Ottawa expected to remove GST on new rental apartment builds | Globalnews.ca
Ottawa expected to remove GST on new rental apartment builds | Globalnews.ca
The federal government is removing the GST on all new apartment constructions in an effort to ease the financial burden on builders amid high interest rates.
So does this only benfit building developers? Seems like another rich getting richer situation.
Maybe, but if you need more housing, rewarding development is what you need to do.
It's like when someone cries: "We need more workers". What's the answer? That's right: "Pay them more!". This time it's "We need more houses". But the answer is the same: "Pay them more!"
I'm having trouble with the "if you need more housing, rewarding development is what you need to do." Part
From my limited understanding the purpose of a developer is to do speculative research to determine what building ideas they can make a profit off. They pay the builders and then find a buyer for the finished product.
So I can see how removing the gst can help motivate the building of apartments. but is that really the best strategy? It seems like a gamble to me. If it's still more profitable to build over priced condos they'd stick to that. Having affordable apartments near by those condos may lower the demand for expensive condos. So it may not be in the best intrest of developers to make them, let alone make them last.
We'd need somthing a little more systemic. Somthing not dependent on doing the profitable, thing but doing what is nessary to ensure there is quality affordable housing.
Justin Trudeau could eliminate poverty, feed the world's hungry, and bring about world peace and you Eeyores would still find a way to chant, "TrUdEaU bAd!"
He wouldn't do that even if he could.
I have no love for the Liberals but this is indisputably good policy for incentivizing rental supply. Gotta give credit where it's due.
What is the plan to avoid this just ending up as a bargain for the speculators that routinely up new properties to rent/resell at a markup? Is there something in the legislation to counter predatory practices?
Housing is financialized because it’s a scarce commodity. Removing scarcity removes financialization.
An abundance of housing improves options and lowers rents.
I would prefer to see more targeted measures to deter speculation, such as Singaporean-style heavy taxation of residential units owned by corporations, non-residents, and owners of multiple homes.
That to me is one of the few true solutions, and we know if works because it's been done elsewhere:
It hadn't worked prior to April 2023. It is really too early to tell if the elevated rates after that have worked.
A combination of the 2 sounds good actually. Heavy taxes as you mentioned but also exemptions for purpose built rentals (as an entire building, not individual units)
I agree that we need to incentivize the construction of more supply, but while adding supply takes a long time, reducing demand can be done with the stroke of a pen. Here are some ideas that can be implemented overnight:
- Singapore-style taxation of residential units sold to corporations, non-residents and people who already own a home.
- Yearly tax on residential units, offset by refundable tax credits. This means that only non-residents would pay this tax, discouraging foreign speculators.
- Switch from a property tax to a land value tax to discourage real estate hoarding. A land value tax encourages land to be used.
- Temporary reduction of immigration quotas of all kinds, to be progressively relaxed over time as specific housing targets are reached.
I don't know how I feel about these incentives. I feel like we should stop going through the market in solving this. Great amounts of money sink into it and don't come out elsewhere in the economy. I feel like some level of government itself should begin building rentals, perhaps hiring construction firms to do the actual builds. Make basic, robust designs and reuse them, driving the costs down. Get fast tracked approvals to build these everywhere in the large metropolitan areas. Offer rents at cost. I can't help but feel that if we keep going through the market, we're gonna keep getting "luxury" buildings that attempt to command higher rents to maximize profit. And then we end up paying this profit via the incentives we provide and the rents we pay. This feels terribly inefficient.
While you gotta start "somewhere", this is as close to "nowhere" as a govt could possibly go.
Lol, so a contractor build a 16 units rental condo for ~3 millions $, will not pay GST, and rent them 2500$/month.
How does it help people?
Ignoring these hypothetical numbers, an abundance of housing means more options for renters. In this case the developers have to compete for our rental money. This means lower rents.
Goods and Services Tax (GST)
This does reduce financial barriers. Good on the liberals.
Anyone notice how every incentive to increase housing is almost always rental style properties? They really want to squash ownership eh?
Genuinely baffling take, our entire system prioritizes the homeowner above all else. Policies like a GST exemption are the smallest of crumbs in a world where it's literally illegal to build an apartment building in 80% of the land in our largest cities.
Only looking at (taxpayer-funded) subsidies alone, homeowners get FHSAs, first time buyer tax credit, home buyer's plan, tax-free imputed rent, unlimited capital gains exemption, and a slew of other provincial grants. This is all while they build equity! What do renters get in comparison?
Arguably purpose built rental buildings have tighter control over the cost of that rental. Condo buildings on the other hand have inflated cost at the builder end because they have to be built fancier to entice buyers. That's why you only see "luxury" condos with names built. Then you have buyers outbidding each other, inflating the purchase price for those condos. As a result a much bigger amount of money is locked into that building doing nothing other than extracting interest and higher maintenance fees from the owner.
The reason I'm talking about buildings is because you can't solve the housing problem with houses. They don't work economically or environmentally. In that case the only relevant modes of housing are rental buildings and condos.