The same can be said about the housing supply and affordability crisis we currently face. We have lost track for years. And as a result, we now find ourselves in a dire situation.
The truth is that exorbitant taxes, fees and levies, including sky-high development charges (DCs), make it difficult for builders to build homes that people can afford.
The cost ultimately pushes the cost of a community’s new growth onto the buyer of a new home. They pay the bill in advance, even though the infrastructure will serve for generations.
Add to that a cumbersome, expensive and extremely slow approval system and you have a real problem.
Reports show that taxes are destroying the market and that the already poor housing situation could become even worse. Governments will lose money for years if the industry does not recover. Expensive taxes and levies and lengthy approval processes hinder housing development.
DCs in particular have gotten out of hand. These are one-off fees that municipalities collect from developers for new construction to help finance infrastructure and services such as roads, water, sewerage, parks, public transportation and police. But they are also used for projects such as daycare centers and schools.
The levies are a problem and contribute significantly to the costs of buying a new home. A report from RESCON shows that 36 percent of the cost of a new home is due to the tax burden. CMHC reports that DCs make up nine percent of the total cost of a detached home in Toronto. The agency found that DCs alone could add more than $100,000 to the cost of new units.
Over the years, rates have risen significantly, worsening the affordability of new homes. In Toronto, DCs for a one-bedroom apartment rose from $10,000 in 2014 to $52,000 in 2024.
It’s a problem that has been in the works for decades. Governments now depend on revenues from developing countries to finance their projects.
Four years ago the Report of the Ontario Housing Supply Task Force recommended that action be taken to stop the exorbitant DCs. However, the problem has not been addressed. The federal government has indicated that it plans to reduce DCs, but no action has yet been taken.
The Ontario government has provided some relief to builders with the passage of Bill 17. Payment of DCs will be deferred until the home is occupied. In the past, the DC had to be paid when a building permit was granted. This means that builders do not have to finance the costs of DCs while the house is being built.
However, there are other outstanding payments still due at the planning permission stage. More specifically, education development costs, park land allocation and community benefit costs are still payable during the issuance of the building permit.
Admirably, the federal and Ontario governments have announced the elimination of sales tax on new homes up to $1 million for first-time buyers, as well as reductions on a sliding scale for first-time buyers on homes purchased between $1 and $1.5 million. First-time buyers account for about 35 percent of new home purchases, so this will have a positive effect.
But governments must now put DCs squarely in the crosshairs. Compensation has exploded over the years.
CMHC recently conducted a pilot project to collect information on development costs in 30 municipalities across the country and concluded that they pose a significant financial burden on development.
The level of unit costs varied widely. For an apartment with two or more units, DCs in 2025 ranged from $55,566 in Burnaby, BC, to $130,200 in Toronto. For a single-family home, CMHC found that DCs ranged from $111,629 in Burlington to about $180,600 in the City of Toronto.
We cannot continue with such exorbitant fees. We are in a housing crisis that will only get worse. Governments must intervene and create conditions to reduce DCs for new homes.
A report recently prepared for RESCON by the University of Ottawa’s Missing Middle Initiative shows that housing starts fell in 34 Ontario municipalities in the first nine months of this year compared to the same period in the previous three years. Job losses continue to increase.
Sales have all but dried up. The start is low. And many developers are pausing or canceling projects altogether.
In the municipalities studied, the number of new-build homes fell by 34 percent, with apartments having a hard time. Only 54 new apartments were sold in Toronto in October, down from 145 in October 2024.
According to the analysis, the reduction in housing numbers translates into 35,377 fewer man-years of employment in the first nine months of this year, compared to the same period in the previous three years.
Addressing the excessive tax burden associated with building and purchasing a new home could boost the housing industry. Lowering the DCs would be a positive first step.
Time is of the essence. We can’t waste it.
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