While the residential resale market recorded a mere 1.3% decline in unit sales during 2009, total new housing starts in the Niagara Region dropped by whopping 25%. An atmosphere of uncertainty continues to cast a shadow across the potential for recovery is this vital economic sector.
The latest cloud on the new housing horizon is the pending implementation of the harmonized sales tax on homes valued over $400,000. According to the Niagara Home Builder’s Association the complex transition period that accompanies the new tax regime will seriously impact housing affordability and will negatively impact the job creation performance of the construction industry.
According to Chuck McShane, President of the Niagara Home Builder’s Association, “once the new tax is imposed every home over $400,000 will face an additional $6,000.00 in new taxes for every $100,000 that the price is over the $400,000 threshold”. Unfortunately for the local housing industry, this increase comes in the wake of the recent double whammy of the unprecedented levels of inflation applied to development charge fees at both the municipal and regional level.
At last week’s Pelham Business Association Economic Forum, Mr. McShane pleaded to Minister Yasir Naqvi, Parliamentary Secretary to the Minister of Revenue that he takes a message to the current Liberal government that this $400,000 threshold needs to be re-addressed.
The HST will also impact buyers and sellers of re-sale properties as there will be eight per cent more taxes applicable on legal fees, appraisals, real estate commissions, home inspection fees, and moving costs, adding a projected $1,500 in new taxes to the average residential real estate transaction in Ontario. For existing homeowners, the HST also adds hundreds of dollars in additional tax on utility bills, on home renovations and the cost of property maintenance.
As our Provincial politicians go on the road in an attempt to reassure Ontarians that the shift to a consumer tax system will yield worthwhile benefits to our overall economy those of us in the trenches of the local housing industry are left to both handle the explanations to our customers and collect the cash on behalf of our revenue strapped public service.