5 takeaways from the Canada-Ontario homebuilding deal

Premier Doug Ford and Prime Minister Mark Carney signed a sweeping intergovernmental deal this week that could reshape the economics of homebuilding in Ontario for years to come. The Canada-Ontario Partnership to Build commits more than $8.8 billion in joint federal-provincial funding over a decade, targeting housing supply, transit infrastructure and development cost reductions.

Here is what construction and development professionals need to understand about the agreement.

1. Development charges could drop by up to 50%

This is perhaps the single most consequential item for builders. The agreement establishes a cost-matched $8.8-billion infrastructure fund — split equally between Ottawa and Queen’s Park — specifically designed to offset the revenue municipalities would lose by cutting residential development charges (DCs).

The deal identifies “priority municipalities” where DCs are considered cost-prohibitive and targets substantial reductions of between 30 and 50% for a minimum three-year period. Municipalities that have already voluntarily reduced DCs will receive recognition, provided they maintain those reductions. For developers active in high-growth Ontario markets, this could meaningfully change project pro formas, particularly on projects that have been sitting on the shelf waiting for improved economics.

Critically, the funding is tied to municipalities putting forward “ready-to-build” infrastructure projects, so the release of capital will be conditional.

“You come to the table, and we’re going to give you the infrastructure you need and save the taxpayers within your community a tremendous amount of money,” said Ford. “We can get more shovels in the ground across Ontario and keep the dream of home ownership alive.”

2. HST on new homes is eliminated for purchases up to $1.5 million

Ontario and the federal government are moving to remove the full 13% HST on eligible new home purchases valued up to $1 million, for a maximum rebate of $130,000. That maximum rebate will also apply to homes valued between $1 million and $1.5 million — a significant change from the previous structure.

For homes valued between $1.5 million and $1.85 million, the rebate scales down proportionally. The federal government’s share of the arrangement is valued at $875 million, subject to parliamentary passage, while total estimated tax relief across the province is pegged at $2.2 billion.

For builders and developers, this is a meaningful demand-side stimulus. Removing $130,000 in tax burden from a $1.2-million home changes the calculus for buyers sitting on the fence. And it could accelerate absorption in mid-market new construction projects.

3. Major GTHA transit projects are finally getting contribution agreements

The agreement sets a hard deadline: federal contribution agreements on 5 previously announced Greater Toronto and Hamilton Area transit projects must be concluded within 90 days. Those projects are the Ontario Line, the Eglinton Crosstown West Extension, the Scarborough Subway Extension, the Yonge North Subway Extension and the Hamilton LRT.

For the construction industry, this matters because protracted federal funding uncertainty has been a persistent source of project delays and procurement hesitation. Locking in federal contributions within a defined window should allow Metrolinx and municipal partners to advance procurement and contracting timelines with greater confidence.

4. A $3-billion Waterfront East Transit line is moving to a three-way cost share

The federal government, the province and the City of Toronto have agreed to each contribute one-third of the estimated $3-billion cost to plan and construct the Waterfront East Transit line, which will serve Toronto’s East Bayfront and Port Lands — one of the largest urban development areas in North America.

A notable condition: the federal and provincial governments will not be responsible for cost overruns. That shifts overrun exposure entirely to the City of Toronto, a detail that will likely influence how the project’s procurement and contract structures are designed. Builders and contractors eyeing work in this corridor should pay close attention to how that risk allocation flows down through the contracting chain.

5. Buy Ontario provisions apply to all projects under the agreement

It might be buried in the fine print, but it’s important: all projects funded under the Canada-Ontario Partnership to Build will be subject to the provincial government’s Buy Ontario policy, which prioritizes domestic suppliers, services and materials.

For Ontario-based contractors, subcontractors and suppliers, this is a competitive advantage worth noting. For firms that rely on cross-border supply chains — particularly given the current tariff environment — it is a compliance and planning consideration. The agreement was explicitly framed as a response to U.S. tariff pressure and economic uncertainty.