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When you buy a property, unfortunately, your spending doesn’t end there. No matter where you are, there are going to be some recurring costs associated with your investment. In addition to taxes, you may pay on the closing of your property, such as the Land Transfer Tax, there is also a regular tax devoted to property ownership in general. This is aptly called property tax.

In this article, we are going to explain how property tax works in the City of Toronto. We will cover current property tax rates in Toronto, where the money goes, how rates change over time, and how they compare to other cities.

If your property isn’t in Toronto, this article can still be helpful to you. Most cities handle property tax similarly, it is mostly the rate that changes. In addition, we will be looking at the values for residential taxes. Rates vary depending on the type of property you own. For a full breakdown, consult the city’s property tax information webpage.

What is property tax?

Property tax is all in the name. Homeowners pay this tax to their municipality upon the value of their property. Property tax rates are expressed as a percentage, usually around 1%. Property tax rates directly determine your annual property tax payments (we will get into more specific calculations later).

This does not mean that you have to pay your property tax bill all at once though. In Toronto, you will pay your property tax bill in instalments. You can pay as few as two instalments per year, or as many as 11 if you enrol in the Pre-Authorized Tax Payment Program.

The current property tax rate for residential properties in the City of Toronto is 0.611013%. Property tax rates for other property types will vary.

Why do I need to pay property tax?

When you purchased a property in a given municipality, you implicitly agreed to be subject to the laws and practices of that municipality, and this includes property tax rates. If you don’t, the city can take action against you (actions which you may pay for as well).

That isn’t to say that property tax is just money down the drain. There is a good chance that you enjoy the benefits of the municipality your property is located in. Property tax revenues make up the primary source of revenue for many cities.

With the money collected through property tax, the city is able to construct and maintain the many infrastructures and public works projects that a city requires. This includes building roads, libraries, and transit systems such as the TTC.

The City of Toronto even provides a breakdown of where your tax money was allocated. They base their chart on an average property value in the city ($703,200) in order to give you a realistic idea of how your money is spent.

In 2020, the city’s largest expenditure was police services, costing over $1 billion per year, or around $738 per property. In second place is the TTC, costing the taxpayer about $541 on average.

Property Tax rates in Toronto

The final percentages of property tax rates are determined by a few different values. First, there is the city or municipality tax rate. This is determined by your municipality and often makes up the largest part of your taxes. In Toronto, the current city tax rate for residential properties is 0.451291%.

Next is the Education Tax rate, which is set by the province and goes towards local schools and school boards. The Education Tax rate is currently set at 0.153000% for residential properties.

Finally, Toronto applies an additional City Building Fund Levy of 0.006722%. This newer portion of taxes goes towards affordable housing projects, TTC maintenance, and other projects designed to keep the city in good shape in the coming years.

Adding these three pieces together, we get a residential property tax rate of 0.611013% in the city of Toronto.

Property tax rates are usually set yearly by the city council to reflect the city’s needs.

How property taxes are calculated

Your payment is based on the assessed property value of your home. Property assessment values are determined by the Municipal Property Assessment Corporation and are updated every year. This value is then simply multiplied by the property tax rates to determine your yearly contribution.

An example:

For a property assessed to be worth $720,000 in 2021.

Using the formula:

       Estimated property tax = Assessed Value x Total Tax Rate

your property tax for the year will be approximately:

       $720,000 x 0.611013% = $4,399.2936

Therefore you can expect to pay an annual property tax amount of about $4,400.

Your Property tax account

Every property owner in Toronto has a property tax account. This account can provide you with information regarding transactions, payments, and payment schedules. You can easily review your property tax account online through the city’s web portal.

Average Property tax: Toronto compared to other Ontario cities

Tax rates in Ontario can vary greatly. Generally, municipal tax rates reflect the size of the region, the council’s operating budget, and the state of the city’s property market, among other factors. This is why Toronto, with a very large number of expensive properties and more taxpayers generally, tends to have the lowest rates in the province.

A report by Zoocasa determined that Toronto, Markham, and Richmond Hill had the lowest property tax rates in Ontario, while Windsor and Thunder Bay had the highest property tax rates in Ontario. The report compares actual payments based on sample assessment values for properties, showing an average price for taxes in each city.

How property tax rates reflect the housing market

Generally, the areas with the most expensive properties will have the lowest property tax rates. Conversely, an area with the lowest priced real estate will tend to have the highest property tax rate. Windsor has a property tax rate of 1.818668%, however, the city also has a considerably lower average home price than Toronto or Richmond Hill who have overall lower tax rates. This means that while people in Windsor will pay less for a home upfront, but pay more for it over time.

Residential property tax can also be affected by the commercial rate that businesses pay. A municipality that is able to derive more tax income from commercial real estate will often have a lower residential tax rate.

How do property taxes change?

Property taxes usually change every year, but they do not always necessarily increase. The rate in any given year will depend on the needs of the city at that time. For example, Toronto had a higher property tax rate in 2018 than it does today. The property tax rate in Toronto from 2018 to 2020 actually decreased but increased again this year. This is due in part because as property assessment values increased in recent years, tax revenues increased and allowed the rates to drive lower.

