Development charges: Not all cities are created equally

New analysis shows reducing or eliminating development charges could increase viable projects by up to 14% in some cities

Our first Development Charges and Fees Survey, released in December 2025, quickly became one of our most referenced publications. It provides highly sought-after information for developers, researchers and the public.

Now we’re taking the next step: analyzing the updated and expanded development charges data to better understand its implications. Data from December has been updated, and development charge data is now collected for 10 additional cities, bringing the total number of municipalities to 40.

CMHC’s new modeling and analysis for selected cities also shows that reducing or even eliminating these charges may increase the number of viable projects. In some cities, this increase may be as high as 14%. Despite this potential increase, eliminating development charges alone won’t solve the housing crisis for many cities. But, reducing or eliminating development charges also presents a challenge for municipalities.

CMHC’s Housing Development Viability Analyzer evaluates project viability across Canadian communities

CMHC developed a model called the Housing Development Viability Analyzer. It reviews the viability of projects in various neighbourhoods or broader areas across Canada.

The model looks at:

• residential construction costs
• a wide array of charges and fees
• selling prices
• other market and economic conditions

It shows what makes a portfolio of projects viable in various Canadian communities.

Larger reductions have greater impact, increasing viable projects by about 5% or more

The Housing Development Viability Analyzer shows that significantly reducing development charges is key to increasing viable projects. Reducing these charges by 10 to 20% only slightly boosted project viability (by 0.2 to 2%) in Toronto, Vancouver, Burnaby and Ottawa.

Larger reductions in development charges produce better outcomes. Reducing the charges by 50% to 60% increases viable projects by about 5% in Toronto and Vancouver. Eliminating these charges and fees increases viable projects by about 10% in both cities.

The impact of reducing development charges varies widely between municipalities

Some cities see much larger gains than others, highlighting that the effectiveness of these policies is not uniform across Canada:

• Burnaby: Viable projects increase by nearly 8% with a reduction and about 14% with elimination.
• Toronto and Vancouver: Viable projects increase by 5% with a reduction and 10% with elimination.
• Ottawa: Viable projects increase by only 1.3% with a reduction and 3% with elimination.

Note: Estimates are based on data available as of January 2026. Toronto and Vancouver estimates show the average change in viable projects between 20 and 140 units in size. Burnaby and Ottawa show change for projects of 100 units.

Municipalities with higher development charges see the biggest gains from reductions

Not all municipalities are equal under the development charges system. Municipalities with high development charges stand to gain the most from reductions, as this can encourage more housing supply and reinvigorate their residential construction supply chain. As shown above, Vancouver, Burnaby and Toronto benefit the most from these reductions because development charges are currently high. On the other hand, Ottawa gains less because its charges are already lower and therefore don’t discourage building as much.

The flip side of this finding is that there is a space for development charges in the municipalities’ fiscal toolkit. They don’t necessarily need to be fully and permanently eliminated. Most fiscal tools influence behaviour to some extent. However, a low rate of development charges appears to cause only small distortions in housing supply, as illustrated in the Ottawa example above. This suggests that moderate development charges can balance fiscal needs with housing supply. 

Financially constrained housing markets would see larger increases in building activity

Reducing development charges increases the viability of housing construction projects in all cases. However, in cities where housing markets are more financially constrained, it’s harder to develop financially viable projects. As such, a reduction in development charges would lead to more building in these markets, because reducing costs moves more projects from being unviable to being viable.

For example, the increase in supply that would result from a reduction in development charges is quite large in Toronto. In the scenario where development charges are eliminated, the increase in the number of housing units built would reach between 10,000 to 16,250 units annually in Toronto. This represents a third to a half of the estimated supply gap in the city to restore 2019 affordability levels (31,511). A reduction of about 50% in development charges is simulated to generate an additional 4,900 to 7,650 units annually in Toronto.

Reducing development charges alone won’t solve Canada’s housing crisis

Reducing or even eliminating development charges wouldn’t solve the housing crisis facing Canada. While it may incent greater supply, the increase is not enough to reach pre-pandemic affordability levels in many cities. Additionally, development charges have grown to play a significant role in municipal finance. Eliminating them will create a gap that municipalities will need to address.

Inconsistent municipal reporting makes benchmarking development charges difficult

Overall, development charges have increased, and this fiscal tool should be benchmarked across municipalities. However, reporting varies so much that meaningful benchmarking is impossible. This is why CMHC emphasized the need for consistency and standardization when we first released results from our Development Charges and Fees Survey.

The lack of comparable information also created unrealistic expectations that reducing development charges alone could solve the housing crisis. Our latest analysis shows that sharp reductions will encourage more supply, and could be a significant contribution to addressing the existing supply gap in some cities, such as Toronto. However, in other cities that don’t have charges that are as high or where financial conditions are a bit more forgiving, a reduction doesn’t necessarily turn into an increase in housing supply of the same magnitude.

Contributors to this article: Lin Zhang, Sean Nash, John Baker, Angelina Zhao and Elena Simonova