Toronto Real Estate Board is reiterating its call for the City of Toronto to reject a proposed new tier of land transfer tax.
TREB has already warned officials that the policy of relying on Municipal Land Transfer Tax as a revenue source is unreliable but with Council due to debate proposals today (Mar 27) the board is highlighting the impact on the housing market.
The City Council is debating whether a new tier of MLTT would be a viable funding option for its Housing Allowance Program.
Although the new proposals target homes valued at $2 million and above, TREB says that there are likely effects for the wider Toronto housing market.
“The real estate market functions as a continuum. Policies that impact certain price points can have a trickle-down effect by influencing move-up decisions of home-buyers, thereby preventing the supply of lower-priced properties from being freed-up for other home buyers,” said Jason Mercer, TREB’s Director of Market Analysis.
Unreliable trend
TREB’s letter to City Council points out that while sales of homes priced at $3 million or more have been increasing in recent years, it is not realistic to rely on this trend to continue indefinitely. These sales appear to have peaked in April 2017 and have dropped dramatically since then, dropping by 32% in 2018 over 2017 with this trend continuing in the first two months of 2019.
“It is important to point out that, just two years ago, City Council increased the LTT on all home buyers by an additional 0.5 percentage point and added an additional upper tier rate of 0.5% on homes priced over $2 million. Continuous increases to the MLTT is an unsustainable and risky fiscal strategy for the City,” said Von Palmer, TREB’s Chief Communications and Government Affairs Officer.