Take the Toronto City Building Fund as an example. This addition to property tax was not always part of your payment. Rather, it was added in recently to address an assessment that the city would need additional income to raise sufficient cash for improvements and maintenance in the coming years. This value could change depending on if the city needs more money than it thought, or less than they initially calculated.

What does property tax mean for investors?

If you are buying a property as an investment, the sale price is just one financial consideration you need to keep in mind. There are many other costs involved, of which property taxes is just one. Between two municipalities, the difference paid annually can amount to thousands of dollars. Unexpectedly high property taxes can ultimately take a portion out of your return. Always inform yourself on local tax rates and consider your lifestyle and financial needs before you buy a property. Toronto and other municipalities offer the most up to date information on their websites.

If you buy property in an area with the highest property tax rates, you may save on property value, but these savings are not as good as they seem after you pay high property taxes.

On Tuesday RE/MAX released its 2021 condominium report, with numbers pointing at an incredible year for the Canadian condo market.

The report examined trends and developments in five major cities and many more submarkets over the past year. The key takeaway was that, following a downturn last year, the condo market across the country is seeing a massive resurgence.

The most startling statistics come from Vancouver and Calgary, which saw an 83-87% increase in sales volume respectively from January to August of this year when compared to the same period last year.

They cite two major factors that could be driving this recent push for condos. The first is affordability. Many people are turning away from detached homes as the prices rise far beyond their means. For many getting into the real estate market today and looking to take advantage of low-interest rates, condos represent the only viable option. This is particularly true for younger buyers, who RE/MAX says are driving much of the increased demand.

The other major factor is low supply in other property types. However, with the growing popularity of condos, similar supply issues could arise soon in this segment.

“Supply has declined from almost eight months to just under five year-over-year, although inventory levels are still 16% ahead of 2020 levels,” says Elton Ash, Executive Vice President at RE/MAX Canada.

Once any excess supply is bought up, Ash says condominium values are likely to continue appreciating

While Vancouver and Calgary saw the greatest volume increase, the Halifax-Dartmouth region saw the greatest price increase. Condos there are up almost 30% in value this year. In Toronto sales were up 71%, while prices increased by 7.5%. Ottawa saw only a 29% increase in sales, but a 17.5% increase in prices.

The RE/MAX report on Canadian Housing Market Outlook for the fall of 2021 predicts that the fall housing market will remain steady, while the Canadian economy looks on the way to returning to more regular conditions.

All this considered, Canadian buyers investing in condos today will likely be very happy with their investments for the near future.

Read the full RE/MAX report here.

Rent-to-own real estate investing can fund lifestyle changes—just ask Daniel St-Jean.

St-Jean, now an investor and fundraiser who worked as a consultant for the federal government in Ottawa, and his wife Laurel began investing in 2010, and by 2014 their cash flow was so strong that they decided to move to Niagara-on-the-Lake where Laurel pursued her wine making ambitions. Having an income that wasn’t tied to a single location also helped the couple achieve their dream of traveling for six months of the year.

“We needed to build a business to cover a $120,000 income in Ottawa, so we started investing in 2010 with a five-year plan, and four years in we made enough cash flow to kiss our jobs goodbye and move,” said St-Jean. “From Day 1, we started with rent-to-own, which means we own the house but after three years our tenant buys it from us, so we don’t technically own a lot of doors but we’ve set up 51 rent-to-own deals. We bought 12 houses on Niagara-on-the-Lake for buy-and-holds, but at the height of our rent-to-own strategy, our cash flow was $18,500 a month. That’s how we were able to move away from Ottawa.”

The key to the strategy is raising the money to facilitate the deals, he added. Moreover, the couple diversify their investments, as well, choosing sectors like, among others, green energy, but fundraising is an imperative, says the charismatic St-Jean, who will be hosting a 20-minute virtual presentation on Nov. 3.

“We use the rent-to-own strategy because, of all strategies, if you do it well it has the least problems. People choose the house they want to buy from you in three years, give their $20,000 deposit, and then become responsible for things like deferred maintenance, snow removal, and if it floods they call the plumber, not me. Picking the right strategy is a good way to start because you need to protect your cash flow,” said St-Jean. “I raised the funds for every single deal—that’s $29 million for 63 total properties—by using other people’s credit to buy the houses through joint ventures with us.”

Fundraising might be the important facet of St-Jean’s strategy, which he’ll be imparting to attendees at next month’s event. One concept he will teach is “connectworking.”

“As opposed to networking, you build connections,” he said. “At the end of last year, I probably sent 1,700 best wishes for New Year’s. I keep track of people and whenever anything comes around, I reach out to them. Most people do networking like they’re on a hunting trip. What they need to do is ‘connectworking,’ which is more like gardening.”

St-Jean’s recipe has brought him much success, and it’s even culminated in a book he authored called Milk & Cookies for Success. Still, he says he couldn’t have done it all alone—he has surrounded himself with a team of professionals, most of whom are real estate investors and understand the lay of the land.

