Starting April 1, eligible home buyers in Ontario will no longer have to shell out 13 per cent HST on new homes, according to the latest deal struck between the province and the federal government that was announced Monday.
Additionally, the province, along with the federal government, have also agreed to spend an allotted $8.8 billion to lower Ontario’s municipal developmental charges that hike housing costs by a substantial amount over the next decade, Prime Minister Mark Carney said, standing with Ontario Premier Doug Ford and Toronto Mayor Olivia Chow.
The federal government will invest $4.4 billion through the Build Communities Strong Fund and that will be matched by Ontario.
- READ MORE: Buying a new build home? Say bye to the HST
- READ MORE: Development charges to be cut in half for three years through $8.8 billion investment by Ontario and federal governments
Ford said funding will be “prioritized” for those municipalities that agree to slash development charges or have already lowered it.
“So, to all my great 444 mayors and people in the municipalities, if you don’t cut DC’s, you aren’t getting any money,” Ford said.
Mike Moffatt, founding director of the Missing Middle Initiative, told CTV News Channel on Monday that the new changes are going to bring the housing targets for the province and the federal government a “lot closer.”
“Now this is only a temporary measure, so we need to have more structural changes … but anything to make housing construction more affordable, particularly for middle-class families, is sorely needed,” Moffatt said.
Moffatt said although this change is not going to “fully” get the federal and provincial governments to their targets, it’s an important measure.
“The CMHC predicts that housing stats across Canada will fall each of the next three years, despite the fact that the federal government needs them to double,” Moffatt said.
When asked whether he thinks this new investment could end up becoming a bail-out for some of the developers, like in certain municipalities that have raised development fees, Moffatt said if builders and developers are “just sitting around,” they won’t be able to access the funds.
“This helps lower the cost of construction, because development charges are, at the end of the day, a construction tax, and help smaller homes get built,” he said.
However, Moffatt said that he does believe it is important for the federal and provincial governments to work with municipalities responsible for these development charges.
“The last thing you want to see is that the municipalities who have raised development charges the most actually benefit the most from this,” he added. “That wouldn’t be fair.”
According to Moffatt, these new changes are going to specifically help Ontario’s middle-class housing situation the most.
“When you have the HST announcement, which can take $100,000 or more off the price of a new home, this announcement, which could take off as much as much as $100,000 in development charges, starts to go a long way to creating housing affordability for young, middle-class Ontarians who have been priced out of the market for last 10 to 20 years,” he said.
“We simply can’t get that middle-class affordability if we’re putting hundreds of thousands of dollars of taxes on the price of every new home.”
With files from CTV News’ Annie Bergeron-Oliver and Joshua Freeman
