New funding announcements and tax reductions are helping, but they say more needs to be done
Governments in Ottawa and provincial capitals insist they want to build faster and hit ambitious housing targets. But lawyers in real estate and infrastructure say the legal framework still pushes in two directions at once, as local politics, entrenched fee structures, and overlapping rules often blunt the impact of new incentives and funding.
“About a third of the cost of developing, building, and selling a house is taxes and fees,” says William Liske, vice president and general counsel at Losani Group, which builds homes in Southern Ontario. “That has to change, because it’s way too costly to manufacture, build, and sell a house when a third of what you’re paying is government fees.”
Bill Liske
For Liske, the central problem is who controls land use decisions and how much those decisions cost builders to navigate. Federal and provincial tweaks to HST and development charges have chipped away at the margins, he says, while leaving the most expensive and unpredictable layers intact at the municipal level.
He breaks Ontario’s tax regime into three pillars. First is the longstanding GST/HST new housing rebate. It was introduced when “homes were cheap, and the government never increased the threshold,” he says, so it now maxes out far below current prices. Second is the rental housing framework, where development charge credits of 15 to 25 percent per unit offer some relief for purpose-built rental projects. Third is the new HST holiday for first-time buyers.
In practice, the combined impact on his buyers is limited. In his markets, fewer than 10 percent of purchasers qualify as first-time buyers, so “90 percent or more of the home buyers are seeing no benefit at all to the government incentives right now,” he says, while every buyer still shoulders significant embedded HST. His prescription is blunt: expand the full HST holiday to all buyers, with a cap at $1 million to keep the focus on attainable homes rather than luxury products.
He argues that expansion would address only part of the legal and financial friction in the system. For example, development charges have climbed to more than $100,000 per unit in Hamilton, before parkland and other fees, and those costs sit on top of the risks associated with hostile municipal approvals. “Eighty-three per cent of our approvals are from the [Ontario Land Tribunal] now,” he says. “We can’t build, we can’t expand, and we can’t contract either,” when councils elected on anti-development platforms block both greenfield expansion and infill intensification.
Liske’s solution is radical by Canadian municipal standards: pull some housing approvals away from local councillors entirely. “There has to be a way of putting decision-making for land use, planning, and home building in the hands of independent, neutral, and trained adjudicators,” he says, rather than politicians whose voter base “is diametrically opposed to facilitating housing.”
Where Liske points to structural resistance inside the system, Ottawa real estate lawyer Mitchell Leitman focuses on affordability measures that have backfired. In his practice at Rasmussen Starr Ruddy LLP, he sees the fallout from vacant-unit taxes, underused-housing levies, and non-
resident speculation taxes that were pitched as affordability tools but often become administrative headaches.
Vacant-unit taxes in cities like Ottawa were meant to force owners to put homes back into circulation, yet Leitman says the policy logic does not align with how most landlords behave. “It’s rare that people sit on homes and don’t make them available,” he says, pointing to situations like land assemblies, where owners expect to demolish buildings and are penalized anyway. The same disconnect appears in the non-resident speculation tax, which adds 25 percent to land transfer tax in Ontario for many foreign buyers; he recounts American clients who “gladly paid” the levy on a modest cottage, which he calls “another example of actions that did not necessarily translate to the outcomes that they’re hoping for.”
Dentons infrastructure and PPP partner Ethan Sinclair sees the shift away from purely punitive measures and toward direct federal and provincial spending as promising. The big story is the arrival of new funding bodies and legal vehicles that aim to address bottlenecks in enabling infrastructure rather than just tweaking the tax treatment of individual projects.
Ethan Sinclair
He points to the Canada Infrastructure Bank’s infrastructure for housing initiative and the federal Build Canada Homes initiative, which together provide financing for water, wastewater, utilities, roads, and transit that must be in place before new housing can be built, while also engaging in direct building on federal lands, opening new sources of capital, and committing billions to affordable housing.
“The financial constraints around development, both for housing specifically but also for the enabling infrastructure needed to allow for housing builds, have been a serious hindrance. What we are seeing and navigating now are new sources of funds,” Sinclair says, and clients are wrestling with new capital structures and procurement rules that come with that money. Those rules include “Buy Canadian” requirements for steel, wood, and aluminum that affect procurement for large infrastructure- and housing-related projects. Compliance has become a live legal issue for both authorities drafting RFPs and contractors seeking to avoid falling offside when sourcing and documenting their supply chains.
Even with new financing and procurement tools, Sinclair says the familiar municipal chokepoints still matter most for approvals. Zoning, development approvals, and building permits remain the main drag on getting shovels in the ground, with timelines that vary widely by municipality. Provinces have started to intervene directly – British Columbia’s municipal housing target program is a recent example – but he says the larger need is “a consistent and harmonized approach for municipalities” so builders can plan with some confidence across jurisdictions.
Vancouver development lawyer Alex Fane is watching the BC experiment and says the province has forced municipalities to confront their role in the crisis. After “years of governments imposing additional taxes and restrictions on housing,” he says, the new transit-oriented development mandates and housing targets show the province is trying to tackle local nimbyism head-on.
That does not mean projects all come to fruition. Fane says the combination of construction costs, heavy municipal fees, higher interest rates, and restrictions on foreign capital has pushed many projects to the sidelines. Even where additional density is legally available under provincial law, “there’s only so much that the province can do,” he says, because municipalities still control rezonings, extract the fees, and run the public processes that determine whether any given site moves ahead.
Fane argues that access to foreign capital remains “one of the more important” factors if governments want private builders to launch large projects again, because offshore pre-sale buyers historically underwrote a share of multi-family development. At the same time, he says policymakers need to be more honest about how their own requirements drive up hard costs. Environmental standards, amenity contributions, and development cost charges all have policy rationales, but “those increase costs,” he says, and if they are not re-examined, affordability targets will remain out of reach.
Across these perspectives, a pattern emerges: the legal tools Ottawa and the provinces are deploying to hit housing targets now reach into financing structures, infrastructure procurement, tax design, and municipal governance more deeply than the blunt instruments of a decade ago. Each layer brings its own conditions, frictions, and unintended consequences.
THE ‘CARROT’ INCENTIVES
Federal government: Build Canada Homes, and the $6 billion Canada Housing Infrastructure Fund provide a new federal builder and long-term infrastructure money to support affordable housing enabling projects nationwide.
Ontario: The March 30, 2026, Canada Ontario Partnership to Build puts $8.8 billion into housing-related infrastructure, pairs it with an HST rebate on new homes, and ties other provincial funds to municipalities that hit housing targets.
British Columbia: Under its “Homes for People” plan, BC couples mandatory small‑scale multi‑unit and transit‑oriented zoning with provincial funding and new development‑finance tools so municipalities can update bylaws, improve approvals, and build the infrastructure needed for more homes.
THE ‘STICK’ TAXES
Vacant home taxes: municipal surtaxes on homes left empty
Underused housing tax: tax on certain underused residential properties
Non resident speculation tax: land transfer surtax on foreign buyers
