Quebec Liberals propose ditching 'welcome tax' for first-time homebuyers

Quebec Liberal Party Leader Dominique Anglade wants to "help those who dream of becoming homeowners to do so," according to a statement Sunday. 

That's why her party is promising to abolish land transfer duties  — commonly known as "welcome taxes" — for the purchase of a first home if they are elected this fall.

In the statement, PLQ housing critic Marie-Claude Nichols said it has become increasingly difficult for Quebecers to keep pace with inflation in the real estate market. 

"This problem of accessibility is of concern, especially since it particularly affects young people and families in Quebec."

According to the Quebec Professional Association of Real Estate Brokers, the median price of a single-family home in Quebec rose to $339,960 in 2022. That number jumps to $550,000 in the greater Montreal area, a 20 per cent increase over last year.

The welcome tax is normally paid to the municipality by the new buyer of a building or land located on its territory. The fee can amount to several thousand dollars, which represents a considerable burden for new buyers.

To compensate for the loss of revenue caused by scrapping the tax, the PLQ says it would compensate municipalities, at a cost of about $200 million.

In a statement Sunday, the Federation of Quebec Municipalities (FQM) said any proposal promoting access to property will "always be good news," but said the terms of its application could cause problems. 

"We believe that aid should be paid directly to citizens in order to avoid any administrative complications," said FQM president Jacques Demers, the mayor of Sainte-Catherine-de-Hatley in the Eastern townships.

The Liberals also want the limit of the Home Buyers' Plan (HBP) to increase from $35,000 to $50,000. The HBP is a federal program that allows a person to borrow from their own RRSP to buy a house, without having to pay taxes on the money withdrawn. They must reimburse the loan within a set time period.

The provincial Liberals say if they are elected in October, they will set up a policy of supervision of purchase-resale operations to combat house-flipping — a practice that consists of buying a residence for the sole purpose of improving or renovating it in order to resell it quickly at a higher price.

Wrong approach, CAQ government says

The finance minister's office said the Liberal proposals would "stimulate demand when the problem is inadequate supply."

"These are short-term solutions that would have the potential to drive up the price of the entire housing market," Eric Girard's office said in an email. "We have taken steps to increase supply with more than $1 billion for the construction of social and affordable housing."

When Girard presented his latest budget earlier this month, he said the Montreal real estate market was in the process of catching up with cities like Toronto or Vancouver.

He said he believes it makes more sense to let the market regulate itself through supply and demand while protecting buyers from bad brokerage practices. 

To that end, Girard announced that, as of June 10, real estate brokers will no longer have the right to represent both the buyer and the seller of the same property .