Paul Barker • Special to Postmedia Network, Toronto Sun, New Homes & Condos
There has been much debate for the past month or so since the federal government announced it was removing the Goods and Services Tax (GST) Rental Rebate on new purpose-built rental housing, on whether it was a purely political move, may do some good or both.
Among those applauding the move, which will see the rebate increase to 100 per cent and apply to new rental housing built for long-term rental accommodation, is Nick Ainis, the principal of Toronto-based Fusioncorp Developments Inc.
Ainis, co-author of a book released in April called Building Toronto’s Skyline, which traces the evolution of rental units starting with low-rise apartments built in the late 19th century for working-class families to the skyscraper towers that exist today, says instead of just talking about the problems related to building affordable housing, Ottawa “actually took some action.”
The rebate applies to projects in which construction began on or after Sept. 14 of this year, and on or before Dec. 31, 2030, and are completed by Dec. 31, 2035.
According to a department of finance Canada backgrounder, for a two-bedroom rental unit valued at $500,000, the rebate would deliver $25,000 in tax relief.
“To protect Canadian renters from renovictions, the rebate will not apply to individually owned condominium units, single-unit housing, and owned houses situated on leaded land and site in residential trailer parks …”
Ainis, whose company has been involved in projects ranging from luxury condominiums and townhome complexes to a housing initiative for low-and-moderate-income households, said prior to the announcement, building affordable rental units had been more difficult than it has ever been.
“Construction costs have gone up so much, that a lot of these projects are unable to work. I have a good friend who works as an affordable housing consultant and projects have just been killed because of inflation, escalations in construction due to supply chain issues and economic matters. We need something, we need ideas, and we need help from the government for sure. Some sort of subsidy, absolutely.”
And while the tax subsidy will not necessarily equate into cheaper rents, what he expects it will do is increase the number of units being built.
“The more units that are built might drop the price down a little bit for renters, but it’s going to take a long time for that to happen,” said Ainis. What a rebate could do, he added, is spur on construction.
“Interestingly enough, there is a project in Belleville we are involved with and it’s a joint venture with a family run company who are considering redeveloping a site. We are working with a planner and an architect and we’re actually considering building from condo to apartment rentals because of this decision from the federal government.
“It was something we weren’t thinking of before, but we weren’t sure. And now this actually makes us think about it, a little bit more. In places outside of Toronto, definitely rental is more viable in my opinion. If built, it will be a little over 200 units, so it is a sizable project. In places outside of Toronto, rental is definitely more viable in my opinion.”
Comments