The Government of Ontario is raising the foreign homebuyer tax in an effort to remedy the province's housing crisis.

Effective October 25, the Non-Resident Speculation Tax will increase from 20 per cent to 25 per cent, making it the highest in Canada.

According to the province, concerns have been swirling for years that foreign real estate speculation is driving up the cost of housing.

The increase, they said, will further discourage non-resident speculation while also drawing "the dream of homeownership" closer for Ontarians."

Ontario's foreign homebuyer tax was raised as recently as March - from 15 per cent to 20 per cent - and expanded to cover the entire province. Previously, it only applied to homes purchased in the Greater Golden Horseshoe.

The legislation was not well received, with critics arguing that it ignored many issues central to making housing more affordable.

This latest tax increase is included in Ontario's "More Homes Built Faster Act," the next stage of the province's plan to address the housing crisis by building 1.5 million homes over the next 10 years.

"Today's announcement is another step in our government's plan to make housing more attainable for all Ontarians," said Steve Clark, Minister of Municipal Affairs and Housing, in a release. 

"We are working to end Ontario's housing supply crisis – both by building 1.5 million new homes over the next 10 years, and by ensuring Ontarians are able to access our existing housing supply. These measures are a clear indication of our commitment to do precisely that."

The two-year, Canada-wide ban on foreign homebuyers will go into effect on January 1, 2023.