Real Estate Insider: April 2019 News Report

Happy Easter Weekend! Before you put all of your eggs in one basket, read some of these reports we found useful for making real estate decisions.

If you aren’t debt free going into retirement, you may have considered using your investments to pay off your mortgage. But is that the best retirement strategy? This isn’t simply a “Yes or No” question, there may be more things to consider than you thought. This article is a good place to start if you’ve been contemplating which route to take to retirement. >>

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Solar is the energy of the future without question, yet is buying a house with solar panels worth it today? It all depends on the company and the contract they have! Read here how solar panels on the roof ended up costing this couple more! Would helping the environment be worth a few extra dollars each month? We will let you decide! >>

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Ever heard of smart wood? This BC company is tired of the damage concrete is doing to our environment, and has developed wood that is stronger, lighter, and more soundproof than concrete. Read here more of the benefits of this timber over concrete.  >>

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Living mortgage free is a dream most have, but is pre-paying on your mortgage payments a good way to accomplish this? This article breaks down why pre-paying may not be all it’s cracked up to be! >>

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Buying your dream home might not be the best idea if you want to live your dream life! Don’t just take our word for it, read here why if this couple could go back in time, their “Dream Home” might have been crossed off their list of priorities. >>

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If you are selling your house and you want top dollar, the first thing you should do is call Team Lalovich! The second thing you should do is read this article for 5 tips on staging your home to attract the most buyers! >>

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Housing shortages is a major problem that Ontario is facing; this group has an easy solution! Your move Doug Ford. >>

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What was your reason for your last move? Do you fit in with the majority? The answer might surprise you, find out here! >>

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“2 Years of Home Ownership – The Good, The Bad, and The Ugly” >>

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If you’re contemplating ways to make passive income, this article is for you! Especially if AIRBNB is one of those contemplated ways. >>

Attention Landlords and Tenants in Ontario – Ontario Standard Leases Are Coming

Are you a landlord or tenant in Ontario? If you are, or are considering becoming one in the near future, we have a timely post for you today.  Mandatory changes are coming to residential lease agreements in the province, and here is what you need to know.

What is Happening With Residential Leases In Ontario?

Landlords of most private residential units in Ontario must start using the standard lease template for all new leases.

When Is This Starting?

These standard leases must be used in Ontario starting April 30, 2018.

Who Decided This?

The Ontario Liberal Government – through the Ministry of Municipal Affairs/Ministry of Housing.

Where Can I Find a Copy of this Standard Lease?

Visit the Central Forms Repository on the Government of Ontario website to download the form.

What is the Purpose of this Standard Lease?

Three primary reasons are stated:

1. To help landlords and tenants understand their rights.
2. Reduce illegal terms in leases and misunderstandings regarding verbal agreements.
3. Reduce the need for Landlord Tenant Board (LTB) hearings to resolves disputes.

What Else Should I Know About Standard Leases?

In the leases, there are mandatory terms (that must be completed and cannot be altered), there are optional additional terms (which allow for unique terms to be agreed to by landlord/tenant) and general information on rights and responsibilities (Ie. subletting, pets, guests, etc).

What Are Our Thoughts On This Issue?

Whether we like it out not it, this will soon be the law. So we will have to deal with it and adapt. First impression is that it will further swing the pendulum towards tenant rights more so than it already is. But fingers crossed that if it doesn’t work the way it is expected to, or if it causes specific problems related to clauses, etc., the government will listen to feedback from the industry and amend this standard lease to get it right.

What are your thoughts on the Standard Lease? We’d love to hear from your landlord/tenant perspective.

Real Estate Insider: November 2017 News Report

Wow, did we find some articles you won't want to pass up! This edition, we cover tax evasion, living with your parents, "jingle mail", and much more.

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Have an RRSP? Thinking about buying a home? Make sure you are up to date on the provisions of the Home Buyers Plan to make sure you are saving as much as possible! >>

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Watch this great video if you’re considering becoming a Landlord! Be sure to know all the tips and tricks before you make the big investment! >>

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There are many different ways to invest your RRSP; one of the lesser-known ways is to invest it in Real Estate! Learn how you can use your RRSP to your advantage when investing for your future. >>

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Buy or Rent? An age-old question associated mostly with cars and houses, but what about water heaters? Learn the pros and cons of buying versus renting a water heater for your home. >>

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Want to learn more about the upcoming stress test? Read these 10 ways that it will change the lending market. >>

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Tax Evaders beware! BC and Ontario to consider registry of pre-construction condo sales. >>

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Whether you are a Landlord or a Tenant, make sure you are up to date with the changes to Ontario’s Residential Tenancies Act so you can stay informed and protected! >>

