New federal fund will be handed to provinces, but industry wants proof it will move the needle
Ottawa’s latest bid to tackle Canada’s housing crisis puts provinces and territories in the driver’s seat, with a proposed $1.7 billion fund aimed at shaving costs off new construction and coaxing more projects off the sidelines.
The question for builders, lenders and brokers is whether that cheque would meaningfully change the economics of homebuilding, or simply reshuffle who pays which fees.
Tabled in Bill C‑26, the plan will send money directly to provinces and territories to reduce development charges, levies or other costs on new housing and to bolster existing supply programs. The only firm condition is that the money has to support increasing housing stock.
Finance minister François‑Philippe Champagne called the program’s flexibility its main selling point, stressing that “it’s going to be different in different parts of their country,” and that Ottawa would “rely on our provincial and territorial partners to use that money in the most efficient way to increase the supply.”
Ontario moved first, pledging to temporarily remove the harmonized sales tax on certain new homes for one year. The province said it could take up to $130,000 in tax off qualifying purchases and generate 8,000 additional units.
The federal government pointed to that HST change as a model for how transfers could reduce fees, boost productivity in construction and even help trim internal trade barriers between provinces.
Ontario homebuyers are set to see a rare tax break on new construction, with the province proposing to remove the full 13% Harmonized Sales Tax (HST) on eligible new homes for one year in partnership with Ottawa.https://t.co/9gHPlj8wY5
— Canadian Mortgage Professional Magazine (@CMPmagazine) March 26, 2026
Critics focused less on design than on outcomes. Conservative housing critic Scott Aitchison said the Liberal government is “throwing out billions of taxpayer dollars with no guarantees of results, targets or accountability to build homes.”
He argued instead for eliminating federal sales tax on all new homes up to $1.3 million while withholding federal rewards from municipalities that raised building costs.
Canada Mortgage and Housing Corporation estimated that the country needed about 3.5 million additional homes by 2030, atop what was already in the pipeline, to restore affordability, with much of that gap in Ontario and British Columbia. CMHC and federal officials also said housing starts would have to roughly double over the next decade to close the supply shortfall.
Champagne said the new funding would be ready to deploy in the spring, despite not having appeared in the federal budget tabled last fall.
For industry players, the fund promises short‑term cost relief and some political pressure to cut fees and red tape. But unless it is matched by deeper reforms to approvals, labour capacity and zoning, Canada’s homebuilding machine still looks unlikely to deliver the volumes CMHC and market analysts said were needed.
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