You might be looking to buy land in Ontario to build your future home, for commercial purposes, or as an investment. Buying land in Canada can be complicated and requires a lot of research. Here are a few things to look out for when buying land in Ontario.
Types of Land
There are three types of land that you can purchase in Ontario: raw land, vacant land (zoned land), and Crown land.
Different Types of Land in Ontario
| Raw Land | Vacant Land | Crown Land | |
|---|---|---|---|
| Access to Utilities | None | Yes/Some | Varies |
| Typical Down Payment Requirement | 50% | 35% | Varies |
| Cost | Lower | Higher | Varies |
| Privately Owned | Yes | Yes | No |
Raw Land
Raw land is land that has never been developed before. Raw land won’t have any utilities such as power and water, and there won’t be any structures on the land. There might also not be any road access. Raw land is privately owned.
Vacant Land
Vacant land is land that is serviced or partially serviced, which means that it may have power, water, septic, road services, and existing improvements or developments on the land. Vacant land is also privately owned.
Vacant Land or Not Vacant Land?
Vacant land is land that doesn’t have any permanent structures or have been largely developed. For example, an open field would be considered to be vacant land. Farmland would most often not be considered to be vacant land.
HST will only apply to vacant land that has been used for business purposes. If the land was for personal use, such as for a residential home, then there would be no HST charged.
Crown Land
Most land in Ontario is Crown land, which is public land owned by the provincial government. Nearly all of northern Ontario is Crown land, while southern Ontario is mainly privately-owned land.
Buying crown land has restrictions and conditions on the use of the land. Crown land can be bought or it can be rented for specific uses. Applications to purchase or use Crown land will be reviewed using Ontario’s Crown Land Disposition Policy, which helps to ensure sustainable development. Crown land is sold at market value, with exceptions allowing Crown land to be sold under market value for purposes that benefit the public.
If you choose to rent Crown land, your rent is based on the market value of the land, with a minimum annual rent amount.
Most land in Ontario is Crown land, which is public land owned by the provincial government. In fact, 87% of Ontario is Crown land! Nearly all of northern Ontario is Crown land, while southern Ontario is mainly privately-owned land.
Ontario Crown Land Rent (% of Land Market Value)
| Land Use | Lease with Option to Purchase | Lease with No Option to Purchase | License of Occupation | Land Use Permit |
|---|---|---|---|---|
| Recreational (Cottage) | N/A | 10% | 6% | 5% |
| Residential (Home) | 10% | 6% | 5% | 4% |
Source: Ontario Ministry of Natural Resources and Forestry
Leasing, license of occupation, and land use permits do not give you ownership of the land, but they give you the right to use the land. Leases give you the exclusive right to use the land. Land use permits are usually for up to 10 years, license of occupation for up to 20 years, and leases for 20 years or more. Only leases can have a negotiated right of renewal.
What kind of land should I buy?
Raw land is the cheapest to buy, but it also requires the most work. You will need to connect services and utilities, or develop them yourself if municipal services are not available. This might include building a water supply well, a septic tank, and physical road access. Vacant land can be more expensive than raw land, but it is easier to get financing for and to develop.
Article Written by Wowa.ca