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Still living with your parents? You’re not alone! Multi-generational households are becoming more common due to price growth and it is changing the way developers are planning for the future. >>

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American Real Estate Company “Zillow” to start showing Canadian Listings with goals to expose American buyers to affordable housing in Canada, mainly in big cities and vacation areas. >>

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“Think Canadians couldn’t abandon their mortgages like Americans did in 2008? Think again.” >>

REVIEW: Ontario Fair Housing Plan – What You Need To Know

Housing is all the rage in our province these days.  Everyone is talking about it.  Markets are at all-time highs and there seems to be no end in sight.  It has also become extremely unaffordable in markets like the Greater Toronto Area (GTA).  Naturally, the governing Liberal party has decided to do something about it.  Last month they introduced a comprehensive package of measures to stabilize the market called the Ontario Fair Housing Plan.  Today, we are going to review some these measures.

A 15% Foreign Buyers Tax In The GTA

This is the big one you probably saw in all the headlines.  Essentially, they are imposing a 15% non-resident speculation tax on the price of homes in the Greater Golden Horseshoe Area of Ontario.  The tax will apply to individuals who are not citizens or permanent residents of Canada and foreign corporations.  This will only apply to single family homes (or condominiums), and not to multifamily, agricultural land, or commercial/industrial property.  It will also not apply to the rest of Ontario (including our hometown of Windsor).

Expanding Rent Controls

Previously, rent control only applied to rental units built before 1991 in Ontario, but this will no longer be the case.  The allowable rent increases will be at the rate posted in annual provincial rent increase guidelines and run in-line with the Consumer Price Index (CPI) rate (also referred to as inflation).  These increases will also be capped at 2.5% per year.  For example, if you had a rental unit that was tenanted, when you come up to the 1 year anniversary date from your lease, you will only be allowed to increase the rent by this provincial guideline rate (say 2%).  So if you charged $1000/month, you could increase the rent to a maximum of $1020/month.

Changes To The Landlord Tenant Act

The Landlord Tenant Act is the legislation that governs the relationship between Landlords and Tenants in Ontario.  These changes to the Act will include developing a standard lease in multiple languages, tightening provisions for “Landlord’s own use” evictions, ensuring tenants are adequately compensated if asked to vacate under this rule, and technical changes at the Landlord-Tenant Board.  Landlords will no longer be able to use their own leases with their own clauses and will need to use this standard lease that is being introduced.  The tightening of "Landlord's own use" evictions will make it more difficult for Landlords to evict Tenants when they claim to need the unit for themselves or an immediate family member.  This has been used in the past in questionable manners at times to get around rent controls.

Vacant Home Tax

Introducing legislation that would empower municipalities to impose a tax on vacant homes to encourage property owners to sell or rent unoccupied units.  This is pretty self-explanatory with the hopes of stopping speculation and to increase supply of properties for sale and for rent.

Levelling Property Tax Levels For New Multi-Residential Buildings

Ensuring that property tax for new multi-residential apartment buildings is charged at a rate similar to residential properties.  High property taxes on apartment buildings lead to higher rents for tenants and also make it less economical for developers to build new rental supply.  This measure hopes to encourage more rental unit developments.

Those are the big measures to take away from the Ontario Fair Housing Plan.  Next week, we are going to talk about some of the takeaways from these measures as they affect our local market.  What are your thoughts on these measures?

Title Insurance - Is It Needed and Who Does It Protect?

This is an area generally covered by your lawyer, but it plays a prominent role in a high percentage of real estate sales. Occassionally problems and defects regarding the property are not discovered prior to closing, but become major issues after you complete the purchase. Such matters are often costly to remedy, but more importantly can make the property less marketable when you subsequently look to sell. In short, TITLE INSURANCE provides coverage against such problems and helps cover the financial consequences which arise as a result.

Title insurance can be issued on behalf of both the purchaser and the lender, or both. Lenders will often require title insurance as a condition of approving a mortgage. Types of risk typically covered include:

• Survey irregularities
• Removal of existing structures
• Unregistered easements
• Set back or side yard non-compliance
• Zoning restrictions
• Right-Of-Way matters
• Fraud or forgery
• Fundamental Title Issues

As with any type of insurance, certain risks may not be covered. Be sure to discuss with your lawyer what risks are covered/excluded, and take the time to read the policy. Premiums will vary, but it is relatively inexpensive and well worth the investment.

Title insurance can often help ensure that a closing is not delayed due to a defect in title, especially one that arises right at the time of closing. It has become a widely accepted practice throughout the Ontario real estate industry and one that we strongly endorse.

