Brokerage: New Ontario housing plan a negative for investors

Ontario’s new “Fair Housing Plan” is a positive for local residents, according to one industry player, but it could squeeze investors out of Toronto’s hot housing market.

“If you’re an investor, these rules are generally not great for you. Anything that’s meant to cool the market is generally not good for investors,” Ray Taaeb, CEO of Casalova, told Canadian Real Estate Wealth. “The only time this would be good for investors is if this somehow leads to a downturn in the market where they can start buying more properties. But I don’t think this will lead to a downturn.”

Ontario Premier Kathleen Wynne and Finance Minister Charles Sousa unveiled 16 new housing measures Thursday, many of which are aimed at addressing housing affordability in the province.

A number of those policies – including expanded rent control that will apply to all rental units and a vacant home tax – likely caught the eye of investors across the province.

It’s the rent control tweak that Taaeb believes will most impact those investors.

“As an investor, if you’re looking at buying rental properties now, it’s now very easy to calculate your return because you know it’s maxed at whatever the rent control price is for that year,” he said. “I don’t think there will be as many people buying these rental properties.”

And these new measures could encourage current investors to sell off some of their portfolio.

“People start to read these rules, investors may believe this is the top of the market; it’s been going up double-digits year-over-year for several years, now that they’ve finally introduced some of these rules, now I’m going to sell my property,” Taaeb said. “If you have an influx of these investors who have held for a while now going on the market, you’re going to have increased supply.

“And when you have increased supply in the market that’s more than the demand for these units, then you’re going to see prices dropping.”

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