the same taxes that residential properties currently pay.

Introduction of Vacancy Taxes

The government is also out to introduce vacancy taxes. Houses in stock that are vacant will be taxed. Vancouver will collect a 1% tax on vacant properties starting in 2018. Toronto intends to follow suit.