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JAY GOLDBERG: Ontario and feds take steps on housing but more are needed
Getting folks who aren’t first-time homebuyers into newly built homes should still be a priority
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The governments of Ontario Premier Doug Ford and Prime Minister Mark Carney are going back to the drawing board to try to spur more housing activity, after previous policies fell short of the mark and housing starts remain far short of previous expectations.
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Late last year, both governments announced they would rebate the HST on new homes worth up to $1 million and offer partial rebates on new homes worth up to $1.5 million for first-time homebuyers. The major problem with that is that most homebuyers, who are not first-time homebuyers, didn’t qualify for the rebate.
JAY GOLDBERG: Ontario and feds take steps on housing but more are needed Back to video
Getting folks who aren’t first-time homebuyers into newly built homes should still be a priority. After all, those individuals will be moving from other homes, which will then be put on the market and could be sold to first-time homebuyers. Allowing all homebuyers to access the HST rebate will help spur housing demand at a time when the market clearly needs it.
Recognizing that reality, Ford announced last week that the federal and provincial governments plan to extend the HST rebate on newly built homes to all homebuyers for a period of one year, beginning April 1, 2026.
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While this extension is good news, a longer extension would have been preferable. Limiting the rebate to a period of just one year may spur demand in the short term, but will leave uncertainty in the long term and could lead to a drop in demand a year from now if the policy is not extended. Both governments should be looking to give the housing sector as much certainty as possible and short-term plans leave much to be desired.
Many levels of government involved
One of the reasons the housing crisis is such a difficult issue to tackle, however, has to do with the fact that multiple levels of government are involved, including municipalities.
For example, a huge issue is municipal development charges, which are fees that local governments charge to cover the cost of new infrastructure and services. While new homebuyers don’t see the cost of these charges when they buy a new home directly, they are very much a part of the story. In Toronto, the average new home includes $180,000 of municipal development charges, a shockingly high number that plays a huge role in driving up housing costs in Canada’s largest urban centre.
Some municipalities have shown that when there’s a will, there’s a way. For instance, Vaughan, under Mayor Steven Del Duca, cut development charges virtually in half back in the fall of 2024. That’s a path other municipalities are going to have to follow to allow housing to become more within reach of potential homebuyers.
But because too many municipalities, particularly in Ontario, have been hiking development charges and making new housing unaffordable for potential buyers, the Ford and Carney governments announced plans on March 31 to offer provincial and federal funding to help cut municipal development charges by up to 50%, yet another move that will help to get costs down.
One final issue that needs to be put on the table is zoning reform. Red tape from all three levels of government often forces developers to wait years on end for rezoning to be approved. Approvals for multi-residential buildings, something desperately needed to increase housing supply, take as long as 25 months in Toronto. That’s more than two years of waiting before developers can get shovels in the ground to start building new homes, which is a big reason why Canada’s housing supply numbers are lagging behind governments’ goals.
Fees associated with zoning reform are also a huge problem. In the Greater Toronto Area, as an example, fees averaged $116,000 per lowrise unit and $79,000 per highrise unit. Thus, not only are issues associated with zoning slowing down the housing construction process, but they are also adding to the cost.
Extending the HST rebate on newly built homes to all homebuyers is a good step. So too is offering funding from the province and the federal government to help cut development charges. But zoning reform still needs to be put on the table.
To truly fix the housing crisis, all three levels of government are going to have to work together to solve problems that have been building up over decades but are now demanding solutions. Recent announcements represent a good start, but there’s more work to be done.
— Jay Goldberg is the Canadian affairs manager at the Consumer Choice Center
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