Rising government fees and taxes, particularly in major cities, are creating significant challenges for developers attempting to build new homes and address Canada's ongoing housing shortage.
Policy of the Year is part of STOREYS' annual editorial year-end series. You can find the rest of our 2024 selections. While that seems like a natural solution to the country’s relentless housing supply crisis, it's no secret that the barriers to this feat have been plenty in 2024: High interest rates, pricey construction costs , a labour shortage, and – perhaps most notably, especially in places like Toronto and Vancouver – incredibly high development charges.
In fact, fees and taxes seem to dominate discussions in the development and pre-construction industries (and beyond) as of late. “Development fees have been a major topic, but I think the most notable thing is that the conversation has shifted outside of the industry,” says Senior Vice President of Development at Wesgroup Properties. “There is more public discourse than ever about the extreme burden of government fees, charges, and taxes on new housing – it’s in the news, it’s being discussed in the House of Commons.” Municipal fees and taxes have been increasing at an unsustainable rate, one that the market simply can’t absorb. “If you think of it as an ordinary house; you’ve got the cost of land, cost of materials, cost of labour, all the professional costs that go into building the home, and then you have your government fees and taxes, which includes municipal fees and charges,” says Senior Vice President, Communications and Stakeholder Relations at The Building Industry and Land Development Association (BILD). “Municipal fees have been rising astronomically. When you’re in a situation when you have lower house prices – because we’re in a softer market right now – while all of your other costs are elevated, including these municipal fees, it becomes a challenge to finance your project and make it economically viable.” The current climate is one where sluggish sales have lead to slow starts and to an eventual stall in new homes on the market
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