The impact of all government fees, taxes and charges on the price of new homes in the Greater Toronto Area (GTA) has increased significantly, according to a new report conducted by Altus Group for the Building Industry and Land Development Association (BILD).
The report, Government Charges and Fees on New Homes in the Greater Toronto Area [here], is a follow up to a similar report released by BILD in 2013. It shows that these costs add a combined $186,000 to the price of an average new single family home and $121,000 to the cost of an average high-rise apartment unit in the GTA.
“Some of these costs, such as development charges, are increasing far faster than the rate of inflation, squeezing prospective new home buyers out of the market,” said Dave Wilkes, BILD president and CEO, in a press release.
Development charges are imposed by municipalities on new developments to offset funds related to the increased need for services such as water, roads, sewers and emergency services.
The building and land development industry agrees that new home buyers should pay their fair share of these costs. However, the report shows that these charges have increased across the GTA between 236 per cent and 878 per cent since 2004, far exceeding inflation and the average wage increases over the same period.
“Combined, development charges and HST make up nearly 80 per cent of all government fees applied to new homes,” added Wilkes. “With affordability being a significant concern in GTA markets, these types of increases are not sustainable.”
In order to keep home ownership a reality in the GTA, BILD recommends that all levels of government must consider the role that taxes and fees contribute to the cost of a new home.