RBC Financial Strategy and Performance

- Legislation and policies – promoting a healthy housing market February 2018 - Government of British Columbia ◉ RBC The B.C. government's 2018 budget included a 30-point plan to address housing affordability issues in several areas of the province. The most significant changes are a new speculation tax (rising from 0.5% of assessed value in 2018 to 2% in 2019) that will apply to homeowners who do not pay income tax in the province, as well as an increase in the foreign buyer tax to 20% from 15% January 2018 - OSFI Qualifying rate for uninsured mortgages raised to 2 percentage points above the contract rate or the five-year posted rate, whichever is higher April 2017 - Government of Ontario ◉ Introduced 16 measures in a 'Fair Housing Plan' to address mounting risks in the housing market including a 15% Non-Resident Speculation Tax on the purchase price of homes in the Greater Golden Horseshoe region January 2017 - City of Vancouver Vancouver introduced a tax of 1% of the assessed value of each home which is vacant (principal residence is exempt) October 2016 - Department of Finance Qualifying rate for high-ratio mortgages with a term of five years or more is changed to the 5-year posted rate ■ Portfolio-insured low-ratio mortgage loans must meet the eligibility criteria of high-ratio insured mortgage ◉ Any sale of a principal residence must be reported in the seller's tax return for the year of sale, even if the entire gain is fully protected by the principal residence exemption July-August 2016 - OSFI & the Government of British Columbia ■ OSFI increased scrutiny on mortgage underwriting standards and indicated it will place a greater emphasis on confirming internal controls and risk management practices are sound, and take into account market developments ■ Foreign buyers registering the purchase of residential homes in Metro Vancouver become subject to an additional property transfer tax of 15% under legislation introduced by the British Columbia government Canadian Housing Market 29 29

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