Toronto, Nov. 28, 2023 (GLOBE NEWSWIRE) -- Greater Toronto Area, November 28, 2023 – By not extending the new HST exemption to purpose-built rental units under construction, Minister Freeland is jeopardizing 128,000 units of new purpose-built rental (PBR) housing (of which more than 13,000 are in the GTA), that are struggling for completion under very challenging economic conditions, the Building Industry and Land Development Association (BILD) said today. This, despite the fact that PBR development companies have pledged to reinvest any savings from current projects realized from an extension into new rental housing projects, further increasing much needed rental supply.
“Under the current economic conditions, for which this government is largely responsible, the cost to build new apartments has grown by almost 65 per cent in the last two years,” said Dave Wilkes, President and CEO of BILD. “Virtually every PBR project coast to coast is struggling under very harsh economic conditions. The companies building these 128,000 new rental units are facing the stark choice of halting the project, or converting what would have been rental units to condominiums for sale. Even more concerning is the reality that present conditions will undermine the ability for the sector to reinvest in new projects in the future.”
Purpose-built rental is housing built specifically for long-term rental accommodation. It forms a vital segment of Canada’s housing stock. Unlike other forms of rental, PBR is professionally managed, provides security of rental tenure and in many cases provides unit sizes suitable for families. Much of Canada’s existing PBR stock dates from late 1960s to early 1970s when a federal tax incentive made it an attractive form of housing to build. When the tax program ended it became less attractive to build PBR, and as a result, considerably less was built in the decades since.
“We are experiencing a deficit of housing of all types, rapid population growth and increasing rents — we need more housing now,” Wilkes said. “It takes years to build new housing. With the present exemption only applying to units where construction starts after September 14, net new purpose-built rental construction will only come on stream years down the road. This does nothing to alleviate the housing crunch in the short-term. Effectively the government’s decision not to extend the exemption to rental units under construction jeopardizes the addition of near-term supply. Further, if companies are not able to complete their current projects, there will be less investment dollars available to build new projects, eroding future capacity and supply.”
The largest Canadian PBR developers, BILD and numerous provincial developer and home builder associations from coast to coast (nearly 90 from all over Canada), have asked the government to extend the exemption to all 128,000 PBR units currently under construction. Exempting future projects is a good measure, however, the current housing crisis demands action to protect near-term housing supply and to maximize the number of rental units coming to market in the short-term.
With more than 1,300 member companies, BILD is the voice of the home building, land development and professional renovation industry in the Greater Toronto Area. The building and renovation industry provides more than 230,000 jobs in the region and $26.9 billion in investment value. BILD is proudly affiliated with the Ontario and Canadian Home Builders' Associations.
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For additional information or to schedule an interview, contact Justin Sherwood at jsherwood@bildgta.ca or 416-371-6005.
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