A very insightful article from a research partnership based in the University of Toronto argues that joint federal and Ontario government tax breaks and development charge reductions are a gift to the kinds of investors who created much of our crisis of unaffordable housing.
Through measures announced this spring, over $5 billion in private tax breaks, over the next year alone, are on offer for those able to buy or build high-priced private homes. It’s designed to encourage buying and building at a time when both activities have slowed dramatically. But as Dr. 
Jeremy Withers of UofT’s New Housing Alternatives research partnership notes:
- Those savings aren’t to help first-time home buyers. “First-time buyers have already been able to claim HST rebates on new homes for over a year, in an effort to give them a leg up.”
- That $5 billion is almost seven times more than the province ($176 million) and federal government ($589 million) are projected to spend in total on building and subsidizing affordable housing in Ontario.
So, if all that money isn’t going to help those with low- and moderate-incomes to get affordable homes, and it isn’t helping first-time home buyers, who will benefit? Withers says that housing investors are the most likely beneficiaries of these new and very expensive measures. And they are the people and corporations largely responsible for pushing up the price of housing and land when interest rates were low, leading to a housing bubble that crashed when interest rates rose.
Withers argues that these reductions in HST aren’t likely to lead to the 8,000 units of new construction the governments hope will result. But even if 8,000 new units are built, the HST incentive comes to $275,000 per unit. For that same amount of money, non-profit and co-op housing providers could buy existing for-profit buildings with affordable or near-affordable rents and keep the rent permanently affordable.
Add in the development charge breaks and the total package is about $5 billion this year. Instead of bailing out investors, that money could have paid 100 per cent of the costs for at least 10,000 permanently affordable non-profit, co-op and Indigenous housing units that are desperately needed.
As Withers says, “Tax breaks and public subsidies should not be offered indiscriminately and unconditionally. They should be extended on a targeted basis, as part of a broader program to transform Ontario’s inequitable home building system.” You can read the article here.