“I have a team of people—realtors, lawyers, mortgage brokers, accountants—who are good at what they do because they’re investors, and that makes a difference. There’s a big difference between a realtor who isn’t an investor and one who is because the latter will understand your questions and can answer them adequately, so select a team of experienced people,” said St-Jean. “The property manager is also key—is the person themself a landlord? How long have they been a landlord for? How many doors do they have? Find the best people you can and bring them into the fold.”

Everything foreign buyers need to know to succeed in the Canadian real estate market Toronto is one of the hottest real estate markets in North America and it’s attracting the attention of many foreign buyers looking for investment opportunities. Buying real estate in Canada as a foreigner presents unique challenges and there are a lot of things that you need to be aware of as you work towards homeownership in Canada.

In this article, we will go over everything a foreign investor needs to know before they get into the Toronto real estate market.

Topics covered include:

• Can foreigners buy property in Canada?
• Why invest in Toronto
• What special rules or taxes apply?
• Financing and mortgage opportunities for foreign investors
• Putting your property up for rent
• Finding the best residential properties for you
• Advice for foreigners moving to Canada

Can foreign investors buy property in Toronto?

There are no laws preventing non-resident ownership of real estate in Toronto (or in Canada). If you have the means, you can begin buying property in the country immediately. However, just because it’s legal does not mean foreign investment will always be easy, but with the right information and assistance, the process can be a breeze.

Canada recently had a federal election, with parties promising a proposed ban on foreign home sales for at least two years to combat the housing crisis. As of yet, the Canadian Government has not instituted a ban.

Why invest in Toronto in the first place?

Toronto is one of Canada’s hottest real estate markets. The city is the country’s largest and fastest-growing. Toronto has become a major North American hub for industry, as well as enjoying a rich local culture.

The city is famously international, featuring thriving communities of numerous nationalities and ethnic groups, as well as many foreign students. Foreign buyers account for a significant number of sales in Toronto, so you will be able to find quality advice when looking into this market.

The city offers many different opportunities for investment from condos and townhouses to detached homes or luxury homes.

The real estate market in Toronto is hot right now, with the previous few years seeing double-digit increases in housing prices. The average price of a home in Toronto is now over $1,000,000 and is predicted to continue rising. Additionally, Canada currently has very low-interest rates on mortgages.

Additional taxes for foreign buyers

Foreign Buyers Tax

One thing to know as a foreign buyer is that you will be subject to a Foreign Buyers Tax, referred to as the Non‑Resident Speculation Tax (NRST). This 15% tax is applied to any residential real estate bought within the Golden Horseshoe region by non-permanent residents or foreign corporations.

Alas, there is some good news if you plan to live on your property and seek permanent residence in Canada. Those who acquire permanent resident status within four years of paying the tax are able to apply for a government rebate.

For more information on the NSRT and rebate opportunities, see the Government of Ontario’s web page on the topic.

Vacant Home Tax

Another tax you may be subject to is the Vacant Home Tax. This tax is applicable to any home that is not your principal residence and has been vacant for more than six months in a year. The purpose of this tax is to combat supply issues by encouraging vacant homes to be either used, rented or sold.

For non-residents who own a home in Canada but live elsewhere most of the time, you could be on the hook for this tax. The Vacant Home Tax is relatively new, only being created in 2021. The tax will likely cost up to 1% of your home’s current assessed value.

The property buying process

So you have decided you want to get into the Toronto real estate market. Now begins the hard work of taking that desire all the way to a sale.

Finding financing, paying down payments and a mortgage

While a foreign investor can expect to pay similar interest rates to a domestic buyer, the amount of money required for your down payment may be significantly higher.

For non-U.S. or Canadian-based buyers, expect to pay at least 35% down on your property. This money can not come as a gift from another person or entity. American-based buyers can pay as low as 20% in special cases.

Once you have secured financing, foreigners have much the same options for mortgage products and interest rates as Canadian citizens. However, you may be subject to some premiums and extra restrictions enforced by your lender.

What documentation is needed for foreign investors?

Non-residents will need to supply lenders with some personal information and documentation in order to secure mortgage financing in Canada, including:

• Proof of income
• Proof of down payment
• A reference letter from a non-Canadian bank
• Credit report from an international bureau or six months worth of bank statements

Can I rent out my Canadian investment property?

Foreign property owners are welcome to rent their properties in Canada. If you choose to do this, be sure to make note of important tax considerations. A foreign property holder is subject to a 25% tax on gross rent income. In addition, should you choose to file for Canadian taxes and receive deductions, you will need to fill out an NR6 form to claim rental income as a non-resident.

If you plan on renting your property remotely, we recommend employing a property management company in Canada. A property management company can take care of any issues that arise for your property or tenants while you are out of the country.

Finding the right property for your investment

Finding the right property for you will depend on a few factors. The biggest factors will be how much you can afford and what you plan to use the property for.

