The Urban Development Institute's (UDI) Taxing Growth: Analysing the Taxes and Fees on New Housing Development examines how government-imposed taxes, fees and development charges contribute to housing costs and affect the financial viability of new residential projects in British Columbia.

Using four hypothetical housing developments in Vancouver, Kelowna and Saanich, the report demonstrates how charges imposed by municipal, regional, provincial and federal governments accumulate throughout the development process.

The research finds that while individual charges may serve legitimate public purposes, their combined impact can increase housing costs, create financial uncertainty and contribute to projects being delayed or cancelled.

Key Findings: Government Taxes and Fees on New Housing in BC

UDI's analysis identified substantial differences in the tax and fee burden across housing types and municipalities.

In the Vancouver condominium example, government taxes and fees totalled approximately $327,566 per average unit, including taxes paid by the purchaser. The report found that the modelled development would face significant financial viability challenges at the assumed market prices.

For a purpose-built rental apartment in Vancouver, the analysis attributed approximately $883 of a modelled $2,698 monthly rent to government taxes and fees incurred during development and included in the project's financial model.

These estimates illustrate the cumulative cost burden under the report's assumptions. They are not measurements of the taxes paid on every new home in BC.

Which Government Charges Affect Housing Development Costs?

The report examines several types of taxes, fees and policy-related costs, including:

• Development Cost Charges (DCCs) and Development Cost Levies (DCLs): Charges used to fund infrastructure and services required to support growth.
• Community Amenity Contributions (CACs): Contributions associated with development that help fund community amenities and other municipal priorities.
• Goods and Services Tax (GST): Federal taxation that can affect the financial viability of new housing, particularly purpose-built rental projects.
• Property Transfer Tax (PTT): Provincial taxation that can apply when development land is purchased and when completed homes are sold.
• Vacancy and property taxes: Charges that may increase development holding costs during lengthy approval processes.
• Municipal permits and approvals: Fees and timelines that affect financing costs and overall project feasibility.

UDI also examines how inclusionary zoning and green building requirements can contribute to development costs, even when those expenses are not collected directly as government fees.

How Do Taxes and Development Charges Affect Housing Supply?

The report identifies project viability and financial uncertainty as key concerns.

When government charges increase after land has been purchased or project financing has been arranged, developers may face costs that exceed their original budgets.

If those costs cannot be absorbed through land values, project margins or market revenues, development may be delayed, redesigned or cancelled.

Purpose-built rental projects face particular challenges because they require substantial upfront investment and cannot generate financing through condominium presales.

UDI's analysis emphasizes that the cumulative impact of government charges, rather than any single fee, can create barriers to delivering new housing.

UDI's Recommendations for Reducing Housing Delivery Costs

The report identifies three broad priorities for governments:

1. Streamline development approval processes

Establish more predictable approval timelines, improve coordination between authorities and reduce delays that increase financing and property holding costs.

2. Remove barriers to purpose-built rental housing

Reduce or eliminate Community Amenity Contributions for rental projects and review federal GST rebate rules to better support rental construction.

3. Reduce the cumulative impact of government charges

Coordinate municipal, regional, provincial and federal charges, improve predictability around fee increases and review development finance mechanisms.

The report also recommends inflation-adjusted tax exemption thresholds, more predictable Community Amenity Contributions and limits on cumulative annual increases in development charges.

Research Methodology and Scope

UDI worked with experienced multifamily developers and tax experts to model four hypothetical mid-rise residential developments:

• A condominium project in Vancouver
• A condominium project in Kelowna
• A condominium project in Saanich
• A purpose-built rental project in Vancouver

The analysis uses cost estimates recorded in September 2022, including certain approved rate increases scheduled for January 2023.

The findings reflect the tax policies, market conditions and project assumptions used at that time. They should be understood as historical development scenarios, not current estimates of housing taxation in 2026.

The full report includes itemized development budgets, government charges, project timelines, recommendations and references.