GST removal on rental builds won’t lower prices any time soon, experts say
Global News
The removal of GST for rentals in Canada is a welcome step to create more housing affordability but its impact on rents likely won't be felt any time soon, experts say.
The federal government’s removal of GST for rentals in Canada is a welcome step to create more housing affordability but its impact on rents likely won’t be felt any time soon, experts told Global News.
Prime Minister Justin Trudeau announced the immediate removal of the five per cent tax for those projects on Thursday. The idea was first put forward as a 2015 campaign pledge by the Liberals but it had never come into fruition until now.
Matti Siemiatycki, the director of the Infrastructure Institute at the University of Toronto, said Friday that the Liberals are “playing catch-up” in terms of addressing the housing crisis.
“(Cutting the GST) will increase supply, but there’s no guarantee that this is going to bring down prices and it certainly won’t do that any time soon,” he said.
“We’re playing catch-up here and trying to fill gaps that had been decades in the making.”
Siemiatycki said removing the GST is a good first step, but one that is a little late considering the time it takes to create more supply and the urgency of the matter.
He also said there could be some headwinds for affordability, such as increased demand from more immigration, inflation and interest rates. The Canada Mortgage and Housing Corporation recently predicted that Canada will be down 3.45 million homes by 2030 compared with what it needs.
The Canadian Home Builders’ Association said Thursday that the government’s action addresses a “long-standing issue” that has prevented construction of more rental housing, with CEO Kevin Lee saying it was something they had called for for a long time and would be necessary for “many years to come” to ensure more rental housing is built.
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