In an upcoming poll conducted on behalf of the Ontario Real Estate Association (OREA), 49% of Ontarians who really want to own a home have given up believing they ever will (25%) or are pessimistic about the possibility (24%) – reflecting a growing housing affordability crisis.
Development charges are a big part of the problem, often adding up to $135,000 to the average home’s price tag.
While development charges are intended to be a fee to pay for growth-related capital costs – like roads, utilities, water and wastewater – cash-strapped municipalities have looked to them more and more as a source of general revenue which is then being passed on to homebuyers.
That’s why, since 2019, OREA has been lobbying government to look at ways to reduce development charges to make home ownership more affordable.
Cities like Burlington and Vaughan have been leading the way to tackle this head-on.
Earlier this year, Burlington City Council unanimously voted to reduce development charges, encouraging responsible development to accomplish their goal of building 29,000 new homes over the next 10 years. The City of Vaughan also voted to dramatically reduce development charges, which they recognized as an unfair tax burden on home buyers.
Unfortunately, not all cities are rowing in the same direction. In May 2024, the City of Ottawa voted to hike these fees by 11%, and they’ve hiked them five additional times in the last six months. This has drawn criticism from across the political aisle, with both the Federal Housing Minister Sean Fraser and Conservative Critic Scott Aitchison arguing that the increases will further aggravate the housing supply crisis that we are trying to solve.
Development charges in Toronto have also seen a significant increase. As highlighted by the Building Industry and Land Development Association (BILD), the city’s fees have increased six times faster than home prices and 20 times faster than inflation in the last decade.
Development charges are out of control.
When we asked Ontarians, 75% strongly supported reducing municipal development charges, and 72% told us they would support the provincial government putting a limit on them. While we understand municipalities have struggled to keep up with the pace of growth, we also know, province-wide, billions in development charge revenue remains unspent. OREA has offered solutions, like encouraging the province to allow municipalities to offer water and wastewater as they do energy – amortized across the user base.
Obviously, more needs to be done if we want to solve the housing affordability crisis.
Municipalities need to find other approaches to generating revenue that don’t involve passing costs down to consumers. Pro-housing policies that address the infrastructure needs of municipalities, paired with solutions for the Government of Ontario to consider implementing that encourage getting shovels in the ground, are how we solve this problem.
— Rick Kedzior is President of the Ontario Real Estate Association