Mark Carney, Doug Ford to cut development charges by up to 50 per cent to boost housing construction

It was part of an announcement that also saw all three levels of government each provide $1 billion for the Waterfront East LRT, a long-planned line that would serve rapidly growing neighbourhoods along the East Bayfront and the Port Lands.

Housing industry veterans have said that development charges — fees paid to a municipality to fund local infrastructure when a building is constructed or expanded — have been a significant cost barrier for developers to build more. 

“They have become a major hurdle in the Ontario housing market,” Carney said during the press conference. 

“In recent years, they have been growing at an unsustainable rate — increasing the cost of every new home, compressing margins, and stalling new builds. Cutting development charges was a key commitment of our housing plan.” 

The move comes amid a slowdown in the housing industry, especially in high cost locations like Ontario and B.C. The Canada Mortgage and Housing Corp. projected in its 2026 outlook that growth would be slow this year and that new home construction would fall through 2028 as developers face “high costs, weaker demand and more unsold homes.”

The federal government and Ontario will cost-match a total of $8.8 billion over 10 years, focused on housing infrastructure projects. This funding will support the reduction of municipal development charges by up to 50 per cent — the reductions will be in place for three years and target municipalities covering 80 per cent of the province’s population.

Ford and Carney said new infrastructure funding will offset the financial impact of development charge reductions on municipalities, and in turn, municipalities will be expected to support development charge reductions.

If municipalities don’t reduce development charges, Ford said cities will not receive any government funding.

“We’re creating the conditions and the environment for companies and builders in this province to start building. I need the municipalities now to step up,” said the premier.

Toronto Mayor Olivia Chow said the reduction in development charges as well as the HST rebate for new homes will “make a real difference.” 

“Housing is becoming more attainable for more people,” she said.

Chow also called the Waterfront LRT “the critical missing piece needed to unlock the waterfront.”

Once it’s built it will provide transit to a neighbourhood of 150,000 people and carry about 50,000 riders a day, the mayor said.

According to a provincial news release, the current cost estimates for the line are $3 billion. As a condition of the agreement, the federal and provincial governments “will not bear costs for any overruns,” it said.

‘Housing drives Canada’s economy’

The deal is the first agreement with a province under the Liberals’ Build Communities Strong Fund. The government is expected to negotiate deals with other provinces and federal Housing Minister Gregor Robertson said each deal will be different, because not all provinces have development charges. 

“B.C. is the next toughest province with development charges so we’re looking for some uptake there, but overall the goal is to get community infrastructure built that unlocks more housing and that supports our broader efforts for affordability,” he said in an interview with the Star. ’

Robertson said getting the housing industry going is important not just for affordability, but for the country’s economy more broadly. 

“Housing drives Canada’s economy as do infrastructure projects and we want both of those creating jobs using Canadian materials and workers and providing great housing and public transit and infrastructure.”

The Building Industry and Land Development Association (BILD), which has long advocated for the reduction of development charges, applauded the announcement.

“The beauty of this program is that it will not only result in reductions to development charges, but it will also ensure that municipalities continue to have the funding required to put the necessary pipes in the ground and to build much needed transit,” said BILD president Dave Wilkes.

BILD said that development charges range from tens of thousands of dollars in smaller municipalities to as much as $130,000 for a single-family home in the GTA — these charges have increased by as much as 1,000 per cent in the last decade and a half.

Federal Conservative MP Scott Aitchison said the Liberals are offering a housing program without any concrete results. 

“Once again this Liberal government is throwing out billions of taxpayer dollars with no guarantees of results, targets or accountability to build homes,” he said. “Mark Carney is not providing the national leadership he promised.”

Robin Jones, president of the Association of Municipalities of Ontario (AMO), said even though she has yet to view the government agreement, the news is welcome “to build more homes quickly and more affordably.”

However, it remains unclear how government ensures developers pass on the reduced cost to build as savings for the consumer. 

“The federal and provincial governments are simply giving tax breaks to the private development industry and telling them, ‘do what you do.’ No conditions. No targets. No metrics,” said Ricardo Tranjan, Ontario research director at the Canadian Centre for Policy Alternatives.

“We don’t know what share (of development charge reductions) will go towards ensuring developers get their desired profit margins versus what will be passed on to the final consumer. And who’s that final consumer? Is it a first-time homebuyer or an investor increasing their large real estate portfolio? We don’t know that either.”