January 9, 2017
Toronto Budget Committee
City Hall, 10th floor, West Tower, 100 Queen Street West Toronto, ON M5H 2N2
Dear Mayor Tory; Chair Crawford and Councillors:
I am writing today to ask you to reject a proposal by city staff to increase the Toronto land transfer tax (LTT). Housing in our city is expensive enough. City council should be working to make Toronto more affordable for young families, not less.
For generations, Toronto has been a city where thousands of young people got their start in life. The city’s economic strength attracted new Canadians looking for a better future and its range of affordable housing made Toronto a great place to live, work and raise a family. Unfortunately, finding an affordable home in Toronto is becoming a CN Tower sized challenge for many young families and it’s about to get worse under a city staff report.
This week, the Toronto Budget Committee will consider the 2017 City Operating Budget. As part of the 2017 budget, city staff are proposing to hike the local LTT. The staff proposal would impose over $85 million in new taxes on home buyers with first-time home buyers paying almost $500 more in taxes on an average priced home.
The proposed tax could not come at a worse time for young families. Home prices have reached record highs and new listings are at record lows. Recent data from the Toronto Real Estate Board shows that homes prices are up almost 17 per cent in 2016 compared to 2015. Today, an average priced detached home in the 416 sells for $1.2 million. To make matters worse, Toronto has the dubious distinction of being the highest tax jurisdiction in North America when it comes to buying a home. A local first-time home buyer pays over $15,000 in taxes to the city and the province.
Toronto city council has an opportunity to take action to support more affordable home ownership in our city. Voting down the proposal to increase the LTT is a good first step but I encourage you to go even further.
To start, City Council should follow Ontario’s lead and double the city land transfer tax rebate for first-time home buyers. Last December, Premier Wynne and her government doubled the provincial rebate from $2,000 to $4,000. Doubling the Toronto rebate would provide up to $8,000 in relief to a first-time buyer. Unfortunately, under the city staff proposal, Toronto is actually looking to roll back the relief offered by the province.
Toronto should also focus on bringing more housing supply into the market. In particular, Toronto should work with the province to encourage the building of a greater range of housing types, namely townhomes, duplexes and stacked townhomes. Building more of these units would give a growing family more affordable options for staying in Toronto and baby-boomer’s more options for “right sizing” out of their large-detached home.
Ultimately, Toronto needs to roll back the LTT or, given your current fiscal challenges, at the very least do not make this punishing tax even worse. Research has demonstrated the LTT has discouraged economic activity and blocked listings since all home sellers know they have to pay the tax on their next purchase.
As part of Mayor John Tory’s speech to the Toronto Board of Trade last November, he stated, “I have no intention of telling an entire generation of young people that they just can’t afford to live in Toronto.” Ontario REALTORS® agree.
As civic leaders, you have an opportunity to make life more affordable where it matters most – a home. Please reject city staff’s proposal to increase the Toronto LTT and instead consider doubling the relief for first-time home buyers as the Ontario government did.
Chief Executive Officer
Ontario Real Estate Association