IN THIS ISSUE

• A NEW DESIGN

  • Reply to this email to let us know what you think

• The impact taxes have on new homes

• This week’s good news in housing

  • How to create truly affordable homes

  • Toronto targets 20k new rentals

  • 322 new student housing units at U of C

• A student renter’s story

  • Working 3 jobs to afford a place to live

• Rental resources

TOP STORY

🤑 The role taxation plays in new housing

Taxes are a controversial topic in the world of housing. While taxing new economic activity like home building is crucial for funding government programs, case studies show that it adds to the cost of new homes.

Taxes and fees vary depending on the situation. If you or your family want to buy a home, you’ll face a different tax profile than a company building apartments.

Buying a home:

• GST / HST tax added on to the purchase price

• Depending on the home, there are rebates that give back part of the GST paid

Building housing:

• GST / HST on construction and sale (if not rental)

  • 100% GST rebate announced in 2023 for construction of rental housing

• Empty Homes Tax (EVT)

• Speculation and Vacancy Tax (SVT)

• Additional School Tax (AST)

• Development Cost Charges (DCCs)

• Community Amenity Contributions (CACs)

To be clear — there are reasons for why all of these different taxes and fees exist, and in some cases, certain projects are exempt.

Let’s narrow our focus to DCCs — why do they exist and what are they for?

• Municipal and regional fee, not technically a tax

• Builders see this as a tax as it makes it more expensive to build — DCCs get passed along to the buyer or renter

• Used to create infrastructure to support housing, such as transportation, water, sewer, roads, etc.

There has been lots of criticism on the growth rate of DCCs over the last decade compared to inflation. This image shows the rate of change in Ontario municipalities.

Toronto’s DCCs have increased by 1000% since 2010 — consumer prices are up 41% in the same time period. Using publicly available data, the same author shows how much of this funding was used by municipalities in 2022 for infrastructure improvements.

A research study done by the Urban Development Institute demonstrates the how taxes and fees can increase the cost of housing, using four unique case studies from across BC as examples.

When used as intended, taxes and fees on homes fund social services, infrastructure improvements, and government housing, but directly increase the cost of new housing.

It’s important to understand the tradeoff — what matters most to you?

Since this is such a hot button issue, it came as no surprise that the Federal Conservative Party launched a tax rebate proposal that hit the news last week.

• Details:

  • Would remove sales tax on new build housing

  • Adjust the rebate for the purchase of new homes under $1 million to 100%, giving back up to $50k

  • Party leader Poilievre argues that by getting rid of the sales tax, “developers will have to pass on savings to buyers, otherwise they will buy from another company”

• Cost: $4.5 billion every year

• Funding: Cut the Liberal Party’s Housing Accelerator Fund and Canada Housing Infrastructure Fund to pay for it

Mike Moffatt, an economist and Ivey Business School prof, hypothesizes that this would incentivize home building and make new homes immediately more affordable. The drawback, Moffatt says, is finding a way to pay for this approach without cutting federally funded housing programs that take a creative and much needed stab at different solutions.

👏 Good news in housing

Study: How to create deeply affordable housing

U of T housing researcher Carolyn Whitzman argues that providing truly affordable levels of housing cost requires a “loaded nacho” approach, that centres on collaboration from all three levels of government. This research focuses on the delivery of immediate solutions and advocates for clear definitions of what affordability really means. Keep reading…

Toronto targets 20,000 new rental homes via incentives

This announcement is intended to remedy the lack of new rental housing in the city. The slate of incentives includes waiving development cost charges (DCCs), a 15% property tax reduction, and other tax waivers. To be eligible for the program, developments must designate 20% of units as affordable. Critics question if this requirement will make projects financially unviable. The policy’s success can be judged on the number of rentals it helps deliver. Keep reading…

322 student housing units coming soon in Calgary

Calgary’s University District will be home to 645 new renters, made up of primarily University of Calgary students and young professionals. This announcement marks the start of construction, which is expected to complete in time for the start of the 2025-2026 school year. This project marks another private investment in Canada’s student housing market from industry leading institutional investors, a strong signal for future supply in the space. Keep reading…

🧑‍🎓 Stories from student renters

Every spring, students from around the country run out of the classroom for summer break, only to jump into a seemingly never ending search for housing for fall. We’re collecting stories from young renters across Canada to share with our readers. If you’re interested in sharing your experiences, reply to the poll below and let us know!

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Age: 2nd year undergrad (19)

City: Victoria

School: University of Victoria

Kind of housing: Unfurnished 2 bedroom apartment

Location: 40 min bus ride to university

Rent: $1,375 per person plus utilities

Story: I spent all summer checking all the different rental platforms for like 4 hours every day and applying to everything I could. I was having such a hard time being accepted that I was forced take this place. It’s way out of my budget and in South Oak Bay, so not close to the UVic campus at all. Right now I’m working 3 different jobs while taking 5 classes just to be able to afford rent and groceries every month. I’m super thankful that my parents help me out with tuition otherwise I don’t know how I’d make it work.

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🧩 More from Studenthaus

Want to read our research about how students make housing decisions? Check out the 2023 and 2024 Outlooks below.

🗂 Rental resources

Whether it’s your first time living on your own or you’ve been renting for years, this is the time of year that lots of young people are getting settled in new places, which can involve dealing with a new landlord.

Is your landlord illegally entering your unit, trying to change your agreement without your consent, or unreasonably preventing you from having overnight guests?

If so, and you can’t quite figure out how to word a message to your landlord, check out the list of template letters from BC’s Tenant Resource and Advisory Centre to help you out.

There’s even a template roommate agreement.

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