We welcome any feedback that you may have had with Title Insurance – good or bad! And as always just reach out to us, if you would like to get connected to Windsor-Essex and learn more about our local market opportunities.

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Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

Ontario Reverses Course - Won't Extend Municipal Land Transfer Tax

Ontario’s provincial government has reversed its course and has decided it will not extend the power to charge a Municipal Land Transfer Tax to municipalities outside of Toronto, where it already exists.

Source: OREA

“This is a huge win for Ontario’s homeowners and those who dream of one day owning a home. It reaffirms that the Municipal Land Transfer Tax is a bad revenue tool, not just outside Toronto but in it as well,” says Patricia Verge, president of the Ontario Real Estate Association (OREA).

OREA led a five-week campaign called Don’t Tax My Dream that saw Realtors and 32,000 members of the public voice their opposition to the spread of the tax province-wide (which we linked to in our previous blogs (here and here) of the last 2 weeks and hopefully contributed in a small way ☺).

“I would like to also acknowledge MPPs on all sides of the legislature who spoke both publicly and privately against the tax,” says Verge. “Your work has helped protect affordable home ownership for future generations.”

This is great news for Ontarians as this potentially saves homebuyers thousands of dollars. Given the weak outlook for the Canadian economy for 2016, with low commodity prices, I think that this is prudent timing for this decision.

Cheers to another strong year in 2016 free of municipal land transfer tax!

Are you relieved at these results? Let us know in the comments.

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Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620

The Effects of Double Taxation on Ontario

Last week we talked about The Ontario Ministry of Municipal Affairs and Housing indicating that they are extending the power of municipalities across the province to charge a land transfer tax. This potential doubling of land transfer taxes would add thousands to the cost of purchasing a home in the province.

Today, we are going to look at the ramifications of such a policy:

1. These changes and modifications to housing/financing rules always seem to have the largest impact on younger people and first time home buyers. This is a segment of the market that is most vulnerable to downturns in the market and economy and adding this additional cost makes things even more disproportionately difficult for them.
2. The first time home buyers land transfer tax credit rebate in Ontario carries a maximum refund of $2000. With an average home price in Ontario of $470,000, this translates into a proposed land transfer tax of over $11,000. This rebate clearly doesn’t go far enough in relation to house prices at all time highs. Municipalities should also consider matching this rebate with their share of the land transfer tax.
3. For the home buyer with the minimum 5% down payment (and insured mortgage), the added cost of this land transfer nearly amounts to 50% of the down payment. Add in legal closing costs and other soft costs such as appraisals and inspections and this 5% down homebuyer needs more like 10% down on closing.
4. This increased cost will take some buyers out of the market or delay their purchases. This should also lead to increased rental demand as these buyers are forced to save longer for their downpayment. This should put downward pressure on vacancy rates and upward pressure on rents.
5. The conservative government estimates this move would cost the province $2.3 billion dollars in lost economic activity and 15,000 jobs.
6. This is just one more indirect tax on citizens. With proposed increased income taxes, revamped CPP or an Ontario Pension Plan, increased hydro/water costs way outside of other jurisdictions, the burdens on Ontarians continues to rise. When does it end?

Are there any other effects that you can think of? Let us know in the comments.

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Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620

Double Taxation - Ontario to Allow Municipalities to Charge Land Transfer Tax

The Ontario Ministry of Municipal Affairs and Housing has indicated they are extending the power of municipalities across the province to charge a land transfer tax according to the Ontario Real Estate Association.

Source: Orea Blog

This additional cost of buying a home, already in place in Toronto, would double the effective tax and could add thousands of dollars to the cost of buying a home in the province.

“Ontario home buyers are already charged a provincial land transfer tax, so by adding a municipal tax, they’re essentially doubling the tax burden on Ontario families,” said Patricia Verge, president of OREA. “If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year.”

Here is the breakdown of existing land transfer tax rates in Ontario:

• 0.5% up to and including $55,000
• 1% above $55,000 up to and including $250,000
• 1.5% above $250,000
• 2% above $400,000 where the land contains one or two single family residences.

So with an Ontario average sale price around $470,000, you are talking about $5875 for land transfer tax and an effective rate rate of approx 1.24%. With this doubling to include municipal land transfer tax we are talking about $11,750 or an almost 2.5% tax rate. This is not an inconsequential amount and will add a significant burden to homebuyers and the housing sector which is a large segement of our economy.

Next week we are going to be talking about the ramification of this potential tax.

In the meantime, we encourage all Ontarians to visit www.donttaxmydream.ca to learn more about the negative impact of the MLTT and stop this tax from spreading province-wide.

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Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620