Is there an extra fee coming your way?

A new charge hike that has been proposed by the Ontario Liberal government could raise the hidden costs for investors of pre-construction condos.

The proposed reforms target the charges that developers of new condo and other housing projects in Toronto currently pay, with the aim to help municipalities pay for improvements around these developments, such as the cost of providing new streets, water and electricity.

Despite the continuing appreciation of condo prices in Toronto, the industry doesn’t think it’s fair for investors to be on the hook for additional charges and taxes.

“It seems [the government] wants to have its cake and eat it too,” said Andrew la Fleur, a real estate agent at

“It gets what it wants, in terms of having a denser, more urbanized population in these condo buildings with more efficiencies and easier service as opposed to suburban sprawl development. And yet they seem to be continually singling out, in particular, condo buyers, investors and developers with these onerous taxation policies.”

In the past, new charges and taxes handed to condo developers have ended up on the shoulders of the investors and buyers of condo units. “Developers will pass on this additional tax to the buyer as they currently do with other development charges,” said Freedom Malhotra, founder of the Condo Planet.

“Many first-time investors are often shocked to learn of the extra closing costs they have to incur related to development of sidewalks, streets and much more. Unfortunately, very few builders or Realtors for that matter do a good job explaining this.”

The Liberals said that the proposed changes are based on input from across Ontario, including more than 20 public workshops and stakeholder meetings.

Malhotra said it’s very important for investors and buyers to insist that an addendum be added to the sales contract they sign to ensure these fees are capped. “The extent of the cap is entirely negotiable,” he added.

“I have seen some builders willing to cap to as low as $1,500. Without a cap in place, you leave yourself wide open to paying whatever the builder decides to pass on. That type of exposure is very risky indeed.”

The exposure is certainly risky, but it’s a part of the pre-construction industry that isn’t going to change anytime soon. “The government is always looking at new ways to tax us – the condo business is no different,” added La Fleur.

“That basically means there is a lot of inflationary pressure built into the system itself. Condo prices will continue to rise, if for no other reason that taxes, charges and fees are continuing to rise.

“In Toronto, we have already got double land transfer tax, [the government] already said it is going to double development charges and is phasing that in, so this is just another in a long list of singling out condo owners and condo developers. I guess because we’re an easy target.”

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