Government fees, taxes and charges for new home buyers in the Greater Toronto Area (GTA) are amongst the highest in North America, says a report conducted by the Altus Group for the Building Industry and Land Development Association (BILD).
The report says these charges add $222,000 to the cost of an average new single-family home and $124,000 to the cost of an average high-rise apartment in the GTA.
“The facts demonstrate that government fees, taxes and charges play a significant role in eroding housing affordability in the GTA,” says Dave Wilkes, president and CEO of BILD. “These costs are unsustainable and BILD calls on all governments to bring certainty and transparency for new home buyers.”
The study examined major Canadian cities including Ottawa, Vancouver, Montreal and Calgary; and major U.S. metropolitan areas including San Francisco, Miami, Boston, New York City, Chicago and Houston, and compared them to various GTA municipalities. Since housing is taxed differently in the various jurisdictions, the study assessed the total tax burden, as well as development-incurred charges to enable better comparisons, says BILD.
For a typical single-family home (low-rise), the average total of all government fees, taxes and charges in the GTA is three times higher on a per-unit basis than it is on average in the six U.S. metropolitan areas, and nearly double those in the other Canadian urban areas, the study says.
For high-rise developments, the average per-unit charges in the GTA is 1.5 times those in the six U.S. metropolitan areas, and roughly 30 per cent higher than in the other Canadian urban areas.
The study says when government-imposed charges are isolated to only include charges incurred by developers or homebuilders from municipalities (development charges that are included in the price of a home and are used to fund municipal infrastructure), the average charges in the other Canadian urban areas, outside the GTA, are roughly similar to what is imposed by governments in the U.S. metro areas.
For the GTA, these developer-incurred charges are double those charged in the other Canadian and U.S. jurisdictions for low-rise and 60 per cent higher for high-rise compared to other Canadian jurisdictions. The key reason for this is that development charges are approaching $100,000 per unit in some GTA municipalities, it says.
Wilks says that BILD “supports the concept that growth should pay for growth. But clearly the costs associated with building a sewer or adding a sidewalk cannot be that much different in Montreal, Ottawa or Calgary. GTA municipalities should not be adding disproportionate costs on new home buyers as a mechanism to keep property taxes low, especially when the infrastructure benefits all.”