Cost- Municipal development charges on new residential construction have continued to rise in many Canadian cities through 2026.
- These charges are levied on builders but are generally passed through to buyers as part of the purchase price or as a separate closing adjustment.
- Some municipalities have introduced exemptions or reductions specifically for purpose-built rental housing to encourage that type of construction.
What development charges actually fund
Development charges are fees municipalities levy on new construction specifically to fund the infrastructure that new development requires — roads, water and sewer systems, transit, parks, and other municipal services sized to accommodate new residents. They're distinct from property tax, which funds ongoing municipal operations rather than new infrastructure specifically.
What they actually add to a new home's cost
Development charges have risen substantially in many major Canadian cities over recent years, and in some markets now represent a meaningful five-figure cost per new residential unit — a cost that's grown large enough to be a real factor in new-construction pricing and, some argue, in the pace of new development itself, since higher charges can affect a project's viability.
Who actually pays
Development charges are formally levied on the builder, but in a functioning market they're generally passed through to buyers as part of the purchase price, similar to how any input cost eventually flows through to what a buyer pays — this is part of why new-construction pricing includes cost pressures a resale purchase simply doesn't have. See our explainer on occupancy fees for another pre-construction-specific cost buyers sometimes aren't expecting.
Budget for the full cost of a new-construction purchase, not just the quoted price, using the closing cost calculator.
- Department of Finance Canada — accessed September 2026