Olivia Chow, Doug Ford and Mark Carney agree on a jumbo $8.8-billion housing deal

In a “historic” (their words) display of intergovernmental harmony, Ottawa, Queen’s Park and city hall have struck a $8.8-billion deal to spur housing construction across the province. Mayor Olivia Chow, Premier Doug Ford and Prime Minister Mark Carney announced the news in Etobicoke today: under the Canada-Ontario Partnership to Build program, the federal and provincial governments will each commit $4.4 billion over the next decade to build new homes as well as accompanying infrastructure like roads and water systems.

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The idea is that, if governments pick up more of the tab for housing, municipalities can charge developers less. The new policy slashes development fees by up to 50 per cent in participating municipalities for the next three years.

“Development charges have been growing at an unsustainable rate, increasing the cost of every new home, compressing margins for builders,” Carney said at the press conference. “They’ve been stalling new builds, stalling construction.”

In Ontario, these added costs have surged by as much as 1,000 per cent over the past decade, adding roughly $100,000 to the cost of a new home.

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Now that the provincial and federal governments have committed the dough, municipalities must apply for the program. It remains to be seen which cities will sign on—and whether lower fees actually lead to more construction and, in turn, more affordable homes.

This new tri-level partnership also axes the 13 per cent HST for all new-home purchases valued at $1 million or lower until March 31, 2027. The move, announced last week, is expected to save homebuyers up to $130,000. A lesser rebate—up to $24,000—will be available for homes valued over $1.85 million.