Ottawa, B.C. to spend $3.2-billion to cut homebuilding fees

Rachelle YounglaiReal Estate Reporter Published 5 hours agoUpdated 3 hours ago Open this photo in gallery: Prime Minister Mark Carney shakes hands with construction workers at a construction site in Vancouver on Thursday. Chad Hipolito/The Canadian Press Save for laterPlease log in to bookmark this story. Log InCreate Free Account The federal and B. C. governments will spend up to $3.2-billion to help reduce homebuilding costs , and they plan to help developers get rid of their unsold condominiums in the province. The joint housing announcement on Thursday is Ottawa’s latest attempt to bolster the troubled homebuilding sector and condo market. Ottawa said about 2,500 newly built condos in British Columbia are sitting empty with no buyers. Investors used to account for the majority of the new condo purchases, but a decline in the housing units’ profitability has caused them to lose interest. That has led to a drop in sales, buyer defaults and scores of unsold product. “With higher interest rates, weak investor demand, developers are stuck,” Prime Minister Mark Carney said in prepared remarks for an infrastructure announcement in Vancouver. “They do not want to sell at a loss, but they also cannot afford to hold the empty units indefinitely.” Rita Trichur: It’s time to purge the concept of ‘starter homes’ Through a new partnership, Mr. Carney said, the two governments would use financing tools from Ottawa’s new housing agency, Build Canada Homes, to “convert thousands of vacant condo units into affordable homes.” “The problem is that these empty homes do not just sit idle,” Mr. Carney said in his prepared remarks. “They also disincentivize new construction, unsettle lenders and investors, and create a housing market that is, in effect, frozen.” The Prime Minister’s remarks did not provide details on the financing tools, or specify whether the government would purchase the unsold condo units from developers or provide them with other support to do conversions. Carney also announced an initiative similar to a new program in Ontario that will cut development charges, which are fees municipalities impose on developers to build infrastructure such as roads and sewers for new housing developments. Those charges have spiked across the country, saddling developers with hefty fees on top of their construction expenses. That in turn has driven up the cost of new housing. C. with $1.6-billion to help fund the province’s infrastructure, and the province will match the funding.