Toronto Defers Development Charges on 3,000 Condo Units to Stimulate Construction

Toronto City Council has approved a program to defer development charges on up to 3,000 near–show–ready condo units, providing an immediate fiscal reprieve for developers and aiming to stimulate housing construction in a cooling market.

This deferral of development charges could provide a modest, short-term relief measure that may improve the financial profiles of near–shovel-ready condo projects. By delaying tax costs, estimated to save roughly $19,000 per unit upfront, developers might have greater liquidity to advance construction, which could help stabilize market activity. However, it is important to note that the savings are deferred rather than eliminated, with the full charges due at a later date without interest. 

Affordable Housing Requirements

Under the new initiative, qualified developments must include a modest percentage of affordable housing, with projects incorporating a higher proportion of affordable units receiving priority. City staff estimate that, on average, the deferral will save developers approximately $19,000 per condo unit. This saving is achieved by postponing the payment of development charges, which normally range between $52,000 and $80,000 per unit depending on the number of bedrooms. No interest will accrue on these deferred charges.

Scope

The program specifically targets projects that are already well advanced in their development process (“near-shovel-ready”), ensuring that the initiative directly contributes to releasing stalled projects. City officials hope this measure will accelerate construction, thereby helping to mitigate further declines in Toronto’s housing starts, which have seen a significant downturn.

Financially, the plan represents a commitment by the city to absorb more than $180 million in deferred revenues. Additionally, by waiving the interest that would normally be generated on these funds, the city anticipates a potential revenue loss of up to $28 million over the course of four years. 

Bolstering Against Uncertainty

The approved measure comes at a time when the local housing market is facing heightened uncertainty. With the slowdown in housing starts raising concerns about meeting the demands of current and future residents, the program is viewed as a strategic intervention to unlock new development. In doing so, it directly supports the creation of owner-occupied homes, bolstering both the housing supply and the local economy. There has also been discussion that measures like this could provide some protection against the impacts of tariffs.