Condo development fees could double next year
Proposed hike in charges could also hit buyers, developers warn
Building a condo in Toronto could get far more expensive by next summer due to a proposed bump in development charges that would nearly double those fees.
It's a possibility that experts warn could drastically cool the city's hot real-estate market.
If approved by council's executive committee next month, the prices for some building permits would jump to more than $23,000 for a two-bedroom apartment. That's up from the roughly $12,400 the developers currently have to pay.
The additional costs that would take effect next year would likely be passed down to buyers and change what they'd consider to be affordable, developers warn.
That's troubling news for Zack Fraser, who's looking to buy a condo in King West.
Lowest development charges in GTA
"As somebody who's young and looking to buy a place, it's already really hard to do that, so I couldn't imagine prices going up much more," he said.
Development fees in Toronto are the lowest in the GTA right now.
Coun. Adam Vaughan understands that with the city's condo market booming as it is, there may be a need to raise the charges to keep up with infrastructure needs. Even so, he questions some of the details of the proposal for the new fees.
"Just doubling them is such a blunt idea that it could actually do damage to a lot of people," he said.
Buyers will also be hurt by the changes, according to Brad Lamb, a condo developer.
Executive committee meeting next month
"Either a developer buries the taxes in the price so when they sell a condo for you for $300,000, that includes the taxes, so you're paying the taxes," he said. "Or, with my company, we expose the taxes so at the end of the project when the buyer buys, they've signed a contract for $300,000 plus these costs."
The proposal would phase in the increased fees in February, then again in July.
The matter will go before a public meeting of the executive committee next week.
Mayor Rob Ford said Wednesday he was looking forward to a good discussion.
"Overall, we have to pay for this infrastructure and we're building a lot of condos and if we don't build the infrastructure, then we're going to be [having] serious problems in 10 years," he said.
Ford said he believes that even with the proposed increase, Toronto would still have the lowest development charges in the GTA.
With files from the CBC's Natalie Kalata