The Canada Mortgage and Housing Corporation said that municipal development charges are a significant barrier to fixing the national housing crisis.
These fees increase the cost of building new homes, which discourages developers and slows the rate of new housing starts across Canada. Because these charges are often steep in high-cost markets, they can make projects financially unviable for builders.
CMHC data suggests that reducing or eliminating these fees could lead to a measurable increase in construction. For example, eliminating development charges would boost housing construction in Burnaby, British Columbia, by 13.8% [1].
While the agency identifies these charges as a major obstacle, other reports indicate that slashing fees is not a cure-all for housing affordability [2]. The impact of fee reductions may vary by market, and some analysts said that a broader approach is necessary to lower the cost of living for residents [2].
Beyond municipal fees, the agency has highlighted other systemic issues affecting the industry. Eliminating interprovincial trade barriers could add 30,000 housing starts per year [3]. This suggests that while local fees are a primary hurdle, national trade restrictions also hinder the scale of available construction.
The current situation places municipal governments in a difficult position. These charges often fund the infrastructure required for new developments, such as sewers, and roads. Reducing them may spur building activity but could leave cities with funding gaps for essential services.
“Municipal development charges are a significant barrier to fixing the housing crisis.”
The CMHC's findings highlight a tension between municipal revenue needs and national housing targets. While lowering development fees can incentivize builders to start new projects, it does not address the underlying demand-side drivers of the housing crisis or the need for infrastructure funding, meaning a multi-pronged policy shift is required to meaningfully lower home prices.
