![\"-\"](\"https:\/\/www.canadiancontractor.ca\/wp-content\/uploads\/2024\/07\/Richard-Lyall.jpg\")
<\/p>\n
Last year was a particularly challenging year for the residential construction industry. By all accounts, this year doesn\u2019t look any better. We are in for tough times. In Ontario, the government set an ambitious goal to build at least 1.5 million homes by 2031, requiring 150,000 new homes annually. But we are nowhere near that figure due to the cost of building. In 2023, the province reported only 110,584 new homes were started. And that figure included homes and condos, as well as long-term care beds, and additional residential units.<\/p>\n
We are headed in the wrong direction. Sales are languishing at historically low levels. In October in the GTA, new home sales fell 77 percent and condo sales dropped 91 percent below the 10-year average. Major reasons for the slowdown are the hefty taxes, fees and levies \u2013 particularly development charges \u2013 and other add-ons like new green standards which add to the cost of new housing and make it unaffordable for the average working individual or family to own a home.<\/p>\n
Recently, a report done for RESCON by the Canadian Centre for Economic Analysis revealed that the average tax burden on a newly constructed home in Ontario has jumped to a whopping 36 percent of the purchase price. That\u2019s up substantially from 31 percent three years ago. The average price of a home is about $1,070,000 so that means consumers are now paying nearly $381,000 in income taxes, corporate, sales and transfer taxes, and development charges and fees. The new number is a 16-percent increase over 2021 and highlights a troubling trend. The research showed that the tax and fee burden on new homes continues to be more than twice that of the rest of the economy. It is significantly higher because of the surge in development charges. Worse, the present system disproportionately affects first-time buyers and lower-income households. For homes priced at $450,000, the average tax burden rises sharply to 45.2 per cent.<\/p>\n
These are excessive amounts. The taxes are out of control and pushing the cost of new housing well beyond what they should be. By significantly raising the price tag of a new home, the tax burden is directly contributing to the housing crisis. Developers can not invest in new housing projects because the excessive cost presents extreme challenges for the average family. The situation is untenable and can\u2019t be allowed to continue. The excessive cost of housing is one of the reasons that Prime Minister Justin Trudeau has been forced to resign. On a bright note, the federal Conservatives have promised to cut sales taxes on new housing under $1 million. So, there is some promise on that front.<\/p>\n
It is time for bold action. Compared to the U.S., our incomes have been eroded almost by half yet housing costs have doubled. The other issue, of course, is the messianic pursuit of net-zero housing and haphazard imposition of green building standards by individual municipalities. This is another added cost to housing. We have a building code that regulates such standards, and is based on research, building science, consultation and cost-benefit analysis. Yet, many municipalities are imposing their own standards. Inconsistency between municipalities when it comes to green building standards only leads to confusion, slower approvals and increased costs. This is not the time to be messing with the system.<\/p>\n
RESCON has filed a legal application against the City of Toronto over the escalation of the Toronto Green Standard performance measures. We want a mandatory order that would enforce the Building Code Act and prevent the city from imposing building regulations on planning applications as the manner of construction and construction standards are not subject to site plan control. RESCON didn\u2019t want to go this route but had no choice. Nearly 30 municipalities have jumped on the bandwagon and imposed their own standards in recent years. With these actions, municipalities like Toronto are only slowing approvals and increasing costs to consumers. At a time when the residential construction industry is finding it difficult enough to build homes that people can afford, it makes little sense for municipalities to impose additional green building standards that only raise the cost of new housing further and add to the problem. Exorbitant development charges and the willy-nilly imposition of green building standards by individual municipalities is not helping the cause to build homes that people can afford to purchase.<\/p>\n
These two issues must be sorted if we are to have any chance of changing our course on housing.<\/p>\n
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 <\/em>me***<\/span>@****<\/span>on.com<\/span><\/em><\/a>.<\/em><\/p>\n \t\t\t\t<\/div>\n