Fresh Takes

Mayors Need to Shoulder Their Responsibilities

Certain mayors would have us believe that everyone, except them, should share the blame for the increase in housing prices.

Yet quite a few of their policies have the effect of exacerbating the mismatch between supply and demand, which maintains the dearth of housing, and even makes it worse.

For example, more and more municipalities fund themselves through taxes on new builds. These are known in municipal circles as “development fees.” Under the guise of funding the municipal infrastructure required for development, these taxes artificially inflate the cost of new units, and therefore the price paid by the buyer or renter.

Then there’s the lucrative welcome tax—also called the “transfer tax”—which municipalities have no scruples about raising even as house prices are exploding. Saint-Lambert, for example, with property values rising in 2020, decided to double the maximum rate of this tax, from 1.5% to 3.0%. While City coffers are in good shape, new owners feel the effect of the increase on the cost of acquisition.

Moreover, there are policies like the City of Montreal’s “20-20-20” regulation which, ostensibly to promote affordability, increases construction costs by up to $10,535 per unit. This cost is then passed on to the buyer.

Far from fighting the increase in housing prices, mayors have actively abetted it in recent years with such restrictive development policies.

The first step toward a solution would be for them to recognize their own role in this drama.

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