In a strategic move to invigorate Ontario’s sluggish housing market, Premier Doug Ford has announced a proposal to temporarily broaden the Harmonized Sales Tax (HST) rebate to encompass all newly constructed homes priced under £1 million. This initiative, set to feature in the provincial budget on Thursday, aims to stimulate the construction of an estimated 8,000 additional homes each year, providing significant financial relief to prospective buyers.
Details of the Proposed Rebates
Under the proposed scheme, homebuyers of newly built properties valued at less than £1 million would receive a rebate covering the full 13% sales tax, potentially returning up to £130,000. To qualify, the home must serve as a primary residence or a rental property. This expansion marks a departure from the current rebate model, which is limited to first-time homebuyers.
Ford emphasised that the plan is backed by an agreement with the federal government, which is expected to cover a portion of the lost tax revenue. Speaking at a housing site in Mississauga, the Premier praised Prime Minister Mark Carney for his support, highlighting the extensive negotiations that led to this outcome.
“I don’t like divulging our personal conversations, but I can tell you, the Prime Minister promised something, he delivered,” Ford remarked, asserting that the combined tax relief from both the provincial and federal governments would amount to £2.2 billion.
Timeframe and Financial Implications
The tax rebates are intended to be available for purchases made from April 1, 2026, to March 31, 2027, creating a limited window for buyers to take advantage of this offer. The Ontario government anticipates that the overall cost of the tax relief will approach £1.4 billion, a significant investment aimed at revitalising the housing sector.
While homes priced above £1 million will not be entirely excluded from tax relief, the rebate structure will change. Properties valued up to £1.5 million will still qualify for a maximum rebate of £130,000, with reduced amounts available for homes priced as high as £1.85 million. Homes exceeding that value can still benefit from a £24,000 rebate, provided construction is completed by 2031.
Challenges in the Housing Market
Despite these measures, Ontario’s housing sector continues to face challenges. Last autumn, the government unveiled a similar rebate programme focused solely on first-time homebuyers, but recent trends indicate that achieving the target of constructing 1.5 million homes by 2031 remains increasingly difficult. Housing Minister Rob Flack has previously described this ambitious goal as a “soft target,” reflecting the ongoing struggles within the market.
According to the Canada Mortgage and Housing Corporation, there was a slight increase in new home construction early this year, following a series of declines. However, numbers from 2025 indicate that Ontario recorded just over 67,000 new housing starts, which falls dramatically short of the level needed to meet the decade-long target.
Why it Matters
The proposed expansion of the HST rebate is a pivotal step in addressing Ontario’s housing crisis, particularly as prices continue to spiral and affordability becomes a pressing concern for many residents. By incentivising the construction of new homes, the government aims not only to stimulate the economy but also to create a more viable housing market for future generations. If implemented successfully, this plan could pave the way for a more accessible housing landscape in Ontario, ultimately benefiting both buyers and the broader community.
