Development charges in Ontario are like a runaway train

By Richard Lyall

for Daily Commercial News

Sept. 15, 2026

If Ontario is serious about tackling the housing crisis and increasing supply, it must confront one of the most significant and self-inflicted barriers to building new homes: development charges (DCs).

For years, DCs were viewed as a reasonable way for municipalities to fund growth-related infrastructure such as roads, sewers, water systems, and transit. But they’ve evolved into something far more damaging.

In many Ontario municipalities, particularly across the Greater Toronto Area, DCs have become a runaway train.

In many GTA municipalities, DCs now exceed $100,000 on a single-family home. In some communities, when combined with other municipal levies and fees, the total burden can add as much as $200,000 to the cost of a newly built home.

The notion that DCs are a cost borne by developers has always been misleading. These costs are not absorbed by builders. They are ultimately passed on to consumers in the form of higher home prices and rents.

In many instances, the charges are levied almost exclusively on people entering the housing market - the very people who can least afford them. At a time when housing affordability has become one of Ontario's most pressing challenges, this approach defies both logic and public policy objectives.

The numbers tell a remarkable story.

In Toronto, DCs for a one-bedroom condominium were roughly $7,000 in 2011. By 2025, they had climbed to more than $50,000. Charges on larger condominiums rose from approximately $10,000 to more than $80,000. For a single-family or semi-detached home, DCs increased from under $15,000 to nearly $140,000 over the same period.

It is a striking example of how public policy can unintentionally drive affordability further out of reach.

The federal and Ontario governments deserve credit for recognizing the problem and taking meaningful action through the Canada-Ontario Development Charge Reduction Program (DCRP). The program provides municipalities with access to a portion of an $8.8-billion funding pool if they reduce residential DCs by 30 to 50 per cent or more and maintain those reductions for at least three years.

In addition, the governments have announced a $1-billion infrastructure fund for municipalities that do not levy DCs, helping them invest in housing-enabling infrastructure without relying on fees attached to new homes.

These initiatives represent a major policy shift and an acknowledgement that DCs have become a significant obstacle to housing affordability and housing construction.

But they are ultimately interim solutions to a structural problem. Temporary incentives create temporary certainty. Permanent reforms create investment.

The three-year nature of the DCRP remains a concern. While it offers important relief, its limited duration creates uncertainty at precisely the moment when the industry needs predictability.

The challenges are particularly acute for high-rise condominium projects. These complex developments often require years to plan, finance, approve and build. Delays in implementing program rules and providing operational guidance have already shortened the application period. Many projects cannot realistically meet the timelines required to benefit from the program.

A three-year window is insufficient to generate the long-term investment certainty required to restart supply.

No one disputes that municipalities require funding to support new roads, transit systems, schools, water infrastructure and recreational facilities. But under today’s model, it is new homebuyers who are footing the cost.

A young family purchasing its first home is effectively being asked to finance infrastructure that benefits an entire community for generations. That is neither fair nor sustainable.

Ontario needs a new model.

A more equitable, predictable and sustainable approach to municipal infrastructure funding should realign funding responsibility away from new homebuyers and toward the broader tax base at all levels of government.

Stable federal-provincial infrastructure transfers should permanently replace lost DC revenues. Municipalities should also be given access to alternative financing tools such as tax-free infrastructure bonds and other long-term funding mechanisms that support growth without inflating housing costs.

The public gets it.

A poll conducted by Abacus Data for the Ontario Real Estate Association found that most Ontarians understand the unfairness of forcing new homebuyers to shoulder the cost of growth-related infrastructure. Seventy-five per cent of those who were polled supported reducing DCs.

Ontario is in dire need of more homes. Getting DCs under control is one of the fastest and most effective ways to solve the problem.

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.