CMHC Identifies Development Charges as Major Barrier to Housing Construction in Canada
CMHC warns of a 'very significant barrier' to fixing the housing crisis
National Post
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The Canada Mortgage and Housing Corporation (CMHC) reports that reducing or eliminating development charges could significantly boost housing construction in Canada. A 50-60% cut could increase viability by 5-10% in major cities like Toronto and Vancouver, addressing the ongoing housing crisis fueled by demand outpacing supply.
- 01Development charges, fees for infrastructure, are a major obstacle to new housing projects, with potential viability increases of up to 14% if reduced.
- 02Eliminating development charges could lead to a 13.8% increase in housing construction in Burnaby, British Columbia.
- 03Taxation constitutes about 36% of new home costs, with development charges being a significant portion.
- 04The federal government has proposed initiatives to support housing construction, including the Build Canada Homes corporation and the Build Communities Strong Fund.
- 05Despite these efforts, housing starts are projected to decline, potentially worsening the crisis.
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A recent report by the Canada Mortgage and Housing Corporation (CMHC) highlights that reducing or eliminating development charges could significantly alleviate Canada’s housing crisis. The report suggests that cutting these charges by 50-60% could increase housing project viability by about 5% in major markets like Toronto and Vancouver, while complete elimination could boost viability by 10%. Development charges, which fund infrastructure like sewers and electrical services, are a contentious issue as they add substantial costs to new housing, contributing to the ongoing crisis where demand far exceeds supply. The report indicates that taxation is a major cost factor in new home prices, with about 70% of the tax bill attributed to development charges and land-transfer taxes. In response to the crisis, the federal government has introduced several initiatives, including a proposed Crown corporation to finance affordable housing. However, despite these measures, housing starts are expected to decline in the coming years, exacerbating the existing shortage.
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Reducing development charges could lead to increased housing construction, addressing affordability issues for residents in major Canadian cities.
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