The average price for units will vary greatly depending on where you want to buy in Toronto especially. If you are looking for a place to live with a family, consider a house farther away from the bustling city. If you are looking for a high-earning rental property, consider condos that are closer to downtown or universities.

There is currently a very low housing supply and high competition among homebuyers in Ontario, so be prepared to shop around for a few properties before you buy one. You may be required to pay a higher purchase price than you expected in order to clinch a bidding war.

Throughout the process of finding and purchasing a home, we recommend consulting the services of a real estate agent or broker. A Toronto realtor will have the best expert advice and knowledge of the city to help you make the right choice. They can also, along with a real estate lawyer, assist you in navigating the legal processes required to close on your property.

Closing your property sale and final closing costs

Once you have found a property and had your offer accepted, there are a few steps before you can take possession. Your realtor will help you through these final few steps. Remember that in order to finalize and sign mortgage documents, you will need to be present in Canada.

Also, remember that there are various additional fees to keep in mind that can add to your purchase price. These include land transfer tax, both for Ontario and Toronto, as well as the NRST mentioned above, building fees, and home inspection fees.

Finally, there are recurring fees associated with property ownership in Toronto such as property taxes and utility bills. Property taxes will vary across Canada, but luckily major cities like Toronto or Metro Vancouver tend to have the lowest rates.

What if I want to move to Canada?

One very popular reason for foreign investors to buy in Canada is with the ultimate goal of living full-time in the country. Unfortunately owning property in Canada does not provide you with any special privileges when it comes to applying for immigration.

A non-resident may attain permanent resident status in Canada, allowing them many of the same rights as a Canadian citizen. This process can take a few years to complete and is the first step towards citizenship.

Overall, Toronto is a popular market for foreign investors for a reason and is a great choice if you want to invest in Canadian real estate.

A presentation on Nov. 3 for investors, both neophyte and seasoned alike, will explore ways to raise capital so you can finance all your real estate deals without using a penny of one’s own money.

Daniel St-Jean, who’s hosting the event, knows a thing or two about raising funds for investment projects. Now an investor and fundraiser who worked as a consultant for the federal government in Ottawa, St-Jean and his wife Laurel began investing in real estate 11 years ago and by 2014 their cash flow was so strong that they decided to move to Niagara-on-the-Lake where Laurel pursued her winemaking ambitions. Having an income that wasn’t tied to a single location also helped the couple achieve their dream of travelling for six months of the year.

In total, the couple acquired 63 properties worth $29 million in a few years by raising funds from other investors, preferring to use the rent-to-own strategy with three-year horizons to get their investors’ money out.

“In 10 years, we’ve never missed an interest payment and I know in six months these people will be paid back. I know the timeline, and because of our experience people aren’t taking risks,” he said. “It’s important to treat investors ethically. If I did wrong by an investor, word would get out because it’s a small world, so you should always be careful who you take on board, what you promise, and make sure you take care of your investors.”

Of course, finding investors is an altogether different challenge that the presentation will address through concepts like “connectworking” and “winoffering,” the former of which entails building rapports.

Connectworking is crucial to ascertaining whether or not you’re speaking to the right investor. St-Jean says it’s important to show care, perhaps by trying to help them solve a problem—that could be as innocuous as introducing them to a property manager—and to build trust because they will remember that and be more willing to work with you.

St-Jean will also impress upon attendees winoffering, which is key to raising all the money you need to finance your real estate projects.

“I’ll be revealing and explaining some acronyms that are the keys to your success,” he said. “If you learn and put these acronyms in place, it will separate you from everyone else at that networking event and everybody else competing for the investor funds you’re after, and you will create trust. In the real estate investing business, when you use other people’s money and credit, trust is paramount.

St-Jean will also trash a couple of crippling myths for the benefit of novice investors.

The complimentary presentation is on Nov 3 2021. You can register on the REITE Club website now.

As the population of the City of Toronto grows, more people than ever are looking for a place to stay in the city. Data from Statistics Canada and Royal LePage indicate that in recent years, the square footage of Toronto condos has been shrinking at an arming rate.

Meanwhile, the median price per square foot of Toronto condos is up. So a shrinking in size doesn’t necessarily mean prices are getting more affordable either.

In this article, we will discuss some reasons why condos may be shrinking and why the median price per square foot is rising. We will also look at average prices and sizes you can expect in Toronto and how they compare to other cities across the country.

Toronto condos smaller than 90s peak, continuing to shrink

According to Statistics Canada, the square footage of Toronto condos reached a peak sometime in the early 1990s.

From the 1990s until 2017, the median square footage of Toronto condos shrunk by almost 40%. Between 2015 and 2017 alone, the median size of condo units in Toronto fell from 681 square foot to 647 square foot, a decrease of about 5%.

Compare this to the average size of single family detached homes in Toronto, which actually increased over the same period. The median price per square foot of single family detached homes also remained more or less stable over the same period, while median price per square foot in condos grew rapidly.

Though houses are broadly more expensive, they also offer a larger living area and more space for families. However, detached homes are not popular as entry level properties as first-time home buyers find it far easier to pay condo prices.

