Toronto gets $1.5B to cut development charges 40-60%
Federal-provincial deal to reduce costs and spark housing construction. New rental incentive program launches for affordable projects.
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Toronto has secured $1.5 billion in federal and provincial funding to reduce development charges by 40 to 60 per cent between 2026 and 2029, aiming to lower barriers to new housing construction.
The city will distribute the funding over 10 years, cutting its reliance on development charge revenues to finance capital investments. The reduction exceeds the original program requirement of 30 to 50 per cent cuts.
As part of the deal, Toronto is launching a new phase of its Purpose-Built Rental Housing Incentive Stream, which provides indefinite deferral of development charges for projects that include a minimum of 20 per cent affordable housing.
Housing experts caution that lower development costs alone won't solve Toronto's affordability crisis. Frank Clayton, a senior research fellow at the Center for Urban Research and Land Development at Toronto Metropolitan University, notes that developers typically price homes based on market conditions rather than simply passing savings to buyers. "If demand is strong, prices will be higher. If demand is lower, developers might price properties to cover costs and make reasonable profit," Clayton said. With current market conditions slower than the pandemic boom, developers may have less room to pocket windfall gains.