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Renters across Canada may be able to look forward to more affordable rents in the near future.
Renters across Canada may be able to look forward to more affordable rents in the near future.
After years of requests from real estate developers, the federal government announced on September 14th that it will exempt new rental apartment buildings from paying 5% GST on construction costs. The intention is to incentivize developers to proceed with constructing rental apartments, which should increase the availability of rental units and ideally bring down rent prices.
Real estate developers have argued that rising costs make it financially impossible to build rental apartments, which limits supply and drives up rents. One of the reasons being that rental buildings require the developer to pay 5% GST on its construction costs, since there is no ultimate buyer of the unit. For condo and townhome sales, the ultimate buyer pays the 5% GST instead of the developer. For many developers, the GST on rental projects alone could be millions or tens of millions dollars, which is often the difference between whether a developer decides to build or not.
The impact of this policy will remain to be seen, but giving developers a break on GST should see more rental units constructed, ultimately benefiting supply.
If you have any questions regarding this new policy or real estate law in general, reach out today.
Lawyer
Aman Bindra and his team assist clients with all real estate, banking, and business matters, including purchases and sales of real estate and businesses, borrowing and lending, land development and construction, and leasing.
Aman has extensive experience working with individual, business and corporate clients throughout British Columbia. He regularly advises on and prepares agreements relating to land, asset, and share purchases, financings, and construction projects, and he assists with leasing, incorporations, partnerships, corporate reorganizations, and more.
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