Development charges in Ontario municipalities have surged nearly 400% over the past decade, hampering new housing construction and affordability in Canada’s most populous province, according to industry data.
In Toronto, charges for semi-detached houses have reached $140,000 per unit, while charges for two-bedroom condos have increased to $80,690.
The high charges are deterring new construction projects and driving up home prices. First-time homebuyers and young families face heightened barriers to entry, effectively subsidizing existing residents’ property taxes.
The charges, introduced in 1989 to fund infrastructure for new developments, have evolved into a revenue tool that allows cities to maintain low property taxes for existing residents, analysis shows.
Not surprisingly, Ontario’s housing starts fell 17% in the third quarter year-over-year, threatening the province’s target of 1.5 million new homes by 2031, the Financial Accountability Office reported.
Also read: Canadian Housing Starts Remain Flat In October
Burlington and Vaughan have recently reduced their development charges, but most Ontario municipalities continue to raise fees, according to the Smart Prosperity Institute, an Ottawa-based think tank. British Columbia also implements similar charges, though generally at lower rates than Ontario. Most other Canadian provinces do not significantly rely on such fees.
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