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Developers Applaud GST Freeze on Rental Builds as a Significant Step, but Will It Alleviate Housing Shortages?

Housing industry players are divided over the Liberals’ new plan to speed up rental builds by freezing related GST surcharges, with some calling it a “game changer” and others saying it won’t make a dent.

“The intent of it is to increase supply. It won’t,” Paul Smetanin, president and CEO of the Canadian Centre for Economic Analysis (CANCEA), told The Epoch Times.

The Liberals tabled Bill C-56, the Affordable Housing and Groceries Act, on Sept. 21. The legislation will, among other things, put a seven-year moratorium on GST in a bid to tackle rising affordability woes in Canada, especially in the rental housing sector where major markets like Toronto and Vancouver are chronically undersupplied.

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The GST freeze is retroactive to Sept. 13 and expires Dec. 31, 2030, provided projects are delivered within five years of the latter date.

“There are just too many other factors that get in the way,” Mr. Smetanin said. “That’s not going to change the business model or the appetite for developers and investors to increase the volume of purpose-built rentals. It’s very small and it reduces the costs by about three percent. It really is just a token gesture.”

Diminishing homeownership and rental affordability in Canada have been front and centre in recent years, and as the country grows at a rapid pace and the problem worsens, it’s become a political hot potato. The Liberals have responded with supply-side solutions, but waning affordability appears entrenched.

Conservative leader Pierre Poilievre has consistently criticized Prime Minister Justin Trudeau over a national housing crisis exacerbated under his stewardship.

‘Big Move’

Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), welcomes the suspension of  GST surcharges on purpose-built rental construction but says it falls short.

“The GST move is a big move for rental,” Mr. Lyall said, adding, “There shouldn’t be a time limit on it of seven years, that doesn’t make any sense.”

Michael Cooper, president and chief responsible officer of Dream Unlimited Corp., which develops purpose-built rentals, welcomes the moratorium and says it will reduce outlays by around seven percent depending on the Dream rental project.

“It actually does add up to a big difference,” Mr. Cooper said.

Dream has 1,000 units planned across two rental developments in Ottawa—one a net-zero community, 40 percent of the others comprising affordable rental suites. Mr. Cooper says the developments were effectively shelved due to poor building economics but should Bill C

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