The cost of development charges are being passed onto homebuyers and renters, posing a “significant constraint to housing affordability,” the Canada Mortgage and Housing Corp. said Thursday as it released new data on development charges across 30 Canadian municipalities.
Toronto and Markham led with in highest development charges, according to CMHC chief economist Mathieu Laberge, noting the data provides insights from other municipalities in how these charges could be lowered, for instance, through property taxes and utility fees.
CMHC used an artificial intelligence tool to obtain information directly from websites of municipalities in Ontario, B.C., Alberta and Quebec, with CMHC analysts to validate the data. The agency aims to update and expand the data on a regular basis.
Builders have, for years, called on governments to reduce development charges — fees municipalities charge them to fund local infrastructure when they build or expand developments — arguing doing so would allow them to lower prices for buyers and build more.
Housing experts who spoke with the Star are divided on what the best way forward is. One said developers won’t necessarily cut prices if they have lower development charges, while another said reducing fees would allow developers to increase supply, which would eventually lower prices.
They agreed, however, that increasing property taxes would be a more fair — though unpopular — way to fund municipal services.
Ontario leads in development charges, CMHC finds
Laberge told the Star municipalities in Ontario had the highest development charges of the 30 municipalities examined, followed by those in B.C.
“That is inhibiting housing accessibility, housing affordability,” he said.
The City of Toronto disputed the findings, however, telling the Star the Toronto figures “are not accurately represented as they include assumptions about other growth-related charges.”
“The current development charge rate for a two-bedroom apartment in Toronto ranges from $48,299 to $80,690 depending on whether it is rental or nonrental, lower than the $130,200 noted in the publication. Further, development charges for a single detached unit are $137,846, lower than the $180,600 indicated,” said Lauren Birch, director of strategic policy and programs in a statement.
In response, CMHC said that, for consistency with other cities and a more comprehensive analysis, it estimated community benefit charges and parkland dedication fees for the cities of Toronto, Markham, Brampton and Ottawa, based on site values using some data points from the Municipal Benchmarking 2024 Study, under the assumption that these charges remained constant from September 2024 to October 2025.
According to the study, charges are applied unevenly across the country, with most municipalities charging per housing unit, and others charging per acre. Many municipalities are making efforts to incentivize rental construction by waiving or deferring charges on those developments, it noted.
The amounts also varied significantly; it found fees for a 700- or 750-square-foot apartment ranged from about $40,000 in Ottawa to about $120,000 in Markham. That’s about 8.2 and 15.7 per cent of the average new condo price in those markets, respectively, it said.
It also found that for a single-detached home, development charges ranged from around $125,000 in Pickering to about $180,000 in the City of Toronto — about 9.4 and 8.5 per cent of the average single-detached home price in 2024 in those markets.
It said that in many cases, development charges included regional and municipal fees, and the data it reported included both types of charges where possible.
While the data looks at 30 municipalities, there were 25 more municipalities for which CMHC could not analyze because “the data was too complex,” Laberge said, something he said also poses challenges for developers figuring out their building costs.
Higher property taxes could fund municipal services, experts say
Laberge said he understands why municipalities don’t rely more heavily on property taxes to fund municipal services, but doing so would be more equitable, and there are mechanisms municipalities can use to soften the blow, such as consumption taxes in tourist areas.
“When you think about it, we impose the cost of new infrastructure on a very, very small number of people … Those who buy new units,” he said. “It’s inequitable in the sense that people that bought new units 10 or 15 years ago didn’t pay as much as that cost. It’s also inequitable because those people … are most likely using the roads, libraries and transit that’s funded through (development charges).”
Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives, said he believes CMHC has taken a “very pro-developer position” because there’s no guarantee developers will slash prices if development charges go down.
He said in Toronto and Vancouver specifically, developers “paid too much for land” due to foreign and domestic investor speculation and flipping, but “that’s not happening anymore” and developers are relying on the public sector to make their projects more profitable, something he finds concerning.
That being said, he agreed that increasing property taxes would be a more fair way to fund municipal services, especially given how much homeowners’ property values have increased over the years.
CMHC said its role is to provide “unbiased information to the market to foster informed decision making,” and its new data is achieving that while highlighting the need for increased transparency. It added “any decrease in development charges should be passed on to buyers.”
David Amborski, a professor at Toronto Metropolitan University’s School of Urban and Regional Planning, said that “the market determines the price” of a home, and if developers can afford to build more homes with lower development charges, they will boost supply and over time, prices will fall.
