Renovation Rebate Would Benefit Homeowners

October 7, 2011 -- When home buyers are shopping for a home, they often consider its future potential in addition to its current condition. So, the need for renovations and upgrades, either out of necessity or desire, are often factored into their buying decisions. Frankly, this is a good thing because home renovations help to create jobs and generate tax revenue for the government, worthy goals that REALTORS® are calling on provincial politicians to support and encourage with a rebate for homeowners who undertake renovations.

Home renovations undertaken by Ontario's 3.2 million home owners produced over $20.3 billion in economic activity last year. Unfortunately, a large amount of home renovation work in this province is conducted via the 'cash deal' or through the underground economy. According to housing experts at Altus Group, 37 per cent or $5.2 billion of the output from the provincial home renovation industry in 2010 was conducted through the underground economy.

Unlicensed workers hurt the reputations and competitiveness of legitimate renovation contractors and cheat governments out of billions of dollars. The Ontario Home Builders Association (OHBA) estimates that the underground home renovation economy causes the loss of up to $298 million in HST revenue annually, $1.6 billion in income tax revenue annually and $767 million in other revenues such as CPP, WSIB, Employer Health Tax and Employment Insurance Premiums.

In addition, the underground home renovation industry poses a number of serious risks to home owners. Underground contractors often do not meet health and safety standards, carry no liability insurance and do not offer warranties. Moreover, home owners have little to no recourse in the event of shoddy or unsafe workmanship. If a worker falls on your property, you, as the property owner, may be held liable.

REALTORS® and home builders believe that the best way to mitigate the growth of the underground home renovation economy is to give home owners a financial incentive to use professional contractors. Professional contractors have HST numbers, maintain insurance and pay taxes.

Specifically, REALTORS® are urging all candidates running in the 2011 Ontario election to support the creation of a permanent Ontario Home Renovation Tax Rebate. If the provincial government were to institute a renovation rebate, payable to the homeowner, homeowners would be far more likely to insist on a receipt creating a paper trail that would deter underground economic activity.

The payment to the homeowner provides the incentive for written contracts which is good for everybody, particularly governments losing billions of dollars in tax revenue to the underground economy and at the same time it can go a long way to stimulating the provincial economy

REALTORS® look forward to continuing to deliver this and other messages important to home buyers and owners during and after the provincial election campaign.

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