RC109 NovDec 2023 - Magazine - Page 42
CLOSING SHOT
GET ON THE
BANDWAGON
by Richard Lyall
HE FEDERAL GOVERNMENT’S decision to remove the 昀椀ve-percent GST on construction of new rental apartment
buildings has come late in the game. Still, it is a good
昀椀rst step to tackle the housing supply crisis.
The move—along with the proclamation by the
Ontario government that it intends to follow suit and
eliminate the eight-per-cent HST—will spur much-needed
construction of more purpose-built rentals (PBRs).
However, much more work remains to right the ship,
especially at the municipal level, and eliminate systemic
problems that continue to slow down production of housing. Hopefully, the recent moves by the feds and the province will similarly embolden the municipalities to speed up
approvals.
For years, RESCON has been calling on the feds to
exempt or rebate the collection of the sales taxes on PBRs.
More recently, we also asked for a signi昀椀cant increase in
transfer payments to municipalities from federal taxes collected from new housing construction to facilitate reduced
infrastructure cost pressures on cities and towns which have
limited funding tools.
Proposed changes such as these would certainly go a long
way towards getting shovels in the ground on apartment,
condo, and housing projects.
We haven’t been building enough PBRs to accommodate
our growing population.
The GTA alone needs more than 300,000 new rental
homes in the next decade, according to an earlier report
released by the Building Industry and Land Development
Association, the Federation of Rental-housing Providers of
Ontario (FRPO), Urbanation Inc. and Finnegan Marshall Inc.
The rental housing de昀椀cit in the GTA is expected to double
in the next 10 years to 177,000 units.
PBR supply growth will need to rise from a projected
47,000 units to 124,000 units in the next decade to keep up
with demand. The report says this 昀椀gure should be considered a minimum and realistic target, meaning rental construction starts will need to more than double their current
pace.
As a result, rents have climbed. John Pasalis, president of
Realosophy Realty, recently reported that the average cost
for a condo rental in Toronto was $1,866 in 2016 but climbed
to $2,786 by June 2023.
The recent changes announced by the feds were long
overdue. In the 2016 election, the Liberals promised to
waive the GST on new capital investments in a昀昀ordable
rental housing. But in 2017, the government reversed course,
claiming research showed there are better ways to boost
supply.
The changes were needed now more than ever as residential builders have been hit with a perfect storm of in昀氀ation,
interest rate hikes, material and labour supply shortages,
and rising fees and development charges.
According to a backgrounder issued by the Ministry of Fi-
T
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RENEW CANADA – NOVEMBER/DECEMBER 2023
More work remains to right the ship, especially at the
municipal level, and eliminate systemic problems
that continue to slow down production of housing.
GOVERNMENT OF CANADA
nance, the changes being introduced by the feds will result
in an “enhanced GST rental rebate” being applied to new
purpose-built housing, such as apartment buildings, student
housing and senior residences built for long-term rental
accommodation, that begin construction on or after Sept. 14,
2023, and on or before Dec. 31, 2030. Under the new rules,
the developer of the project must complete construction by
Dec. 31, 2035.
Before the change, the feds provided a 36-per-cent rebate
on the taxes for construction of rental units with a fair
market value of $350,000 to $450,000. The threshold is being
removed and the rebate is being hiked to 100 per cent.
We have been advocating for bold and decisive action to
enable builders to build more housing and rental units.
Hopefully, municipalities will now jump on the bandwagon.
Richard Lyall is president
of the Residential
Construction Council of
Ontario (RESCON).
RENEWCANADA.NET
