In an ambitious effort to revitalise Ontario’s struggling housing market, Premier Doug Ford has unveiled a plan to temporarily expand the Harmonized Sales Tax (HST) rebate for newly constructed homes priced under £1 million. This initiative, set to be featured in the upcoming provincial budget, aims to provide substantial financial relief to homebuyers and is projected to encourage the construction of an additional 8,000 homes each year.
Expanded HST Rebate: Key Details
The proposed measure would fully rebate the 13-per-cent federal-provincial HST on new homes that meet the price criteria, granting buyers a potential refund of up to £130,000. To qualify, properties must either serve as a primary residence or be designated as residential rental properties. Currently, the rebate is limited to first-time buyers, but the government intends to broaden eligibility to include all prospective homeowners within the specified price range.
If the proposal is approved, the rebates would apply to home purchases made between April 1, 2026, and March 31, 2027. The Ontario government estimates that this initiative could lead to a revenue loss of approximately £1.4 billion, but officials are optimistic that the resulting increase in housing supply will effectively address the ongoing crisis.
Tax Relief for Higher-Value Homes
For homes priced above £1 million, the government has also outlined a tiered rebate structure. Properties valued up to £1.5 million would still be eligible for the maximum rebate of £130,000, while homes priced up to £1.85 million could receive reduced rebates. Those exceeding this threshold would qualify for a £24,000 rebate under existing regulations, provided that construction is completed by 2031.
The introduction of these measures follows previous announcements from last autumn, when Ontario and federal authorities revealed similar incentives, albeit restricted to first-time home buyers only. Given the recent downturn in housing starts, Ontario’s Housing Minister Rob Flack has acknowledged that the province’s goal of constructing 1.5 million new homes by 2031 has shifted from a firm objective to a “soft target.”
Contextualising the Housing Market Challenges
Despite a modest increase in new-home construction noted earlier this year, the overall trend remains concerning. The Canada Mortgage and Housing Corporation revealed that Ontario recorded just over 67,000 new housing starts in 2025—significantly below the levels required to meet the ambitious housing targets set for the coming decade.
As the province grapples with a high demand for affordable housing, the latest proposals aim to not only stimulate construction but also to alleviate the financial burdens faced by many buyers in a competitive market. In light of the current economic climate, these initiatives come at a crucial time for Ontario residents.
Why it Matters
The proposed expansion of the HST rebate represents a critical step towards addressing Ontario’s housing crisis, which has left many potential homeowners struggling to enter the market. By incentivising the construction of new homes and providing financial relief to buyers, the government may significantly impact the housing supply and affordability landscape in the province. The success of this initiative could serve as a model for future housing policies, shaping the way Ontario approaches its real estate challenges in the years to come.