Partnership will see governments spend nearly $9 billion to cut fees and boost homebuilding
Canada’s latest housing pact between Ottawa and Ontario carried a clear message for builders and lenders: development charges are set to fall sharply, at least for a time, in a bid to push more projects over the line.
Under the new 10‑year agreement, the federal and Ontario governments have committed a combined $8.8 billion for “housing‑enabling” infrastructure. The funding is designed to backstop municipal budgets as local councils reduced development charges by up to 50% for three years. The cuts would apply to municipalities covering about 80% of the province’s population.
Municipalities are still expected to shoulder part of the cost, effectively turning all three levels of government into partners in lowering upfront fees that stalled or killed projects in recent years.
“Development charges are a major upfront cost that can delay or prevent new housing projects,” prime minister Mark Carney said.
“Lowering these upfront costs will help accelerate construction and build more homes. We’re tackling the housing crisis from every angle – so we can build up housing supply and bring down costs for Canadians. We’re building Ontario strong and Canada strong.”
Development charge cuts seen as swing factor on new starts
Canadian Mortgage and Housing Corporation (CMHC) data already showed that development charges accounted for 8% to 16% of a new condo’s price in parts of Ontario and up to 9% on a single‑detached home in Toronto.
That cost pressure arrived on top of higher rates and labour and material inflation, contributing to forecasts that national housing starts would drift down from an estimated 259,000 units in 2025 to about 247,000 in 2026 and 223,000 in 2027.
Against that backdrop, CMHC has maintained that Canada needed roughly 3.5 million additional homes by 2030, above what was already in the pipeline, to restore affordability.
HST relief aimed at higher‑priced new builds
The agreement also paired fee cuts with tax relief. It built on last year’s GST elimination for qualifying first‑time buyers.
Ottawa and Queen’s Park said the full 13% harmonized sales tax (HST) would be removed for new homes in Ontario priced up to $1 million.
A maximum rebate of $130,000 would be maintained on purchases up to $1.5 million and then phased down to $24,000 for homes of $1.85 million and above, for eligible agreements signed between April 1, 2026 and March 31, 2027.
The province estimated the combined measures would deliver nearly $2.2 billion in tax relief, support an additional 8,000 housing starts next year, create up to 21,000 jobs, and add $2.7 billion to Ontario GDP.
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
“Today’s agreement will be transformational for Ontario and Canada, delivering new homes, transit and infrastructure, and supporting hundreds of thousands of good‑paying jobs for Ontario workers,” Ontario premier Doug Ford said.
“Our government will continue to deliver on our plan to protect Ontario … by lowering the cost of building, getting shovels in the ground faster, cutting red tape, and investing in workers.”
Transit, infrastructure and domestic content provisions
Beyond the core tax and fee moves, the pact covered a slate of transit projects – including Toronto’s Waterfront East line, work on the Ontario Line and other Greater Toronto and Hamilton Area extensions, and support for the proposed ALTO high‑speed rail corridor between Toronto and Québec City.
Procurement under Canada’s Buy Canadian Policy is expected to prioritize domestic suppliers and materials.
Federal housing officials also tied the deal to the new Build Communities Strong Fund and the Build Canada Homes agency, framed as vehicles to convert vacant or unfinished units into affordable stock and to leverage public land and modern methods of construction.
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