Update (Nov 3, 2023): NAIOP Edmonton joined 70+ organizations from across the country, to ask the federal government for an Urgent Amendment Required to Protect Current and Future Housing Supply. The proposal would extend the current GST rebate to purpose-built rental projects that are currently under construction.
On September 21st, 2023, the Government of Canada passed first reading of Bill C-56, aimed at boosting the construction of much needed rental housing for Canadians.
The proposed legislation will enhance the GST (Goods and Services Tax) Rental Rebate specifically for new purpose-built rental housing, including apartment buildings, student housing, and senior residences designed for long-term rental purposes.
Under this enhancement, the existing GST Rental Rebate will be significantly improved, increasing it from 36 percent to a full 100 percent. Additionally, the previous GST Rental Rebate phase-out thresholds for purpose-built rental housing projects will be eliminated. These changes will be applicable to projects that commence construction on or after September 14, 2023 but before January 1, 2031. The project must be substantially completed before January 1, 2036.
NAIOP Canada has requested more information about how exactly the government will define construction starting (CRA administrative guidance has historically has referenced beginning excavation).
NAIOP Canada Applauds the Announcement
NAIOP Canada applauded the Government of Canada's announcement, saying “rental apartment buildings are an essential component of Canada's housing stock but the application of the GST/HST has been a deterrent to additional rental construction. Minister Fraser's move to exempt the GST/HST on these projects will make it easier to build rental housing and will help unlock thousands of rental units across the country.
We welcome the quick decision by the Governments of Ontario, British Columbia and Newfoundland & Labrador to match the federal government's commitment to eliminate the HST. NAIOP Canada calls on other provinces with HST on purpose-built rentals to make the same commitment.
What it means for Edmonton
Many prominent industry members in Edmonton agreed, this was a strong move to promote the construction of more rental homes and address the pressing housing needs of Canadians.
“The removal of GST on purpose built rental projects is a positive step by the Federal Government. This will greatly improve the feasibility of rental construction across Canada and help to ease the financial pressures caused by rising interest rates and construction costs.” Daniel Wynnychuk, Director of Mortgage Originations with Canada ICI and NAIOP Edmonton’s Chair of Multi-Family Advocacy said. “We’re already seeing numerous projects that had previously been stalled move forward.”
“This will allow us to move forward with several projects in Western Canada that were otherwise unworkable” said Russell Dauk, Executive Vice President of Income Properties with Rohit Group. “We focus on building quality homes that people can afford. Rising fees, levies and regulations in many municipalities has made that challenging, but this move helps us close that gap.”
“We are continually working with municipalities to bring on additional rental housing” said Stewart Fraser, Vice President, Commercial, Acquisitions & Entitlements with Cantiro and Chair of NAIOP Edmonton’s Advocacy Committee – noting that multiple factors contribute to the cost and viability of rental projects, including both financial and procedural items. “GST has been a significant hurdle on the financial side of the ledger, so this move will lead to an increase in rental units being delivered.”
Next, NAIOP Canada looks forward to meeting with Minister Fraser to discuss other policy proposals to help address the housing crisis. As the oversupply of office space continues to be a significant issue across the country (highlighted in Altus Group's recent report) easing the conversion or replacement of older obsolete office buildings into residential housing or mixed use developments should be another component of the federal and provincial response to the demand for new housing.
For further information: For media inquiries, please contact: Anand Pye, NAIOP Edmonton, email@example.com