In comparison, Toronto condos are shrinking faster than those in other cities like Vancouver. Compare this to the notoriously small condos of the greater Vancouver area, which only saw a 16% in size reduction over the same period from 1990-2017.

Price per square foot growth in condo units outpaces reduction in size over the same period

Another important statistic when considering the size of Toronto condos is the price per square foot. While Toronto condos have been shrinking, the median price per square foot has increased.

According to Royal LePage the median price per square foot of a Toronto condo was $743 in 2019. The average in 2021 has already risen to over $900 per square foot, with over $1000 per square foot becoming the new norm in some areas.

Assuming two condos of the same price, one smaller and one larger, the smaller one will obviously cost more per square foot. This means that if the average price stays the same, price per square foot may increase a small amount in proportion to the decrease in size. This is not the case however.

A condo built in those same years from 2015- 2017 not only saw a decrease in size by 8%, but also an increase of price per square foot of more than 55%. Condo apartments are getting smaller while at the same time, we are paying more for a smaller living area.

Condo apartments more popular than ever

One final fact to consider is the state of the condo market generally. Despite shrinking condos and inflating prices, the volume of actual sales has increased. Even with a higher price per square foot and smaller unit size, investors are still eager to get in the Toronto real estate market with a condo.

Factors pushing sizes down, prices up

Other factors could be behind this change as well. For example, condos apartments were once seen as substitutes for a family home and were built large with multiple bedrooms. This attitude has changed. Now smaller property types such as single bedroom condo units are far more popular.

In addition, Toronto is more densely populated than ever, and the areas where most condominium developments are located can’t get any bigger. There are two solutions to create higher supply in a limited space. One is to build upwards, which Toronto has been doing for decades now. The other is to increase density. This means more densely populated buildings, which in turn means smaller units but higher supply.

Supply is a major factor, according to Tom Storey of Royal LePage Signature Realty.

“Low inventory levels are putting upward pressure on price per square foot in the Greater Toronto Area, especially for entry-level properties like condos. Although detached homes hold more value per square foot, condos are more affordable for first-time home buyers in the region given their smaller living space and higher supply,” said Torey.

The younger population in the cities is less concerned with settling permanently and instead see their condo units as a space to live while they work, go to school, and attend social events in the cities. A smaller living space does not matter as much for these busier young people who spend more time out of the house than in it. For them, the location is more important than the square footage. Condos are also attractive for those making their first real estate investment who are willing to deal with a smaller living space if it means getting a foot in the door of the real estate market.

Many new condos have begun taking the form of smaller units, or so called ‘micro condos’. These tiny units come in at under 500 square feet. These smaller units were, at one time, the new hot thing in Toronto. Fast forward to today and a changing landscape resulting from the COVID-19 pandemic means demand for these tiny units has fallen, even with low inventory levels in most other segments.

Families who chose to stay in condo apartments rather than more spacious homes and into more are going to find it harder to find a unit size to accommodate the space requirements of a growing family. This increases competition even in the less popular three-bedroom category.

Nonetheless condos remain popular and this demand is putting upward pressure on condo prices in Toronto.

How Toronto condo apartments compare across the country

Condo prices in Canada’s densely populated and largest cities, are among the highest in the country, however, condo prices vary greatly between cities.

Compared to Vancouver, one of Canada’s most expensive real estate markets, Toronto looks even worse off in the condo market. The average condo in Vancouver is now not only bigger, but also goes for less per square foot.

Similarly, in Ottawa prices and sizes are much more favourable than Toronto, even despite supply issues.

Average Condo sizes and prices

We’ve compiled recent data on average price, price per square foot, and average square footage, to help you understand what you can expect when looking for condo apartments in the city of Toronto.

Values are based on an average across the whole city of Toronto, so actual prices may vary between neighbourhoods For example, downtown Toronto is the most expensive, while condo apartments in areas like North York or Scarborough will get you more value for your money.

This data also does not include the Greater Toronto Area, which will also vary greatly depending on location. Finally, statistics on real estate are hard to find and change rapidly, while this picture is mostly accurate for now, just remember that prices are subject to change.

One Bedroom Condos

A one bedroom condo in Toronto in late 2021 went for an average price of $581,000. The average price per square foot of a one bedroom condo in Toronto was $1,019. By dividing the two, we find an average square footage estimate of about 570 square feet. Average rent for a condo this size was around $1,800 monthly. One bedroom units are the most popularly listed units in Toronto right now.

Two Bedroom Condos

A two bedroom condo in Toronto in late 2021 went for an average price of $772,000. The average price per square foot of a two bedroom condo in Toronto was $843. By dividing the two, we find an average estimate of about 915 square feet. Average rent for condos this size was approximately $2,600 monthly.

Three + Bedroom Condos

This section includes anything three bedrooms or greater, meaning there will be slight variation depending on the number of rooms of the unit. A three + bedroom condo in Toronto in late 2021 went for an average price of $925,000. The average price per square foot of a three + bedroom condo in Toronto was $631. By dividing the two, we find an average estimate of about 1,465 square feet. Average rent for condos this size was approximately $3,400 monthly.

