Posted 12.17.13 @ 14:9
Home prices aren’t just rising in the metro areas – all across Ontario buyers are seeing the cost of housing rise – and it may not be a good thing. Right now some new land-use planning rules could go into effect, and the province is seeking input from everyone to see how they could ease the cost on homebuyers but still provide for development province-wide.
Development Taxes Big Business
Last year in Ontario alone over a $1b in fees were paid by new homeowners that went towards community development. Today these fees consist of 20% of a new home’s cost – mainly because new homes are believed to put more stress on the grid and should have to help pay to maintain and improve the community.
The BILD and OHBA are asking people to comment during their 80 day consultation this fall; the goal of the meeting is to create affordability and fairness for homeowners across the board, whether they’re buying a brand new home or not.
Fees 20% of a Home’s Cost
As mentioned earlier, the average new home will have an additional 20% slapped on to the cost of it, which may be deterring some buyers.
But why do buyers of new homes have to pay these fees? Development charges are used as a transitional funding mechanism. Need new roads? Want to wire your community for fibre optics? Need to provide affordable community services like transport, upgrade waste facilities or build something else for the community? Those development fees come in handy!
There is a hidden cost with developmental fees: instead of encouraging green, compact and transit friendly homes, a community winds up subsidizing single family homes that just aren’t all that green.
Last Year Construction Generated $10.8b in Real Wages
So the question is this: shouldn’t buyers of new homes have to contribute to the community in some way?
Brian Tuckey, a land-use planner and dev fee activist in Toronto, has said that in addition to the average of $116,000 people pay on top of their homes (and we’re talking a normal range detached home here, not Oakville luxury real estate) people building homes in Ontario generated $10.8b in real wages, that’s take home pay.
It’s estimated that for every $10,000 of fees added on, a homebuyer will have to pay $6,000 extra in interest over the course of a 25 year mortgage term. It all adds up!
Bringing Down the Costs
Even if you don’t live in the GTA (yet!), you’ll want to pay attention to the changes with the development fees. Attend some meetings, leave a comment, if it doesn’t affect you right now, it could affect you later.
We can’t make your development fees disappear when you build a new home, but we can help you find a great place to put your next home – or better yet, maybe one that you don’t have to build at all. Give us a call today and see what the Goodale Miller Team can do for you.