HST break and lower development charges could cut prices — if municipalities play ball
Ontario’s new housing deal promises to strip up to $200,000 from the all‑in cost of a new home — but only if municipalities and markets play along.
According to BNN Bloomberg, the federal and Ontario governments will jointly spend $8.8bn over 10 years to lower municipal development charges that “drive up housing costs,” with initial funding expected to cut those charges in half for three years.
Mark Carney said in Etobicoke that “development charges across the province will be reduced by half for three years, and the essential infrastructure will still get built,” speaking alongside Premier Doug Ford and Toronto Mayor Olivia Chow.
Carney said the federal government will invest $4.4bn over 10 years through the Build Communities Strong Fund, with Ontario matching that amount.
The Prime Minister’s Office said the $8.8bn package will back housing‑enabling infrastructure projects and support a reduction of development charges by up to 50 percent in municipalities covering about 80 percent of Ontario’s population.
Municipalities levy development charges to pay for growth‑related infrastructure such as sewage systems, transit and roads.
According to BNN Bloomberg, those charges increase developers’ costs, which are then passed on to homebuyers.
The Prime Minister’s Office described development charges as “a major hurdle in the housing market” that have been “growing at an unsustainable rate, increasing the cost of every new home, compressing margins, and stalling new builds.”
The new infrastructure money will offset much of the financial impact on municipalities, but the Prime Minister’s Office said local governments will also be expected to support development charge reductions so that all three levels of government share the burden of increasing supply and affordability.
CBC News reported that the majority of the $8.8bn is intended to cover infrastructure costs for municipalities that lower development charges, though municipalities will still have to help pay for the cuts.
Ontario will work with municipalities and partners to put forward a list of projects for approval.
Ford tied access to the new funding to municipalities’ willingness to reduce development charges.
BNN Bloomberg reported that he said money would go first to municipalities that cut DCs by up to 50 per cent or had already lowered them, warning that those that refused would not “get any money.”
CBC News reported Ford telling municipalities it is now up to them to “step up.”
On the demand side, the package leans on tax relief at the point of sale.
The Prime Minister’s Office said the full 13 percent HST will be removed for new homes in Ontario valued up to $1m, saving buyers up to $130,000.
The maximum HST rebate of $130,000 would remain for new homes valued up to $1.5m, then decline proportionally from $130,000 at $1.5m to a maximum of $24,000 for homes valued at $1.85m and above. This would apply to eligible agreements signed between April 1, 2026, and March 31, 2027.
According to the Prime Minister’s Office, Ontario estimates this HST measure will deliver nearly $2.2bn in tax relief, support an additional 8,000 housing starts next year, create up to 21,000 jobs and contribute $2.7bn to Ontario’s GDP.
CBC News reported that this comes on top of an existing HST rebate for first‑time buyers of new homes valued up to $1m, announced last year by Ottawa and the province.
Carney told reporters that the scrapped HST, combined with lower development charges, could reduce the cost of a new home by up to $200,000.
The moves arrive in a weak building environment.
BNN Bloomberg reported that Ontario Housing Minister Rob Flack said “the housing industry has been on its back,” even as the government seeks to boost housing starts.
Flack said sales offices “are booming” since the HST announcement and predicted the spring market will show “some really good results.”
The Prime Minister’s Office said the Ontario deal is the first partnership through the Build Communities Strong Fund.
Under the provincial and territorial stream, provinces must cost‑match federal investments and take action to reduce construction costs, including cutting development charges where they block new housing.
The federal announcement also pointed to Bill C‑26, introduced on March 26, to authorize payments from the Consolidated Revenue Fund “for the purpose of improving housing supply,” seeking to provide $1.7bn to provinces and territories to implement measures that increase housing supply.
At the same time, the Prime Minister’s Office highlighted Build Canada Homes, a new federal agency with a mandate to “scale the supply of affordable housing” by leveraging public land, flexible financial tools and modern construction methods.
