Ontario government proposing changes to crack down on huge pre-construction price hikes

The Ontario government is proposing new rules aiming to crack down on developers who cancel or hit pre-construction buyers with big price hikes as they wait for their new homes to be built.

The move comes after CBC News reported on cases of Ontario developers trying to force buyers to pay more than they initially agreed or lose their homes-to-be, with developers sometimes citing rising building costs. Amounts have often been tens of thousands of dollars higher than initially agreed.

Premier Doug Ford vowed that his government would do more to tackle these types of situations, in 2021 chastising developers who engaged in the practice, "Nothing burns me up more than that — some developer just trying to make extra money off the backs of hard-working people."

The province is now launching consultations to try and tackle price escalations and offer consumers more opportunities to get a clear picture of what they are signing up for when they enter an agreement to purchase a home. But also in the consultation paper is an indication the government is exploring how a developer can raise prices within limits, causing concern for some that the government may be about to miss the mark. 

Home buyer Jennifer LeFeuvre knows what it's like to be asked for a massive price hike after signing an agreement to purchase.

She told CBC Toronto she is in a sort of limbo after Briarwood Development Group told her she could either withdraw from a purchase agreement or the developer would be tacking on a $175,000 charge for her new home in Stayner, Ont., about 130 kilometres northwest of Toronto.

CBC Toronto tried without success to contact Briarwood Development.

After years of incurring expenses living elsewhere just waiting for her home to be ready, LeFeuvre says she doesn't want a cap on how much a developer can raise your home by after the agreement of sale is signed, she wants the government to get tougher on price hikes of any kind.

"Why is Doug Ford allowing his ministry to do this?... I feel like the ministry is going totally against what he's saying," she said after reading the proposals.

"I can go to Walmart and buy pots and pans there and I have more protection with buying pots than I do with buying the largest purchase in my lifetime," she said.

LeFeuvre says she wouldn't expect to get a late stage discount from developers if the price of lumber falls, so it shouldn't happen the other way around.

Real estate lawyer Blair Drummie Shares these concerns. 

"I want to see us go back to a state of normalcy, where the price was the price," he said. "Pre-2020 builders just didn't even comprehend increasing the purchase price."

Colin Blachar, a spokesperson for the Ministry of Public and Business Service told CBC the government welcomes direct input from Ontarians through the consultations, reiterating that better protecting buyers is the goal.