Webinar March 2026: Reflections from the development charges & tax reforms in Ontario
When Housing Stops Making Sense: Inside Ontario’s Development Crisis
Last Thursday, Trainex brought together two of the most experienced voices in Ontario’s development and construction landscape for a conversation that felt less like a webinar—and more like a reality check.
What unfolded was not just a discussion about development charges or tax policy. It was a deeper examination of a system that, by many measures, has stopped working.
At the center of the conversation were Richard Lyall, President of RESCON, and Marlon Bray, Executive Vice President at Clarke Construction Management. Between them, they offered a rare combination of policy-level understanding and real-world execution—connecting legislation, economics, and on-the-ground feasibility in a way that few conversations manage to do.
And the conclusion, repeated in different ways throughout the session, was clear:
the housing system in Ontario is under real strain, and something has to change.
Watch the full webinar
A Market That No Longer Adds Up
Marlon Bray opened the session with a blunt assessment of the current state of the market. There was no attempt to soften the message.
In his words, the market is not just slowing, it is fundamentally broken. Condo sales in the GTA have dropped to levels not seen in decades. In some recent months, the number of units sold has been shockingly low relative to the size of the region. At the same time, construction activity is declining, with projections suggesting the industry could shrink to nearly half of its peak size from just a few years ago.
What makes this situation more concerning is that it is not limited to one segment. Ownership housing, rental development, and low-rise construction are all facing similar pressures. Across the board, projects are becoming increasingly difficult to justify financially.
Even more telling is what is happening beneath the surface. Construction costs have come down. Land prices have softened. Under normal circumstances, this should have helped restart development activity.
But it hasn’t.
As Bray explained, the core issue is simple: the numbers no longer work.
“The math just isn’t mapping… not for condos, not for rental, not for low-rise. It’s not mapping for anybody.”
Developers are running pro formas repeatedly—adjusting assumptions, reducing costs, reworking designs—only to arrive at the same conclusion: the project still doesn’t make sense.
The Weight of Taxes, and the Invisible Costs Behind Them
If there was one theme that dominated the discussion, it was this: housing in Ontario has become heavily burdened by layers of taxation and policy-driven costs.
Over the past two decades, development charges have increased at a pace that far exceeds inflation, income growth, or even housing prices themselves. In some cases, the increase has been measured in the thousands of percent. Today, it is not uncommon for taxes, fees, and levies to account for a quarter to a third of the cost of a new home.
And those are just the visible costs. One of the more revealing parts of the conversation focused on what Bray referred to as “shadow costs”—expenses that are not always clearly labeled as taxes but are imposed through policy decisions.
These include requirements such as:
Cash-in-lieu of parking fees
Green building standards applied inconsistently across municipalities
Infrastructure-related requirements that significantly increase construction costs
Design constraints and regulatory delays that impact timelines and financing
Each of these may seem minor in isolation. But together, they create a layered burden that quietly erodes project feasibility. At one point, Bray walked through a simplified example of a typical condo unit. The numbers told a powerful story. The actual construction—the physical act of building the unit—accounted for just over half of the total cost. The rest was made up of land, financing, and increasingly, taxes and fees.
In some scenarios, even after accounting for revenue, the project still resulted in a loss. It was a striking illustration of how far the system has drifted from balance.
How Did We Get Here?
Richard Lyall approached the issue from a broader, policy-driven perspective. His analysis traced the roots of the current situation back nearly two decades, to major planning decisions such as the introduction of the Greenbelt and the Growth Plan. While these policies were well-intentioned, their long-term impact—combined with fragmented governance and inconsistent economic understanding, has been profound. Over time, housing costs have diverged significantly from income levels. What was once a relatively stable ratio has now doubled, placing homeownership increasingly out of reach for many.
At the same time, a critical misconception has taken hold in public policy:
that development charges are paid by developers.
In reality, as Lyall emphasized, these costs are ultimately passed on to end users.
“Development charges are a consumer tax… it’s the homebuyer and renter who pay.”
This misunderstanding has allowed costs to escalate without fully recognizing their impact on affordability. Layered on top of this is the complexity of the system itself. Multiple levels of government, overlapping regulations, and inconsistent municipal standards have created a landscape that is difficult to navigate—even for experienced professionals.
A Turning Point: Why 2026 Matters
Despite the challenges, the tone of the webinar was not entirely pessimistic. In fact, both speakers pointed to 2026 as a potential turning point.
Not necessarily because of proactive reform—but because the system has reached a point where change is no longer optional.
As Lyall put it, the situation has become serious enough that governments are beginning to understand the consequences of inaction.
Several policy shifts are already underway or expected in the near term:
Adjustments to HST rebates, particularly for first-time buyers and rental housing
Ongoing discussions around development charge reform
Potential changes to land transfer taxes
Broader efforts to reduce red tape and streamline approvals
At the same time, zoning reforms—such as the expansion of multiplex permissions—are beginning to unlock new forms of development that were previously restricted. These changes, while incremental, signal a broader shift in direction.
Where the Opportunities Are Emerging
While large-scale developments—especially high-rise condos—are currently struggling to make sense financially, smaller and more flexible formats are beginning to stand out.
Multiplex and low-rise projects are emerging as more viable options. They carry lower risk, require less capital, and can adapt more easily to changing market conditions. In some cases, these projects are already starting to “pencil,” even within today’s constraints. At the same time, the growing role of PropTech is changing how opportunities are identified. Tools that provide real-time zoning, data insights, and feasibility analysis are making it easier to assess risk and unlock potential value in ways that were not possible before.
Looking Ahead: A Difficult Year, and a Possible Recovery
The near-term outlook remains challenging. 2026 is expected to be a slow and uncertain year, with limited visibility for developers and investors.
However, there is cautious optimism beyond that. If the anticipated policy changes—particularly around taxes, development charges, and approvals—are implemented effectively, 2027 could mark the beginning of a recovery. As discussed during the session, the market is not lacking demand—it is lacking conditions that allow projects to move forward.
Final Reflection: A System at a Crossroads
This conversation ultimately pointed to a broader reality: the issue is not one policy or one cost—it is the system as a whole.
Housing in Ontario has become increasingly difficult to deliver, not because of a single factor, but because of accumulated layers of cost, regulation, and complexity.Yet, this moment also presents an opportunity. With the right reforms and better tools, there is a clear path toward restoring feasibility and unlocking supply.
The challenge now is timing. Because in a system already under pressure, change is no longer optional—it is urgent.
For more information:
Saman Davari
Project Manager
Saman.davari@trainex.ca