Toronto may be raising the cost for developers to build new condos by a shocking amount
To some, the abundance of shiny new condos perpetually under construction in Toronto can certainly be infuriating, in its obvious ways.
Never-ending, disruptive work; suddenly impeded views and blocked sun; the trade-off between older, unique architecture and rich history (or, just as bad, green space) for concrete and glass towers; a general loss of the city's character to expensive cookie-cutter developments; and more.
But, as the city grows and our housing supply continues to fail to meet demand, these towers and their hundreds of thousands of new units are undeniably absolutely necessary, despite the fact that they are becoming less and less within financial reach for the average resident.
While the current average price for a shoebox in the Toronto sky is already exorbitantly high compared to most cities around the world, it may be about to get even worse thanks to a proposed increase for development charges.
Us: “Toronto has a housing crisis, we need to make it easier and cheaper to build housing for people”— More Neighbours Toronto (@MoreNeighbours) April 13, 2022
Toronto/ @CityPlanTO: “we will raise taxes on new homes by 50%”.
This is an attack on everyone left out by homeowners who won’t pay their fair share of taxes. https://t.co/EjJjYOdjWj
Among the suggested multiple growth funding tools to help pay for new infrastructure and updates as the population expands is a hike in the development charges presented to developers building in the city be increased by a whopping 49 per cent across the board for residential projects.
This would give the city the necessary funds to build itself up to accommodate these new residents — there are an additional 3.65 million people projected to immigrate here over the next three decades — but may obviously dissuade big companies from building homes here.
"The legislative framework provides financial tools for the city to collect funds as growth occurs on the premise that growth pays for growth," the city writes on its page on the potentially changing development change and other growth funding tools.
"This means that new developments (or redevelopments) should help pay for the municipal services and infrastructure that support residents and businesses."
Ontario has less housing stock for its residents than any other province in Canada https://t.co/3gCyNH10Ln— Michael Braithwaite (@mbraithwaite72) January 14, 2022
Some might argue that huge developers' pockets are too thick and the business too lucrative, given current prices especially, for this to impact their decision-making all that much.
(The same was said about the vacant home tax the city is bringing in to try and crack down on ghost hotels and investors in the game for a quick and easy profit.)
Others are more concerned with the other end of the cost — the fact that if developers pay it, they will end up transferring it to buyers, driving prices even higher (something that more supply and factors like rising interest rates would hopefully assuage).
Why do they always try to collect revenue from increased development charges which inflates housing as opposed to increase property taxes which deflates housing?— Asner (@Asner17107439) April 13, 2022
Of course, the money has to come from somewhere, and if it's not coming from developers and potentially then the sale price of a home after that, it would likely have to come from the property taxes after purchase.
It is worth noting that the jump, though a staggering one, is only a proposal at this point, though there is a lot of socio-political context to the suggestion to consider.
As one commenter states in a popular Reddit thread on the subject, "this is a case of NIMBYs passing the buck to non-homeowners."
"Many neighbourhoods in Toronto do everything they can to block new development," another adds, noting low property taxes in older areas where some residents are sitting on ridiculous wealth — and opposing new development in their backyard.
Keep building 100 more condo towers with shoebox size condos.— Deflip (@Deflip10) February 27, 2022
Amid the bonkers real estate market that Toronto has been experiencing for some time, there is obvious concern about any such changes from residents and housing advocates — especially in the case of much-needed affordable housing, which developers already tend to need great incentives to build.
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