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BC Housing Minister Kahlon praises GST rebate on new rental construction

Prime Minister Justin Trudeau announced the rebate Thursday
Housing Minister Ravi Kahlon (left), here seen at the August groundbreaking for a new 152-unit housing development in Tsawwassen with Delta Mayor George Harvie, KinVillage resident Pat Marsh, KinVillage board chair Dennis Deslauriers and KinVillage Association CEO Dan Levitt, welcomes the federal government’s decision to rebate the GST on new rental constructions. (Province of British Columbia/Flickr photo)

A leader in the provincial home building industry welcomes the federal government’s promise to remove the GST on new rental construction, but notes that taxes represent only one obstacle to more housing.

Casey Edge, executive director of the Victoria Residential Builders Association, said the removal of the GST will help new rental projects move forward.

“(It) is overdue and welcome,” he said. “Rent has been increasing, partly due to homebuyers bumped out of the market by higher mortgage rates. So there is greater demand for rental. Tax relief is needed for both rental and new housing for sale. The federal (government) could also index the GST New Home Rebate to inflation and today’s prices as promised when it was introduced in 1990.”

But the GST is only one of many issues challenging new rental housing in Greater Victoria, Edge said. Others include community amenity contributions, what Edge called “exorbitant” development cost charges, permit fees and costs related to step codes, he said.

Edge also called for a cultural shift, noting that some municipalities in Greater Victoria do not want to build multi-family rental housing.

Edge is not the only voice praising the federal government’s promise to remove the GST on new rental construction.

Housing Minister Ravi Kahlon said in a statement that Thursday’s announcement represents “very positive news” and a “significant step” toward enhancing housing affordability.

“I’d like to thank Canada for following through on B.C.’s request to remove GST on purpose-built rental construction,” he said.

Kahlon made the comments after Prime Minister Justin Trudeau announced the measure as part of a broader policy package to increase the housing supply. Other provinces and the Canadian Home Builders Association also praised the announcement with legislation said to be forthcoming next week.

“This is something we have called for for a long time and is a measure that will continue to be necessary for many years to come to ensure much more rental housing supply is built,” Kevin Lee, CHBA’s CEO, said in a statement. “Purpose-built rental is an important part of the housing continuum and a must to be among the 5.8 million homes that Canada needs to build over the next decade to make up the housing deficit.”

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It is not clear yet how much the rebate will cost and how many new rental units it will create. Trudeau’s government had first promised it in the mid-2010s only to back away from it later.

The move comes as the government — trailing in the polls to the Tories under Pierre Poilievre by 15 points, according to a recent poll — has been facing wide-spread criticism for its housing policy. Critics of Trudeau specifically pointed to the disconnect between the government’s policy to encourage more immigration, while seemingly handing off primary responsibility to the provinces.

Kahlon said at the time that he would give Trudeau the “benefit of doubt” but also called on Ottawa to do more.

The promised rebate also comes during a time of high interest rates. They have been at their highest point in more than two decades, discouraging not only home purchases, but also developers from supplying more housing, especially when it comes to rentals. The construction industry has also faced rising costs for various goods.

This combination of high costs and low incentives to build more housing has caused the construction industry in B.C. to shed jobs, thus further compounding housing shortages.

The provincial government has announced or already implemented a series of measures to help improve the supply of housing, but it will likely take some time for those measures to have an impact.


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Wolf Depner

About the Author: Wolf Depner

I joined the national team with Black Press Media in 2023 from the Peninsula News Review, where I had reported on Vancouver Island's Saanich Peninsula since 2019.
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