What are the real impacts of taxes and fees on new housing supply?
One of the major cost drivers on new housing development is the application of taxes and fees by all levels of government. Rate increases paired with ongoing policy changes can often be unpredictable and difficult to navigate. Sometimes, the same government policies that are intended to support growth end up hindering it by placing significant pressure on development project budgets. This pressure is often amplified for new rental housing development, and in combination with other market and regulatory factors, impact the major supply-demand shortfall we see today.
In UDI’s newest report, Taxing Growth: Analysing the Taxes and Fees on New Housing Development, we analyse each tax and fee that goes into the cost of building new housing in Vancouver, Saanich and Kelowna. This not only brings to light the layers of costs on a new development, but also points to individual outliers that have significant impacts on project viability. For example, the application of the Federal Goods and Services Tax on rental housing, or any amount of a community amenity contribution. In recent months, British Columbians have seen a shift in political dialogue to focus more on increasing the supply of housing across the province. Policies such as the Housing Supply Act, Victoria’s Missing Middle Housing Initiative, and increasing investments into rental construction incentives and financing, all emphasize the urgency of the housing supply crisis, and the need to build more multi-family housing. However, some government-generated policies are still undermining the ability to do just that.
This study aims to identify the most impactful taxes and fees on new housing development, and provides multi-level policy recommendations for governments to support housing growth across British Columbia.