The federal and provincial governments have joined forces in a sweeping housing affordability push, committing nearly $9 billion to reduce development charges across Ontario municipalities by as much as half a move officials say could take hundreds of thousands of dollars off the price of a new home.
Prime Minister Mark Carney and Premier Doug Ford stood side by side at a press conference in Etobicoke on March 30, announcing the joint funding package of $4.4 billion each over the next decade. The money flows through the federal government’s newly launched Build Communities Strong Fund a $51 billion, decade-long initiative aimed at strengthening local infrastructure and essential services starting in 2026-27.
At the heart of the announcement is a long-standing frustration shared by builders, buyers, and policy watchers alike: development charges.
These are fees municipalities levy on new construction to fund roads, sewers, water systems and other infrastructure. Over recent years, they have ballooned well beyond inflation, quietly adding tens of thousands of dollars to the cost of every new home before a single brick is laid.
Carney was blunt about the damage. “In recent years, they’ve been growing at an unsustainable rate, increasing the cost of every new home, compressing margins for builders,” he said. “And they’ve been stalling new builds, stalling construction.”
Under the new agreement, the bulk of the $8.8 billion will be directed toward municipalities willing to cut their development charges by up to 50 percent. Ford made the terms crystal clear for local leaders across the province’s 444 municipalities: play ball or get left behind.
“You come to the table, and we’re going to give you the infrastructure you need and save the taxpayers within your community a tremendous amount of money,” Ford said. “If you don’t cut, you aren’t getting any money. But if you do, we will be there to support you.”
The funding is set to remain available for three years, with municipalities also expected to shoulder a portion of the costs tied to the fee reductions.
Toronto Mayor Olivia Chow, present at the announcement, noted her city had already begun trimming development charges ahead of the deal. She welcomed the federal-provincial partnership as a turning point for a city where housing affordability has become a defining crisis.
“For people who just want a home they can afford, this will make a real difference,” Chow said. “It lowers the cost of building. That means more homes built faster.”
The development charge cuts are only part of the story. Ford separately announced the province would temporarily eliminate the Harmonized Sales Tax on new homes valued at up to $1 million, effective April 1, 2026, through March 31, 2027. A federal partnership extended the relief to cover the full 13 percent HST not just Ontario’s portion.
Homes priced between $1 million and $1.5 million will qualify for a maximum rebate of $130,000, tapering gradually for properties valued up to $1.85 million.
Taken together, Carney said the elimination of HST combined with lower development charges could cut the purchase price of a new home by as much as $200,000 for first-time buyers a figure that, if realized, would represent one of the more significant affordability interventions in recent memory.
He also said the combined measures should help “unfreeze” Toronto’s condo market, which has been caught in what analysts at RBC have described as a “deep freeze” a toxic mix of retreating investors, elevated construction costs, stubbornly high interest rates, and a standoff between cautious buyers and hesitant developers.
While housing dominated the headlines, a portion of the funding pot has been earmarked for major transit infrastructure in southern Ontario. The province did not break out specific dollar figures for transit, but identified four priority areas: a high-speed rail corridor linking Toronto to Quebec City, expanded GO Transit lines across the Greater Golden Horseshoe, the Waterfront East Transit line along Toronto’s eastern lakefront, and new subway projects across the Greater Toronto and Hamilton Area.
Whether the measures will be enough to meaningfully move the needle on Ontario’s housing crisis remains to be seen. But for an industry that has spent years watching projects stall on spreadsheets rather than rise from the ground, the announcement marks a notable shift in both scale and political will.
