Increasing land values have driven up cash-in-lieu payments, which gets rolled into the price of a home, making housing less affordable
A provincial requirement for real estate developers to set aside parkland or public recreation space in Ontario – which is often replaced by a cash-in-lieu payment — is driving up housing costs and threatens to discourage desired high-density developments in parts of the Greater Toronto Area, according to a new study.
“It gets rolled into the price of the home,” said Daryl Keleher, the primary author of the study. “It is tracking land values for sure…. But the people who are buying the homes, their incomes are not going up 1:1 with land values.”“At some point it does get a little bit out of control with what people can afford,” Keleher said.
In cases where there is no cap, increasing the density of a development — with smaller site sizes or smaller units — could even cause cash-in-lieu payments to outstrip the value of the land, according to the study, which looked at the particulars of several municipalities as well as some hypothetical high-rise and low-rise developments.
In another case that looked at low rises, a 200-unit subdivision development in Brampton would cost a developer cash-in-lieu payments of $11,547 per unit, while the same development in Mississauga would come in at $47,064 per unit.
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