KEESMAAT PROPOSES RENT-TO-OWN HOME OWNERSHIP PROGRAM, FINANCED BY A PROPERTY TAX SURTAX ON LUXURY HOMES
TORONTO — October 4, 2018: Today, Jennifer Keesmaat proposed an ambitious new rent-to-own program for Torontonians, financed by a surcharge on luxury properties.
“Toronto has become the most expensive city in Canada in which to rent, and housing prices are beyond the reach of most people. People are moving out of our city because it has become too expensive. That’s a problem we are going to address. It’s time to give people a real path to owning a place they can call home in the city they love”, Keesmaat said.
Keesmaat made the following proposals today:
A new home ownership program: The City of Toronto would offer a Rent-to-Own home-ownership program, focused on those who are having a hard time making the leap from renting to owning.
“There is an entire generation of people who are being priced out of this city. They are struggling with debt, have little saved for retirement, and have seen the home ownership ladder kicked out from under them. The Rent-to-Own home ownership program will help.”
A property tax surtax on luxury homes: To finance this plan, the City of Toronto would implement a property tax surtax on high-end luxury homes valued at $4 million and above.
A 0.4% surtax on those luxury homes would yield roughly $80 million per year in revenue — enough to help 10,000 families over the next ten years get into a home they can afford.
“The most fortunate among us — the people who have done best at the highest end of Toronto’s housing market — can afford to contribute a little more to help people get their start”, said Keesmaat.
Keesmaat’s Rent-to-Own home ownership proposal complements her plan to invest city-owned land and use the city’s zoning and regulatory powers, in partnership with city builders, to inject 100,000 new rental apartments into the Toronto housing market over the next ten years.
The goal of this initiative is to recalibrate the Toronto housing market away from luxury rental development and to housing that the middle class and working families can afford.
“The high cost of housing is the top concern of many people in Toronto. It’s not good enough to say there’s nothing we can do. That is not true. We can act to make housing more affordable, and if I’m elected mayor that’s what we are going to do”, Keesmaat said.
Rent-to-Own Home Ownership Program
Jennifer Keesmaat is proposing a two-pronged approach to providing access to home ownership for those who are unable to make the move from renting to owning in the current market.
- “Rent-to-buy” plans: monthly installments would be paid as part of the rental agreement and go towards a down-payment to eventually purchase the home for a set price. Typically, tenants 'option' a home for a period of time (1 to 5 years), with a fixed purchase price at the end of the term. At the end of the term and with the equity accumulated, the tenant is expected to qualify for the mortgage or enter into a shared homeownership arrangement which supports underlying affordability.
- Shared ownership plans: the City or a partnering non-profit housing partner shares ownership of the home to lower the price of the mortgage held by the homebuyer to the equivalent of 80% of average market value.
- Access to the program will be fair and equitable. A detailed application process will be developed in consultation with housing providers.
- Conditions will be set out in the agreements with non-profit partners and prospective homeowners to protect against real estate speculation.
Making Toronto more affordable for everyone through a property tax surtax on luxury homes.
- Keesmaat is proposing a 0.4% property tax surtax on luxury homes priced at or above $4 million dollars.
- It is estimated that the surcharge will apply to roughly 3,000 properties and will raise about $80 million annually.