On November 1, the government of Ontario removed provincial HST on new rental builds. This measure will apply to new purpose-built rental housing, like apartment buildings, student housing, & senior residences, which are built explicitly for long-term rental accommodation.
Well, the government asserts that the enhanced rebate would apply to qualifying projects that begin construction between September 14, 2023, & December 31, 2030, and complete the construction by December 31, 2035.
In order to be eligible for the rebate, new residential units must be in buildings with a minimum of four private apartment units or ten private rooms/ suites & have at least 90% of residential units designated for long-term rental.
Province Taking Some Steps To Make Rent Affordable
Ontario removed provincial HST on new rental builds, which is the latest step the province has taken to improve affordability following the release of the Housing Action Plan in 2022.
Well, there is presently a New Residential Property Rebate in the province. However, it only equals 75% of the provincial portion of HST, with no maximum amount.
For instance, a two-bedroom rental unit valued at $500,000 will obtain a provincial tax rebate of $40,000. Moreover, when combined with the federal rebate in the recent Affordability & Housing Act, worth up to $25,000, it implies that the developers in Ontario can benefit from up to $65,000 in tax rebates.
So, to help release some pressure from the existing renters, the province also capped annual rent increases below the inflation rate. However, this only applies to units which were built before November 2018. Moreover, even in older units, if a tenant moves out, the landlord can increase the rent as high as they like for the next tenant’s first year. This creates a significant affordability obstacle for renters who are coming from overseas or anyone who has to move into a new apartment period.
Immigration In Toronto
The most recent data from Rentals.ca reveals that around eight cities in Ontario are on the list of the top ten most expensive cities to rent in Canada.
As Ontario removed provincial HST on new rental builds, the provincial government hopes that the rebate will help incentivize developers to build more affordable rental units in Ontario, which has the most newcomers of any other province in Canada. Census 2021 data shows that in 2021, over 46.6% of the population living in Toronto were immigrants.
Also, according to Desjardins recent report, there isn’t enough supply in the province to meet the high demand. This implies that many young immigrants & other top talent might not choose to settle in the province & the provincial economy could suffer in the long run.
Rise In Canadian Immigration
Canada’s population reached a milestone of 40,000,000 people this year. In addition, IRCC recently released the Immigration Levels Plan 2024-26, outlining immigration targets for the next three years. In both 2025 & 2026, the nation expects to admit over 500,000 new permanent residents. This doesn’t account for any temporary workers/ international students.
Moreover, IRCC has also recently released a new Strategic Immigration Report, which states that moving forward, the immigration targets of the department & policies need to be more comprehensive. This must include consultations with stakeholders who can help the department match immigration numbers to existing infrastructure, like housing.
The report also mentions the possibility of creating more immigration pathways for immigrants with relevant experience in construction, which can help expedite the construction of more housing.