Why placing the cost of growth on new home buyers is deeply problematic
By Richard Lyall
for The Toronto Sun
April 10, 2026
Governments in Canada are finally starting to grasp the urgency of the housing crisis. After years of inertia, there are signs of meaningful action - particularly when it comes to reducing the tax burden on new homebuyers.
But, just as progress begins to take shape, it is being undermined elsewhere.
The result?
A frustrating and counterproductive pattern. It’s a classic case of one hand giving and the other talking away.
The decision by the Ontario and federal governments to temporarily eliminate the HST on new homes up to a certain amount is a positive move and will provide real, immediate relief for buyers.
Purchasers of new condos, townhomes and houses priced under $1 million will receive a full rebate of the 13 per cent HST. For homes priced between $1 million and $1.5 million, the rebate is capped at $130,000 and gradually phased out, disappearing entirely at $1.85 million.
The move was more than symbolic. It was a tangible effort to improve affordability and stimulate supply.
This is smart policy. It acknowledges that taxes on new housing directly inflate prices and suppress demand. Reducing them is one of the most immediate ways governments can improve affordability.
But while senior levels of government are moving in the right direction, some municipalities appear to be heading the other way.
Take Clarington, for example. On the heels of a 40-per-cent increase in development charges in late 2025, the municipality is now proposing dramatic hikes to planning and development fees - some as high as 187 per cent. Even after adjustments, the increases remain steep: a 136-per-cent jump for major official plan amendments and a 62-per-cent increase for zoning bylaw amendments.
Municipal officials argue these hikes are necessary to achieve full cost recovery. In other words, they want growth to pay for itself rather than be subsidized by existing taxpayers. On paper, that may sound reasonable. In practice, it is deeply problematic.
These costs don’t vanish - they are passed directly onto the price of new homes. At a time when affordability is already stretched to the breaking point, piling on additional fees only exacerbates the problem. It raises the cost of building, discourages new supply, and ultimately prices more buyers out of the market.
This is precisely the wrong time to be introducing such increases.
The disconnect doesn’t end there. In Markham, efforts to enable more missing middle housing - such as fourplexes in established neighbourhoods - have been effectively shut down.
Despite a narrow council vote in favour of allowing up to four units on most residential lots, the decision was vetoed using strong mayor powers.
The rationale? Concerns about infrastructure, parking, and neighbourhood character.
These are legitimate considerations. But they are not insurmountable - and they certainly should not be used to block gentle density outright.
Increasing housing supply requires precisely this kind of incremental intensification. Without it, cities will struggle to meet demand, no matter how many high-rise units are approved elsewhere.
Worse still, decisions like this risk jeopardizing federal funding tied to housing supply targets. That is not just a missed opportunity - it is a self-inflicted setback.
The broader issue here is a lack of alignment across all levels of government.
While federal and provincial leaders are working to reduce costs and encourage building, municipal policies are too often pulling in the opposite direction. The result is a policy tug-of-war that ultimately leaves homebuyers and builders caught in the middle.
This misalignment is costly.
A recent survey by the Ontario Real Estate Association noted that 71 per cent of respondents believe development charges make housing less affordable. And only a small minority expect conditions to improve in the years ahead.
The public understands what policymakers sometimes overlook: government-imposed costs are a major driver of housing prices.
As far back as 2011, research done for RESCON by Will Dunning Inc. warned that government-imposed costs were already accounting for up to 30 per cent of the price of new homes. Those costs have increased since then. Today, they account for 36 per cent of the cost of a new home.
The consequences are predictable - reduced demand, slower construction, and a drag on economic growth.
Residential construction has historically been a major contributor to Ontario’s GDP and job creation. When housing activity slows, the ripple effects are felt across the economy - from manufacturing and forestry to skilled trades and professional services.
Policies that add cost and complexity to homebuilding are counterproductive and economically reckless.
There is a better path forward. It starts with co-ordination.
Governments at all levels must align around a shared objective, making it easier and more affordable to build new housing. That means reducing taxes, fees, and levies - not increasing them.
It means streamlining approvals, not layering on additional costs. And it means embracing sensible density, not blocking it.
Municipalities, in particular, need to rethink how they fund infrastructure. Relying heavily on upfront development charges may be convenient, but it places an outsized burden on new homebuyers. Alternative models, such as financing infrastructure over time or sharing costs more broadly, deserve serious consideration.
The federal and Ontario governments have already signalled their willingness to lead. Now municipalities must do their part.
That means keeping a lid on development charges and planning and development fees and making it easier to build new homes. We cannot afford to keep taking one step forward and two steps back.
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.