Quebec’s official opposition -- The Quebec Liberal Party -- has proposed abolishing the province’s land transfer levy for first-time homebuyers if it wins the October 3 provincial election, Radio-Canada is reporting.
The so-called ‘welcome tax’ rate varies by municipality, but in Montreal, the second largest city in the country and where roughly half of the province’s population resides, the tax is only 0.5% on the first $51,700, but it increases to 2% for purchases between $517,100 to $1,034,200, and tops out at 3% for homes that are at least $2M.
According to the Quebec Professional Association of Real Estate Brokers’ latest statistics, the average price of a Montreal area single-family home increased by 18% year-over-year in March to $565,550 from $480,000, while high-rises in the city rose by 16% to $402,600 from $347,000.
Dominique Anglade, leader of the official opposition Quebec Liberal Party, proposed scrapping the levy for first-time homebuyers who, as prices in the province -- and Montreal in particular -- continue escalating, are having difficulty establishing toeholds in the real estate market.
“This problem of accessibility is of concern, especially since it particularly affects young people and families in Quebec,” Liberal Party housing critic Marie-Claude Nichols is quoted as saying.
Echoing Anglade, Martin Rouleau, a broker with Engel & Völkers told STOREYS that he welcomes the move because first-time buyers are having an increasingly difficult time entering the province’s housing market. In Montreal, condos remain their primary means of attaining homeownership because, unlike the single-family market, there aren’t fierce bidding wars, but they’re hardly ideal for young, growing families.
“Everybody would agree that it’s an excellent idea to help the first-time homebuyers for sure… it’s becoming more and more difficult for them to jump into the market,” Rouleau said before cautioning that details of the Liberals’ plan are scant.
“When they promise something like that, where’s the money going to come from? Will they raise the welcome tax for second-, third- and fourth-time buyers? It’s an excellent idea but where’s the money going to come from?”
While Montreal’s home prices are nowhere near where they are in Vancouver and Toronto, Rouleau added, the city’s market favours sellers and anything that helps younger people buy their first home will help.
The Quebec Liberals also proposed raising the amount of RRSP funds that can be allocated towards home purchases from $35,000 to $50,000, but given that such a move would require permission from the federal government, it’s hardly written in stone.
However, it stands to reason that the governing federal Liberals wouldn’t object to such a proposal in light of their own policies in recent years to help first-time homebuyers enter the housing market.