You Need Help From An Investment Expert

If you’re one of the many investors who are not deterred by smaller condos in Toronto and are looking to buy now, why not seek help from an expert who knows the ins and outs of investing in Toronto. See our recent articles on why Toronto condo investments are a good idea and how to avoid unexpected fees on closing.

Global bond yield rates are up this month, and Canada is not missing out on the action.

The Government of Canada’s (GOC) five-year bond yield increased again this week, surging to 1.24% from the 0.85% of late September. This development adds to an already strong growth of over 75 basis points (bps) from the beginning of the year. The increase was expected to push banks into raising their fixed term mortgage rates in response – a surprise after mortgage rates were previously lowered just weeks ago – and now two major banks have made the first moves.

TD bank was the first of the major banks to hike it’s fixed term mortgage rates by 30bps last week, after having only lowered them two weeks prior. CIBC also took action shortly after TD, hiking its own rates 20bps to reflect the growing yields. All the other major banks, as well as smaller lenders, are predicted to follow suit in the coming days if they haven’t already as they pass increased lending costs on to consumers. As yields continue to rise, mortgage rates will follow.

Though seemingly a small percentage, this increase in rates could cost a consumer over $10,000 over the course of a five-year term. That figure may only grow should yields continue their upward trend. And while $10,000 may be small in comparison to the total cost of a property, it could be enough to cause buyers to rethink their decisions on what they can afford.

It was only mid-September when the major banks began cutting their mortgage rates suspecting a continuing low yield on government bonds. Now, as the price of funding debt is rising, they are seeking to raise the rates once again. Luckily, it’s predicted that mortgage rates will nonetheless remain relatively low for the coming months and into next year. Though if the past month is anything to go by, you can never really tell with today’s market.

While most other GOC bond yields are on the rise, the five-year GOC bond yield is of particular interest as an indicator for changes in mortgage rates. However, the rate most directly impacts fixed rate five-year mortgages. A rise in this particular yield may push more consumers away from such mortgages and towards cheaper variable-rate mortgages that move based on the overnight rate, a figure set to remain steady until mid next year.

Toronto is making global headlines this week after receiving the not-so-coveted number two spot of the world’s worst real estate bubbles. Another major Canadian city, Vancouver, is among the top ten. This news comes among calls from many other sources that the real estate market may be on course for a correction in the near future.

The UBS Global Real Estate Bubble Index is a yearly report that analyses residential property prices in 25 major cities around the world. The report acknowledges that a bubble can only be proved to exist after it has popped, and that they can not claim any knowledge of when such a correction could come. Rather it tracks the factors that most indicate a possible bubble and the factors that put a city most at risk.

This year’s report cites already poor affordability worsened by the pandemic and rapid growth in housing prices as major factors in the high scores of cities around the world.

Toronto’s high placing this year is not unprecedented. Last year Toronto placed third, the year before that the city was second once again. In 2017, Toronto topped the list with Vancouver at number four. In previous years, Vancouver has hovered in the top ten, reaching as high as fourth place. Other major Canadian cities have not appeared on the list.

As of yet, no bubble has popped despite our city’s strong showing.

That doesn’t mean we should disregard the warning signs, however, as many institutions are now raising concern at current market conditions. The International Money Fund also reported this week on the high possibility of a major price correction. The US Federal Reserve revealed that Canada’s home prices are rising faster than any other G7 country. Even the Canadian Mortgage and Housing Corporation lists most major cities including Toronto, Vancouver, and Ottawa as at risk for major market vulnerability.

With so many signs pointing downwards, many are on edge waiting for some kind of apocalyptic event. This feeling may be just slightly unfounded. While a correction seems imminent now, the scale and pace of such a correction is hard to predict. With many now raising the alarms, and governments continuing to take measures against catastrophe, the future may not be as gloomy as it seems.

During the earliest days of the COVID-19 pandemic, the federal and provincial governments laid out legislation for a temporary ban on the eviction of commercial tenants. With new bills coming and going, and rules for landlords and tenants seemingly in flux all the time, many people are confused about the current status of commercial tenant evictions in Ontario.

This article is for both commercial tenants and commercial landlords. This article does not constitute legal advice, so be sure to contact a lawyer for legal advice before taking any legal action. That being said, we will do our best to explain the laws and rules as they stand now and the rights of both the commercial tenant and commercial landlord.

What laws apply?

Commercial Tenancies Act

The primary legislation governing commercial tenants and commercial landlords in Ontario is called the Commercial Tenancies Act. In the Commercial Tenancies Act, the various rights and responsibilities for the commercial landlord and the commercial tenant are laid out by the Ontario government. Recent amendments to the act, most recently in bill 229, add additional protection for a tenant and additional restrictions on the landlord during the pandemic. We will cover these changes in more detail later on.

The act also outlines the grounds for tenant eviction or termination and the process a landlord must follow in conducting an eviction or seizure of property. Until the beginning of the COVID-19 pandemic, the commercial tenancies act was the only relevant legislation governing commercial leases in Ontario.

