Ontario Construction News staff writer
Canada’s housing affordability crisis is being driven as much by government taxes, fees and levies as by supply constraints, the Senate banking committee says in a new report that urges Ottawa to take a stronger leadership role in lowering costs and boosting construction.
The Standing Senate Committee on Banking, Commerce and the Economy resumed its housing study in October 2025, nearly two years after issuing an interim report with 10 recommendations as home prices continued to climb and ownership slipped further out of reach for many Canadians.
After hearing testimony over nine meetings, senators concluded that many housing markets face a troubling paradox: home prices remain unaffordable even as construction and land costs have eased. Young Canadians, in particular, are under growing financial strain, with many believing home ownership is no longer attainable.
“The urgency of the situation calls for coordinated and coherent action among all stakeholders and levels of government,” the committee said in its final report, which includes 12 recommendations aimed at reducing prices, increasing supply and improving access to housing.
Among the most significant proposals is a call for a 100 per cent GST/HST rebate on all new housing valued below $1 million, phased out for homes priced between $1 million and $1.5 million. The committee also recommends that the $1-million threshold be indexed annually to inflation.
To address rising municipal costs, senators suggest Ottawa tie federal infrastructure funding to equivalent reductions in municipal fees, where permitted by provincial or territorial law. They also call for stronger oversight of municipal approval processes and safeguards to ensure developer-built services are not counted again in development charges.
Transparency around housing-related costs is another key theme. The committee recommends that all taxes, levies and charges be directly levied on purchasers and fully itemized to eliminate so-called “tax-on-tax.”
The report also urges the federal government to work with provinces and municipalities to establish best practices for municipal approvals and to use financial incentives to encourage adoption.
To strengthen the housing sector, the committee recommends reducing municipal reliance on development charges by exploring alternative funding models, including tax-free municipal bonds and spreading infrastructure costs more equitably across governments. It also calls for more detailed and forward-looking population and immigration forecasts to help local governments plan housing supply.
Other recommendations include creating a national housing data and accountability framework, supporting small and medium-sized builders in adopting modular and factory-built construction, and offering incentives to spur demand for those housing types.
On access and affordability, senators suggest Ottawa examine whether renters should receive tax benefits similar to homeowners and consider a national home renovation tax credit to improve energy efficiency, accessibility and the creation of secondary suites.
The committee also recommends studying whether restrictions are needed on institutional investment in rental housing and expanding federal support for non-market housing through direct funding, low-cost financing and partnerships with non-profits, co-operatives and Indigenous housing providers.
Taken together, the report argues, the measures are necessary to restore affordability, increase supply and ensure Canadians can access housing in a market increasingly strained by costs embedded at every level of government.
