Open Letter – May 27, 2025

An Open Letter to the Right Honourable Mark Carney, Prime Minister of Canada

May 27, 2025

The Right Honourable Mark Carney
Prime Minister of Canada
Office of the Prime Minister
80 Wellington Street
Ottawa, ON K1A 0A2

CC: The Honourable François-Philippe Champagne, Minister of Finance and National Revenue
CC: The Honourable Gregor Robertson, Minister of Housing and Infrastructure and Minister responsible for Pacific Economic Development Canada

Dear Prime Minister Carney,

We want to congratulate you on your election as Prime Minister of Canada and on the appointment of your new Cabinet. We are looking forward to working with your government towards the common goal of increasing annual housing starts to 500,000 units and supporting a sustainable housing market.

We write to you today to propose that the federal government immediately follow through with a revised version of the campaign promise of enhancing the existing GST new housing rebate, which was referenced as a priority in today’s Speech from the Throne. An enhanced rebate would help lower the cost of ownership, increase housing supply, enable residents to live in right-sized homes, and move the nation closer to its goal of starting construction on 500,000 new homes annually.

Canadians welcomed and embraced the focus on housing affordability during the election in the interest of housing availability, affordability, and job creation. Yet, housing starts for owner-oriented homes continue to fall. In 2024, Canada recorded just 132,000 such starts, the second-lowest since 2001, and down over 20% from 2021. The outlook is worsening: first-quarter 2025 starts are down over 25% year-over-year, hitting their lowest point since the Financial Crisis. Pre-construction condo sales have nearly disappeared in Greater Vancouver and Greater Toronto, indicating further declines ahead.

Canada faces a cost-of-delivery crisis in new home construction. The Liberal platform rightly identified “lowering the cost of homebuilding” as a key priority. While many cost drivers lie outside federal control, the GST is a notable exception. Applied only to new homes, the GST undermines affordability. When introduced in 1991, the federal government provided a rebate that covered over 95% of new homes for all new home buyers. But because the thresholds were never indexed to inflation, most new homes no longer qualify, especially in high-cost regions, where affordability is most strained. This impacts not only new home prices but also resale and rental markets by reducing housing options.

There is an opportunity and need to ensure the GST rebate will address the affordability crisis for all buyers, not just those purchasing new homes for the first time. If an adjustment to GST exemptions applies only to first-time buyers, it excludes key groups like seniors looking to downsize, transactions that free up family-sized homes. Perversely, it could reduce the construction of new affordable supply, as potential first-time homebuyers may be reluctant to use their eligibility on a smaller unit, instead saving it up for a more expensive, family-sized home down the road. This also reduces the incentive for those who purchase pre-construction condos, which are essential for developers to move forward with projects and provide much-needed privately-owned rental homes at completion. We urge your government to redesign its proposed enhanced GST new housing rebate with four key principles in mind: speed, simplicity, supply, and sufficiency.

Speed: The rebate should be implemented immediately to counter the ongoing decline in non-rental housing starts and prevent buyers from delaying purchases. We urge you to announce an effective date, as soon as possible, with the rebate applied retroactively to that date.

Simplicity: The design should align with existing business practices and avoid complex, time-consuming changes for governments and industry.

Supply: New condo supply will not be created in some regions until the market absorbs the existing inventory of under-construction and complete but unsold units.

Sufficiency: The rebate must be large enough to support the federal goal of 500,000 housing starts per year, with thresholds high enough to ensure no region is excluded.

With speed, simplicity, supply, and sufficiency in mind, we propose the following recommendations to the federal government:

1. Implement immediate reforms to the existing GST/New Housing Rebate. Retain the current structure and eligibility criteria, without adding a first-time homebuyer restriction. Raise the lower threshold from $350,000 to $1,000,000 and the upper threshold from $450,000 to $1,500,000. Increase the maximum rebate from 36% to 100% for homes where possession and ownership transfer on or after July 1, 2025. The rebate must apply to homes that are currently under construction and those that are complete and unsold, to ensure the next round of construction can occur as quickly as possible.
2. Commit to further enhancements. Recognize that even these thresholds may not fully address affordability in high-cost regions or future price growth. Implement threshold increases now and launch consultations on inflation indexing and regional adjustments.
3. Encourage provincial action. Urge provinces to adopt or expand similar rebates, including relief from sales taxes and land transfer taxes on new homes.

GST relief was a central part of the Liberal platform, your post-election commitments and addressing the housing affordability crisis facing our country. Acting quickly will complement your middle-class tax cut and show your government’s practical, results-driven approach to one of Canada’s most urgent challenges.

We welcome the opportunity to support your team on implementation and look forward to working together to increase housing starts and improve affordability nationwide.

We would request the opportunity to meet with you at your earliest convenience to further discuss the impact of these proposals and the need to act with urgency.

Sincerely,

Dave Wilkes, President & CEO, Building Industry and Land Development Association
Kristopher Mathieu, AT., PMP., Executive Director, Canmore Community Housing
Kevin Lee, P.ENG., M.ARCH, CEO, Canadian Home Builders’ Association
Pedro Barata, President & CEO, Habitat For Humanity Canada
Dr. Mike Moffatt, Founding Director, Missing Middle Initiative
Daniel Ger, CEO, Options for Homes
Robert Bruno, Executive Vice President, Polygon Homes Ltd.
Beau Jarvis, President & CEO, Wesgroup Properties
Chuck McShane, Chief Executive Officer, Niagara Home Builders’ Association
Jason Burggraaf, Executive Director, Greater Ottawa Home Builders’​ Association (GOHBA)
Robert Yanowski, President, Sundial Homes
Steve Stipsits, President, Branthaven
Dino Bottero, President, Bottero Appraisals Ltd.
Niall Finnegan, Partner, Finnegan-Marshall Inc.
Mike Collins-Williams, CEO, West End Home Builders’ Association
Wendy McNeil, CEO, Homebuilders Association Vancouver