The full Commercial Tenancies Act is available to read online. Because legal language is highly specific, most summaries will simplify to some extent. For any serious concerns in a commercial lease, it is best to consult the text of the act itself.

Changes in response to the COVID-19 pandemic

During lockdowns in 2020 and 2021, many commercial tenants were unable to operate and suffered losses. This resulted in many being unable to pay rent, with unpaid rent putting the landlord in a similarly tight spot. To protect small businesses across the country from failing, the federal government introduced successive bills for the purpose of lightening the load on struggling businesses and helping tenants survive lockdowns.

CECRA

The first of such programs was known as the Canada Emergency Commercial Rent Assistance (CECRA) program. This allowed commercial landlords to receive assistance, intended to subsidize a rent reduction for the commercial tenant. A rent reduction agreement with the landlord allowed the tenant to pay only 25% of their usual rate. While receiving assistance under CECRA, the tenant was protected by a moratorium on evictions. Though landlords and tenants both benefited from the program, it was up to the landlord to apply for the program. Loans and the temporary ban on evictions under the CECRA program ended on January 31, 2021.

CERS

Following CECRA, the federal government implemented the Canada Emergency Rent Subsidy program. This subsidy is available to eligible landlords and tenants who have experienced losses due to shutdowns and pandemic restrictions. The CERS is applied during a number of qualifying periods, each being about one month long. One important change is that the CERS is available to the tenant whether or not the landlord applies for the program.

To be eligible for the CERS program, a tenant or landlord must:

• Have or apply for a CRA business number.
• Be one of a list of eligible businesses, charities, or non-profit. This includes most businesses but excludes groups such as public institutions and corporations exempt from income tax.
• Have experienced a drop in revenue during the period of application. The specific drop in revenue required to apply is based on which period you are applying. Eligible revenue includes revenue generated in Canada by selling goods, rendering services, or other uses of a business’s resources.
• Have eligible expenses on an eligible property. Claimants can receive up to $75,000 per property up to a maximum of $300,000 to pay down these expenses.

The CERS program provides a maximum of 65% subsidy to businesses, with an additional 25% for businesses forced to close due to mandatory public health orders. CERS loans can be put towards expenses such as outstanding rent, property tax, utilities and more.

More specific info on eligibility and terms is available online from the Government of Canada.

Similar to CECRA, CERS also provides a new moratorium on commercial tenancy evictions and suspends the right of re-entry for eligible commercial tenancies who have provided proof of participation in CERS. The temporary ban on evictions for CERS approved businesses is still ongoing.

Amendments to the CTA

Ontario’s Bill 229, passed in December 2020, integrated the temporary ban on evictions and other changes due to CERS into the CTA.

New temporary rules in Bill 229

The rules for the non-enforcement period for evictions are as follows:

• Judges may not order a writ of possession for arrears of rent before or during the non-enforcement period.
• Prohibits landlords from exercising the right of re-entry during the non-enforcement period.
• Prohibits landlords from seizing unsold goods or property as distress from rent arrears during the non-enforcement period.
• Requires any landlord who had exercised the right of re-entry between October 31, 2020, and the start of the non-enforcement period to return access to the tenant or pay damages.

What commercial tenants need to know

Commercial tenants are only protected by the eviction moratorium as long as they are approved for CERS assistance or have been within the last 12 weeks. If you believe you have been wrongfully evicted by your landlord, you have the legal right to take action against your landlord, either through reinstatement of your property access or payment of damages.

For wrongful evictions outside of the protections under CERS, recourse will depend on your particular scenario. For example, if you are evicted for failure to pay rent but had a previous agreement for rent abatement, this is different than an outright and willful refusal to pay and may help you in fighting the eviction.

What commercial landlords need to know

Any landlord with tenants who are receiving CERS assistance may not re-enter the property or seize a tenant’s goods. Any order of eviction is not enforceable until after the end of the non-enforcement period. Should you decide to act on an eviction, you will be required to reverse your decision or pay damages to the aggrieved tenant. Consider looking into the ways that CERS can benefit landlords if you haven’t already.

It is also worth noting that eviction moratoriums do not apply to landlords looking to sell their properties during the pandemic, though there are still some considerations if you go this route.

Assuming your tenant is not participating in any government programs, or the enforcement periods have ended, the following rules apply for commercial evictions, as described by the Commercial Tenancies Act.

Standard rules under the CTA

Though things right now are complicated to some extent, the rules of the CTA will likely revert some time next year to remove special considerations added due to the pandemic. What follows is more general procedures for evictions in Ontario.

Eviction of commercial tenants

In most commercial leases, the landlord and new tenant agree on terms that are ground for terminating the lease. The most common and obvious clause in a lease is the payment of the agreed amount of rent, on the agreed dates. If the tenant fails to pay rent, they are subject to recourse. Tenants are also subject to further obligations comprising the material conditions of the lease. Such obligations include things like building maintenance and or insurance rules. In nearly every commercial lease, a landlord is entitled to evict a tenant for not paying rent or a material breach of the lease conditions, but terms of each specific lease will vary. Often the tenant is given a period of time in which to address and cure the offending breach, so eviction is not necessarily a surprise.

