Maple News reports that the Government of Ontario has announced a full rebate of the provincial portion of the Harmonized Sales Tax (HST) for qualifying new rental housing projects across the province. The move, effective as of November 1, is part of ongoing efforts to address Ontario’s housing affordability crisis.
The tax relief will apply to purpose-built rental housing developments — including apartment complexes, student housing, and senior residences — that are specifically constructed for long-term rental use. To qualify, buildings must contain either a minimum of four private apartment units or 10 private rooms/suites, with at least 90% of the units designated as long-term rentals.
To be eligible, construction on these projects must begin between September 14, 2023, and December 31, 2030, and must reach completion by December 31, 2035. The provincial government has confirmed that the rebate will cover 100% of the provincial HST portion, with no cap — a significant increase from the previous maximum rebate of $24,000.
For example, a two-bedroom rental unit valued at $500,000 could now qualify for a $40,000 provincial tax rebate. When combined with the federal rebate under Canada’s Affordability and Housing Act — which can provide up to $25,000 in additional savings — developers in Ontario could benefit from up to $65,000 in combined tax relief per qualifying unit.
This initiative follows several other steps taken by the Ontario government to tackle rising rental costs. Among them is a rent cap regulation introduced earlier this year that limits annual rent increases for units built before November 2018 to below the rate of inflation. However, this policy does not apply to newer units or situations where existing tenants move out, giving landlords room to significantly raise rent prices for new occupants.
The rental market in Ontario is among Canada’s most expensive. According to recent reports, eight cities in Ontario rank among the top ten most expensive places to rent nationwide, adding to concerns for new immigrants, students, and workers looking to settle in the province.
Ontario’s housing strategy, unveiled in 2022 as the Housing Action Plan, aims to increase housing supply while improving affordability. The removal of provincial HST on rental developments is a targeted approach to incentivize developers to build more long-term rental housing and support the growing population, which includes a large influx of newcomers to Canada.
As the province continues to be a primary landing destination for immigrants, measures like these are seen as crucial to sustaining housing availability and support economic integration. Maple News will continue to monitor developments in Canada’s evolving housing and immigration landscape.