Federal, provincial partnership to cut development charges in half
Posted March 30, 2026
Prime Minister Mark Carney and Ontario Premier Doug Ford on Monday unveiled a sweeping housing agreement centred on cutting municipal development charges, a move both governments say is critical to unlocking stalled housing projects and reducing costs for buyers.
The deal commits the federal and provincial governments to jointly invest $8.8 billion over 10 years to support infrastructure and enable municipalities to reduce development charges by up to 50 per cent.
Development charges — fees levied by municipalities to pay for infrastructure such as roads, water systems and transit — are widely viewed by builders as one of the largest upfront costs in residential construction.
In New Tecumseth, fully serviced residential DCs total $111,560. Of that, $90,502 is municipal; $14,975, County; and $6,083, education.
Under the agreement, the reductions will be in place for three years and apply to municipalities representing roughly 80 per cent of Ontario’s population.
The funding is designed to offset much of the revenue municipalities would lose from cutting the charges. However, municipalities will also be expected to participate in the reductions, creating a three-way cost-sharing model among federal, provincial and local governments.
Ontario will work with municipalities to compile and submit a list of housing-enabling infrastructure projects for approval, with an emphasis on speed to ensure developments can proceed more quickly.
The initiative marks the first federal agreement under the Build Communities Strong Fund and signals a shift toward directly addressing municipal cost structures tied to new housing.
Officials framed the development charge reductions as the cornerstone of the plan, arguing that lowering upfront costs for builders will accelerate construction timelines and increase overall housing supply.
The agreement also includes tax relief measures for buyers, including the removal of the 13 per cent harmonized sales tax on new homes valued up to $1 million, delivering savings of up to $130,000.
That rebate will be maintained for homes valued up to $1.5 million, before phasing down to a maximum of $24,000 for homes priced at $1.85 million and above. The measure applies to eligible agreements signed between April 1, 2026, and March 31, 2027.
Ontario estimates the combined measures will deliver nearly $2.2 billion in tax relief, support about 8,000 additional housing starts next year, create up to 21,000 jobs and contribute roughly $2.7 billion to the province’s economy.
Both governments said the strategy is designed to remove cost barriers at the front end of construction, with development charge reductions positioned as the primary lever to increase housing supply and improve affordability.
.... Story aided by AI
