Removal of GST From New Purpose-Built Rental Housing Construction a Major Win for BC Renters

On September 14, 2023, Prime Minister Justin Trudeau announced a significant policy change by the Government of Canada. Effective immediately, the government will eliminate the Goods & Services Tax (GST) on new rental apartment buildings. This measure aims to incentivize construction of new purpose-built rental (PBR) housing. The official announcement outlined the following key points:

  • The federal government will incentivize the construction of much-needed rental homes by introducing legislation to remove the Goods and Services Tax (GST) on the construction of new apartment buildings for renters.
  • The federal government called on provinces that currently apply provincial sales taxes or the provincial portion of the Harmonized Sales Tax (HST) to rental housing to join the Government of Canada by matching the rebate for new rental housing.
  • The federal government will require local governments to end exclusionary zoning and encourage building apartments near public transit in order to have their Housing Accelerator Fund applications approved.

LandlordBC has long opposed the punitive application of GST on rental housing. Before today’s announcement, rental developers were compelled to pay GST upon the completion of new rental buildings, even if they planned to retain and operate these rental properties with no intention of selling. This essentially imposed a sales tax on an artificial transaction, driving up development and operating costs. Consequently, this tax, introduced in 1991, discouraged investment in rental housing and contributed to the reduction of the available supply of rentals.

For years LandlordBC has advocated for the removal of GST on new PBRs as we recognized that this federal GST policy disincentivized investment in rental housing, decreased rental supply, and raised rents for tenants.

Today’s news is a positive development for landlords, renters, and our communities alike. Eliminating GST from new rental housing will stimulate new investment, thereby increasing supply and enabling a downward pressure on rents. A full removal of the GST on rental housing development will have an immediate impact on lowering the level of investor equity required to build new rental housing, improving investor’s return on equity and incentivizing developers to invest in rental housing.