Local: Ottawa City Council Approves New Development Charges
Earlier this year, the Ottawa City Council approved new development charges, an increase of about 11-12% from previous charges. The result is that inside the Greenbelt, single and semi-detached houses now face development charges of $55,678 per unit. Outside the greenbelt, new charges will be $63,337 for single and semi-detached homes.
The changes were approved by City Council despite heavy pressure from the Ministry of Housing, Infrastructure, and Communities to refrain from doing so, as they contradict the federal government’s efforts to make housing more affordable. Additionally, Sean Fraser, the housing minister, went as far as to say that Ottawa may not qualify for a share in the $6-billion infrastructure fund should the Council approve the increases.
The approved changes are an attempt to bring the Ottawa area development charges more in line with the rest of the province. In particular, the charges in Ottawa are on the lower end of the spectrum, with development charges in Vaughn reaching nearly $150,000.
The city projects that the new development charges will create $130 Million in revenue for parks, libraries, roads, etc. For potential homebuyers in the Capital Region, however, the changes will make the goal of home ownership slightly harder to achieve.
National: Federal Government Increases the Insured Mortgage Cap, Broadens 30-year Mortgage Amortization Eligibility
In addition to the municipal changes, the Federal Government announced two significant reforms to the mortgage rules to make homeownership more accessible. The following reforms will be effective December 15, 2024:
- Increasing the Insured Mortgage Cap from $1 Million to $1.5 Million: For the first time since 2012, the insured-mortgage cap will be increased. The increase will now allow Canadians to qualify for a mortgage with a down payment below 20 percent for homes up to $1.5 Million.
- Broadening the 30-year Mortgage Amortization Eligibility: All first-time homebuyers and all buyers of new builds will be eligible for a 30-year mortgage amortization. An extended, 30-year amortization will allow for lower monthly payments and, accordingly, increase a buyer’s purchasing power.
The Federal changes above are a clear attempt to help more Canadians, particularly younger generations, buy a home. Although they will be beneficial in the short term, creating greater access to home ownership, these policies will in fact result in new owners paying more in the long run.
It is no secret that the long-term solution to the housing crisis is a dedicated plan to increase supply – build more homes. In fact, in addition to these policies, on September 16, 2024, the Federal Government announced its plan to build nearly 4 million homes, what it calls “the most ambitious housing plan in Canadian history.”
It remains to be seen what impact these developments will have on the housing industry.
This blog post was written by Daniella Sicoli-Zupo, a Partner in the Real Estate team, and Colton Allen, Articling Student. Daniella can be reached at 613-369-0378 or at [email protected].
