Starting Monday, homebuyers in Ontario will have to provide more information about their citizenship and place of residence when they buy a piece of real estate anywhere in the province.
The government first announced the news in last fall’s economic statement, but the new rules come into effect on April 24.
Starting then, anyone who buys a piece of land in the province that contains between one and six single-family homes â€” or agricultural land â€” must fill out theÂ Prescribed Information for Purposes of Section 5.0.1 Form â€” one more piece of paper in the sea of red tape associated with real estate.
The form will be incorporated with documents that govern the payment of land-transfer taxes, which is a tax everyone in the province must pay when anyÂ property changes hands. (First-time buyers, however, don’t pay the tax on the first $368,000 of a home’s purchase price and can receive a rebate of up to $4,000 after that.)
Under current rules, the tax is between 0.5 and 2.5 per cent of the total purchase price, depending on the value of the propertyÂ â€” although the City of Toronto also imposes its own municipal levy on top of that.
As part of collecting that tax, the province’s newÂ form mustÂ contain information on:
- Whether the home is intended to be a principal residence or an investment property.
- The type of dwelling (detached, semiâ€‘detached, condominiums, cottages, etc.).
- Residency,Â citizenshipÂ and permanent resident status of the individual buying the property.
- Information about the identity of who owns the corporation, if the purchaser is a numbered company.
- Information about so-called beneficial owners,Â if the person nominally buying the property is acting on behalf of someone else.
The province says there will be a two-week grace period between April 24 and May 5, where there will not be any penalties if people fill out the new form incorrectly. But after that, the information gathered from the form will be one of the government’s newest tools to tackle the province’s ongoing housing affordability crisis.
The information is being sought “to support evidenceâ€‘based policy development with respect to Ontario’s real estateÂ market,” is how the government explains the purposeÂ of the new rule.
Policy-makers have long complained that Canadian data on real estate transactions is rudimentary and lacking compared to other jurisdictions.Â So the new rules are one small step in trying to change that.
The question of foreign buyers has been especially controversial of late, as many critics have blamed them for speculation in the housing market, but often without hard data to back up those contentions.
The group that represents Toronto Realtors recently estimated that foreign buyers made up about five per cent of all buyers in the city last year. But other estimates have pegged the figure much higher.
- Budget 2016Â pledges $500KÂ for more data on foreign buyers in real estate
- Don Pittis: Governments are terrified of popping the foreign buyer housing bubble
Vancouver recently slapped a punitive tax of 15 per cent on foreign buyers in the cityÂ â€” the immediate effect of which was to slow down the feverish activity on the high end of the market.
Monday’s rule change comes against the backdrop of a summit this week between the federal and provincial finance ministers, along with Toronto’s mayor, to discuss what steps might be taken to fix the affordability crisis.