18 Sep Removing the GST and the impact on housing
The federal government recently announced that they would be removing GST on purpose built rentals to help address the housing crisis.
Almost immediately some folks started questioning how giving ‘rich’ developers a break on GST would help the housing crisis and instead of seeing the news as a good news – these folks are claiming that it is bad news and will set us back.
The first thing I would say is that we need to stop painting developers with this ‘rich’ developer narrative. I have heard time and again, that “developers are going to build no matter what – so why are we giving them help?” Or, “developers aren’t interested in helping people – they are only interested in money.” This narrative is not only silly but absolutely inaccurate.
Developers are crucial partners to achieving our housing goals. Finger pointing at the development community and making statements that paint inaccurate pictures isn’t going to help anyone. Let’s do better folks.
Here is what I know about the new legislation about removing of GST on purpose built rentals:
- The rebate applies to long term rental accommodation – apartment buildings, student housing and seniors residences.
- The residential rental buildings must contain at least 4 self contained apartments and the student and senior buildings must have at least 10 units.
- The buildings must contain 90% long term rental units.
- The rebate doesn’t apply to renovations of existing buildings.
- Projects that convert existing non residential buildings (office buildings) would be eligible if they meet all the conditions.
- The federal government is calling on the provincial governments to remove their sales tax.
I’m no expert but this all sound pretty good to me.
So the next question is how will this help us achieve our housing goals?
Jennifer Keesmaat, the former chief planner for the City of Toronto, explains how it will help much better than I ever could so please watch:
In case you didn’t watch here are the highlights:
- Many projects that have all the approvals have been put on hold because they are not viable with the high interest rate with the removal of GST will hlep make some of these projects viable – meaning they will be built.
- What is the financial impact on projects? On projects Jennifer Keesmaat’s company is working on it could range from $40,000 to $60,000 per unit. Or for the bigger numbers, on a 200 unit building the savings could be between 8 and 12 million dollars.
- The housing crisis was decades in the making and we’ve known that we have a shortage of rental housing.
- Rentals are an important part of our housing market.
- To solve the housing crisis we need to build double the amount of housing that we have built in our best year.
Is the removal of the GST going to solve the housing crisis? Not by itself. But it will help.
All levels of government need to work together to address the housing crisis. Governments also need partners. Our partners are the development community. Let’s work together to get the housing built that we desperately need.