NEW iniciative from federal government to accelerate purpose-built rental housing

The federal government recently announced an enhancement to the Goods and Services Tax (GST) Rental Rebate on new purpose-built rental housing to encourage the construction of much-needed rental housing stock across the country. If passed, this action will contribute to greater affordability in the rental market, as the removal of GST will apply to new purpose-built rental housing. This includes apartment buildings, student housing, and senior residences built specifically for long-term rental accommodation. Following the federal announcement, the provincial government has pledged to work with Ottawa to ensure Ontario’s portion of the HST is removed from purpose-built rental housing as soon as possible.

TRREB (Toronto Regional Real Estate Board) has been leading the call for action on housing supply and affordability. We are confident that this is a necessary measure to ensure that the Greater Golden Horseshoe Region will meet its housing supply targets and to establish the viability of more affordable housing projects that residents need.

The federal government provided additional details on what projects will qualify for the GST rental rebate in buildings with at least:

1. Four private apartment units (e.g., a unit with a private kitchen, bathroom, and living areas), or at least 10 private rooms or suites (e.g., a 10-unit residence for students, seniors, or people with disabilities); and,
2. Ninety per cent of residential units designated for long-term rental.

For example, the savings achieved by removing the federal GST from new purpose-built rental developments would amount to $25,000 of tax relief for a two-bedroom rental unit valued at $500,000.

If passed in legislation, the enhanced GST Rental Rebate will apply to projects that begin construction before December 31, 2030, and complete construction by December 31, 2035.

What you could expect from this new initiative in simple terms is more housing in the market hence lowering the so much soared rental prices. Currently the rental market is experiencing an exponential increase and there are many speculations on why this is happening, but in reality we are far behind the residential accomodation that so much is needed from locals and new immigration.  

For details and more, click on the following link.

https://www.canada.ca/en/department-finance/news/2023/09/enhanced-gst-rental-rebate-to-build-more-apartments-for-renters.html

Source TRREB