Improving supply and affordability have emerged as key election issues – but development costs now add up to $135,000 per home
As Canada’s federal election campaign rolls on, the national housing crisis has emerged – unsurprisingly – as one of the central issues concerning voters, even amid trade tensions with the US and the prospect of a protracted tariff war.
Political leaders have unveiled proposals for tackling that crisis including efforts to accelerate home construction and improve the outlook for first-time buyers, while cutting red tape in the planning and building processes has also been mentioned as an urgent need.
But a frequent sore point for homebuyers and mortgage brokers alike is the issue of development fees, which have surged in recent years.
Those spiking development charges are adding tens of thousands of dollars to the cost of new homes and pushing homeownership out of reach for many Ontarians, Rick Kedzior, president of the Ontario Real Estate Association (OREA), said earlier this year.
In January, OREA released findings from an upcoming public opinion poll, which revealed that nearly half of Ontarians who want to own a home have either given up entirely (25%) or feel pessimistic (24%) about the possibility. The findings come amid what OREA calls a worsening housing affordability crisis, with municipal fees like development charges playing a major role.
On average, development charges can add up to $135,000 to the cost of a new home. While these charges were originally designed to fund infrastructure tied to new development, such as roads, water, and wastewater systems, Kedzior argues that municipalities are increasingly using them as a general revenue source, with the burden ultimately passed onto buyers.
“Since 2019, OREA has been lobbying government to look at ways to reduce development charges to make home ownership more affordable,” Kedzior wrote.
The City of Burlington voted unanimously earlier this year to reduce development charges, aiming to encourage “responsible development” as part of its plan to add 29,000 new homes over the next decade. The City of Vaughan followed suit, approving significant fee reductions and publicly acknowledging that high development charges place an unfair tax burden on homebuyers.
But not all cities are following that example. In May 2024, the City of Ottawa voted to increase development charges by 11%, the sixth hike in just six months. The move has drawn criticism across party lines. Former federal housing minister Sean Fraser and Conservative housing critic Scott Aitchison have both warned that the increases will only worsen the housing supply crisis.
In Toronto, development charges have also surged. The Building Industry and Land Development Association (BILD) reports that Toronto’s charges have grown six times faster than home prices and 20 times faster than inflation over the past decade.
OREA’s polling suggests public sentiment aligns with its concerns. Seventy-five percent (75%) of respondents strongly support reducing municipal development charges, while 72% would support the provincial government placing a cap on them.
“While we understand municipalities have struggled to keep up with the pace of growth, we also know, province-wide, billions in development charge revenue remains unspent,” Kedzior said.
Read next: Toronto condo projects stalled by tariffs could get development fee deferrals
The association has proposed alternative models for funding growth. One idea is to let municipalities treat water and wastewater services similarly to energy services – amortized across the broader user base, rather than front-loaded into development charges.
“Obviously, more needs to be done if we want to solve the housing affordability crisis,” said Kedzior.
The group is calling for pro-housing policies that meet municipalities' infrastructure needs without pushing costs onto future homeowners. It also encourages the Government of Ontario to implement solutions that help “get shovels in the ground.”
“Municipalities need to find other approaches to generating revenue that don’t involve passing costs down to consumers,” he added.
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