One neat trick to build more apartments

Alongside milk, bread, and prescription drugs, new apartment buildings are now GST-free. 

What happened: The federal government announced an immediate removal of the federal GST on the construction of new rental apartments—a move Ottawa urged provinces to follow. 

  • The idea is pretty straightforward: If you make labour and materials cheaper for building rental units, more developers will build rental units. In turn, more rental units will mean less competition to find shelter, resulting in cheaper rents. Simple as that! 

When asked for a specific target number of new buildings by 2025 the move would create, Housing Minister Sean Fraser said couldn’t he couldn’t “put an exact number” due to market forces beyond government control, but that it should be “many thousands of homes.” 

Why it matters: That sounds good, as Canada needs many many thousands of new homes. Well, millions, actually. Per the CHMC’s latest numbers, Canada still needs 3.45 million more new homes by 2030 to return affordability levels to what they were in 2004. 

Yes, but: Even if this policy spurs the creation of more houses—something we’ll have to wait and see about—critics say that this action should have been taken much earlier.

  • Scrapping the GST on new rental builds was, in fact, part of the Liberals’ 2015 election platform.

Zoom out: The feds also made other announcements aimed at cost of living concerns, including a one-year extension of the repayment deadline for loans given to small businesses under emergency pandemic relief programs and a demand that the country’s major grocers devise a plan to bring down food prices. —QH