The following blog post was written by Michelle McNally for Royal LePage – original blog here

The federal and Ontario governments have announced a major joint initiative to address housing supply and affordability challenges across the province.

Unveiled on March 30th by Prime Minister Mark Carney and Ontario Premier Doug Ford, the Canada–Ontario Partnership to Build is a 10-year, $8.8 billion agreement designed to reduce development costs, accelerate housing construction, and invest in critical infrastructure.

“Our new partnership with Ontario is about building more affordable homes, more transit, and more careers in the skilled trades. We’re tackling the housing crisis from every angle – so we can build up housing supply and bring down costs for Canadians. We’re building Ontario strong and Canada strong,” said Prime Minister Carney in a statement.

In total, the partnership could reduce taxes and fees on a new home in Ontario by up to $200,000, making homeownership more accessible for Canadians.

Lower development charges to accelerate housing construction in Ontario

A central pillar of the plan is the reduction of municipal development charges, one of the largest upfront costs associated with building new homes.

Under the agreement:

• Development charges may be reduced by up to 50%
• Reductions will be in place for a three-year period
• Municipalities representing approximately 80% of Ontario’s population will be included

To support municipalities, the federal and provincial governments will cost-match $8.8 billion over 10 years for housing-enabling infrastructure.

This funding is designed to offset lost municipal revenue while requiring local participation to ensure a coordinated, province-wide approach.

By lowering upfront costs, the policy aims to:

• Improve project feasibility
• Reduce construction delays
• Increase the pace of new housing development

New HST rebate and tax relief for Ontario homebuyers

The partnership also introduces enhanced tax relief for buyers of newly built homes, a key move to improve affordability.

Key measures include:

• Removal of the full 13% HST on new homes valued up to $1 million
• A maximum rebate of $130,000 for homes priced up to $1.5 million
• A phased rebate reduction for homes priced between $1.5 million and $1.85 million

These measures apply to eligible purchase agreements signed between April 1st, 2026 and March 31st, 2027.

According to provincial estimates, these changes are expected to:

• Deliver approximately $2.2 billion in tax relief
• Support the construction of 8,000 additional homes in the next year
• Create up to 21,000 jobs
• Contribute approximately $2.7 billion to Ontario’s GDP

This builds on previous federal housing affordability initiatives, including the GST rebate for first-time homebuyers.

Major transit and infrastructure investments to support housing growth

In addition to housing measures, the agreement includes significant investments in transit and infrastructure, aimed at supporting population growth and enabling higher-density development.

Key projects include:

• Waterfront East Transit Line (Toronto): Expected to serve 150,000+ residents, support 50,000 daily trips, and enable up to 75,000 new homes
• GO 2.0 Expansion: Increased service across the Greater Golden Horseshoe
• Alto High-Speed Rail (HSR): Continued planning for a Toronto–Québec City corridor
• Major GTA transit projects: Including the Ontario Line, Eglinton Crosstown West Extension, Scarborough Subway Extension, Yonge North Subway Extension, and Hamilton LRT

These investments aim to reduce commute times, improve access to employment, and support transit-oriented housing development.

What the Canada–Ontario housing partnership means for the market

The Canada–Ontario Partnership to Build represents a coordinated, multi-level government approach to tackling housing affordability and supply constraints. As these measures roll out, they are expected to play a meaningful role in shaping Ontario’s housing market, development pipeline, and broader economic landscape over the next decade.

“Today’s agreement will be transformational for Ontario and Canada, delivering new homes, transit and infrastructure and supporting hundreds of thousands of good-paying jobs for Ontario workers,” said Premier Doug Ford in a statement. “Our government will continue to deliver on our plan to protect Ontario in partnership with the federal government and municipalities by lowering the cost of building, getting shovels in the ground faster, cutting red tape and investing in workers.”

Read more details on the Canada-Ontario Partnership to Build initiative here.