Big HST change for new builds (including rentals)

Ontario and the federal government just announced a major change to the HST rebate on new homes – and it goes way beyond first-time buyers.

If you’re looking at a new build (or considering a rental property), this is one of those “read this before you sign anything” moments.

What changed:

Until now, the full HST relief was really a first-time buyer story.

Now:

The enhanced HST rebate is being expanded beyond first-time buyers to all eligible buyers of new homes. It applies to owner-occupied primary residences and qualifying residential rental properties. There are specific date windows for when your agreement of purchase and sale must be signed, and deadlines for when construction must start and finish. First-time buyers who signed after March 20, 2025 get their own (longer) window under the earlier announcement, and this new change layers on top of that.

The headline impact:

For qualifying new builds, the effective price can drop by up to 13% because the full HST (federal + provincial portions) can be rebated, while builders can still keep their usual margins.

On an $800,000 new build, 13% is $104,000. Real-life numbers will vary, but that’s the scale we’re talking about.

Is this about “making homes affordable?”

Here’s my read:

This is more about stimulating the economy and construction than permanently lowering home prices. Government wants more shovels in the ground: more units, more trades working, more projects that pencil out. They’re doing it by making new construction more attractive on a net-of-tax basis.

So yes, buyers can win here but prices are likely still to remain above resale price numbers. But the deeper goal is to get projects moving again, and for some projects this will be the difference between whether they are going to start or not.

What could this do to prices?

Short term, there are a few likely effects:

New builds become relatively more attractive. If you can get up to 13% of the price back via rebate, a new build suddenly looks a lot better than it did last month. The key questions is will this be enough to bring them in line with the current resale market. Current inventory of new homes can get effectively cheaper, this means that some resale properties just got more competition so sellers may have to sharpen pencils.

So, counterintuitively, this could create short-term downward pressure on some prices (especially resale competing with new), even though the intent is to support the market and the broader economy.

What about rental properties?

The expansion also includes residential rental properties, but:

There are additional requirements around how the property is used and held as long-term rental housing. This is not a flipper’s rebate. If your plan is quick in-and-out, this likely won’t fit. For serious long-term rental investors, this could materially improve the numbers on new purpose-built rentals.

What you should do next

If you are:

Thinking about signing a new-build agreement in the next 12 months

A first-time buyer who signed after March 20, 2025

Considering a new rental property build or purchase

Contact Jeff Dinsmore and he can confirm whether your situation likely fits under the new rules. He will run the numbers on how much of a rebate you could be looking at.

Policy changes like this create a short window where informed people can make much better decisions than everyone else.

Information provided by Jeff Dinsmore, Mortgage Broker | FSRA #10315 | jeff@velomortgage.ca | www.velomortgage.ca