However, businesses eligible for CERS who have received approval are still protected as long as the eviction moratorium is in place. Currently, the ban on evictions applies until April 30, 2022 at the latest. No landlord may exercise an eviction order to any tenant approved to receive CERS. Tenants who produce proof of CERS approval are protected for up to 12 weeks following approval. If the tenant reapplies before the 12 week period is up, their protection continues for an additional 12 weeks.

Furthermore, it is not always clear when a commercial tenant has committed a breach of the lease. Like any legal document, a lease is subject to interpretation. The lease dispute may be required to be brought before a court for determination, in which case both parties should consult legal advice.

It’s important to note that CERS protection applies only to rent arrears and not other commercial lease violations such as issues relating to building repairs or insurance. In these cases, the applicable process and remedies apply as normal.

Eviction for non-payment of rent

In the case of non payment of rent the landlord has two courses of action. Firstly, the landlord has the right to re-enter the premises. Usually this includes changing the locks and preventing the tenants use of the property, and is effectively an eviction and termination of the lease.

Another option available to landlords is possession of tenant’s property and goods, as a distress for rent arrears. These goods may be sold off to cover losses incurred from unpaid rent. In both cases the landlord is required to provide advanced notice to the tenant – sixteen days notice for re-entry and five days notice for possession of the tenant’s assets.

Eviction for a material breach of the lease

A commercial lease may include other obligations for the tenant. These obligations may include provisions concerning insurance requirements, repair and maintenance obligations, and safety and building regulations. While a landlord may end the lease due to such a breach, they are not able to possess unsold goods and property.

Legal matters become very complicated very fast. If you need help, we recommend consulting official government sources, or getting in touch with a real estate lawyer.

An increase in time spent at home in the last year may be to blame for many Canadians reexamining the decisions on where they want to live. Domestically, rising housing costs in major cities are causing many to look elsewhere, with Atlantic Canada seeing the biggest gains. Despite travel complications, many are still looking south of the border for their ideal home.

Ontarians, Albertan’s and more moving to Atlantic Canada in record numbers

While the larger and more populous provinces such as Ontario, Quebec, Alberta and BC remain the most common choices for migrating citizens, Atlantic Canada has seen notable gains in the last year. Major sources of migration were Alberta and Ontario, which reported the largest number of departing citizens in the country last year.

According to stats Canada, Nova Scotia saw about five to six thousand migrants from Ontario every year pre-pandemic. In 2020 – 2021, that number rose to almost 10,000. New Brunswick and Prince Edward Island have seen similar gains in population.

Alberta saw a decrease in people moving to places like Quebec and Ontario than in previous years, and an increase or steady demand for the Atlantic provinces.

Why the big shifts?

There are a few major reasons for this shift we are currently witnessing. One major issue is the increase in home prices seen in the metropolitan areas of the larger provinces. House prices are up nearly everywhere, but relative to their starting point. A home in Ontario costs more to begin with, only now the difference is much more noticeable and it is growing ever more appealing for an Ontarian to seek more affordable lodging elsewhere. The average price of a home in Toronto, according to the Toronto Regional Real Estate Board, was over $1.1m. In Halifax, the average is approximately just over $470,000.

Another factor is the way our work habits have changed. One major impact of the pandemic was the move to work from home accommodations. With many people not planning to return to the office, the decision to move across the country no longer necessitates a job change as well.

Furthermore, for those concerned with COVID-19 safety, the Atlantic provinces have seen much lower case numbers than the larger cities to the west. This is due in part to lower population, population density, and popularity for travel.

Besides the financial, work, and safety benefits, the move provides city dwellers with a change of scenery after a year stuck in one place. The east coast provides an attractive alternative to older homeowners looking to cash out their homes in the city and retire away from the hustle and bustle.

Beyond the borders

A report from Point2 indicates that, despite global conditions making it harder for travellers, many Canadians are still looking to live and invest abroad. The yearly report uses internet search data to indicate the American countries of most interest to Canadians looking to buy a home.

The biggest winners

Of the most popular spots in this year’s ranking, some are familiar, while others are new to the pack. The most popular location for Canadian home buyers was by far Mexico, a position it has held since 2015 when the report first began. Also a popular vacation spot, the country is appealing for its climate, home prices, and development opportunities. The country garnered almost twice the search volume of the second on the list: the United States.

The U.S. is appealing to Canadians for it’s familiar culture and language, as well as proximity for those looking to move and still be able to visit family back home.

Other areas of interest

Third on the list was Costa Rica, a tropical Spanish speaking country in Central America. Other’s on the list include Barbados, the U.S. Virgin Islands, and Panama. Though the methodology relies on online search data, the report clearly indicates that Canadians are serious about investment in the Americas.

Between this report and domestic migration data, it’s clear that Canadians are looking forward to new horizons in the near future – if not already making plans.