With November being housing month, it seems like the right time to reflect on the current housing affordability situation.
In November 2018, we featured an article covering the housing affordability experience in British Columbia and Ontario, with a focus on Vancouver and Toronto. Both provinces had just implemented property taxation changes and rent control measures. The article concluded that housing affordability was not an issue confined to Vancouver and Toronto, or even British Columbia or Ontario alone. Housing affordability was identified as a top policy priority across most of Canada, especially among younger demographics. With November being housing month, it seems like the right time to reflect on the current housing affordability situation. How has the law developed in those two provinces? What might the future bring for housing affordability policy and legislation in Canada?
Home prices and rent: moving on up
The sobering reality is that housing affordability is still a problem in Vancouver and Toronto. If anything, it’s gotten even more expensive to buy or rent a home. The Canadian Real Estate Association’s MLS Home Price Index Tool gives us average benchmark prices. In September 2018, the average price for a single detached home was around $1.545 million in Vancouver and $863,500 in Toronto. As of August 2021, the average single detached home is now $1.817 million in Vancouver and $1.241 million in Toronto. On the other hand, household income as reported to Statistics Canada has not significantly changed.
Rent in both cities continues to skew upwards – despite provincial measures limiting rent increases. The Canadian Mortgage and Housing Corporation (CMHC) states in its most recent rental market report that renters in both Vancouver and Toronto continue to have higher average rental rates. For a two-bedroom unit, the average monthly rent is now $1,622 in Toronto and $1,792 in Vancouver. Vacancy rates are exceeding one percent.
The state of the law
Three years ago, British Columbia had just implemented a Speculation Tax and Empty Homes Tax regime as part of its 30-point housing affordability plan. The province had also proposed the Land Owner Transparency Act (LOTA) and the Information Collection Regulation but neither were in force yet. LOTA came into force on November 30, 2020, along with the launch of a new information registry of individuals with indirect land interest (for example, through trusts, partnerships and corporations) in British Columbia. Separate from the province’s Land Title Registry, the Land Owner Transparency Registry (LOTR) is publicly searchable and supposed to make land ownership more transparent. Under LOTA and its regulations, every time an interest in land is transferred, or if indirect ownership changes within two months, individuals must file with the LOTR. The same obligation applies to all pre-existing interests in land before November 30, 2020 and which are still owned on November 30, 2021.
In 2018, Jing Li, a Chinese citizen who had moved to Canada, challenged British Columbia’s foreign buyers’ tax in a civil class action claim against the provincial government. The British Columbia Supreme Court upheld the tax as constitutional. On June 29, 2021, the Court of Appeal of British Columbia decided the same (Li v British Columbia, 2021 BCCA 256).
Since we last reported on Ontario’s Non-Resident Speculation Tax (NRST), which came into effect on April 21,2017, and rent control measures, it’s fair to say not much has happened. A the very least, the NRST still exists — despite the (then newly elected) Progressive Conservative government’s campaign rhetoric to let the markets regulate themselves. Not surprisingly though, Ontario’s Fair Housing Plan is now an “archived posting from a previous administration.”
The elephant in the room and the future of affordability
With housing affordability, the elephant in the room is the ongoing COVID-19 pandemic. As widely reported by various Real Estate Associations and media outlets in Canada, housing prices have soared since the beginning of the pandemic. The combination of work-from-home orders, low interest rates and the desire for more space have resulted in buyers throughout Canada snapping up homes. At the same time, as rightly recognized by the CMHC, COVID-19 has exasperated the challenges of our most vulnerable population — including their access to safe and affordable housing. Furthermore, temporary measures to protect Canadian renters during COVID-19 such as eviction bans and/or rent increase freezes have either ended or will be ending soon.
During the lead up to Canada’s federal elections in September 2021, housing affordability was still reported as an important concern. That being said, concerns related to healthcare spending, pandemic management, economic recovery and cost of living are top priority for many Canadians. With the re-election of a Liberal minority government and their housing plan platform, key policy/legislative developments to possibly look out for in the future are a Rent-to-Own program and a Home Buyers’ Bill of Rights. It’s still too early to say if and how the government’s housing plan will materialize, especially during these challenging times.
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Disclaimer
The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.
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About Judy Feng
