Builders, realtors see benefits to Saskatchewan mimicking Ottawa and cutting PST from new rental builds

Home Builders' Associations and others are beseeching the Saskatchewan government to follow suit with the federal government's recent decision to remove taxes on new builds for rental buildings to address housing affordability and availability issues.

Last week, Ottawa announced it would remove GST from rental construction in response to rental demand outpacing available units across Canada.

Some are saying that policy should be mimicked in Saskatchewan, where housing is becoming a more concerning issue.

"We know that it can work," Saskatchewan Realtors Association CEO Chris Guérette told Radio-Canada.

Eligibility for the newly announced federal GST cut on rental buildings began on Thursday.

Buildings need to have at least four private apartment units or at least 10 private rooms or suites, and 90 per cent of the units designated for long-term rentals, to be eligible.

Guérette welcomes the change as a way to make rentals more affordable.

"The biggest question I have is what other policies can we put in place to ensure that Saskatchewan is actually competitive with other provinces," Guérette said.

Chris Guérette, Saskatchewan Realtors Association CEO, said she's optimistic removing the PST from new rental builds would make renting more affordable. (Albert Couillard/Radio-Canada)

Sask. gov't not keen on rental building tax relief

The Saskatchewan government said it is not considering a similar tax cut.

"Our government believes that the broad application of PST ensures that a fairly applied, reliable, and sustainable source of revenue is available to finance vital public services," Finance Minister Donna Harpauer said in an emailed statement Tuesday.

Instead, the province is drawing attention to its Rental Development Program, a one-time funding allowance for housing organizations to develop affordable units for low-income households.

On top of that, the province touted being one of two provinces, not including the four Atlantic provinces, to have had asking prices for rentals decrease decrease month-over-month in August (0.7 per cent, second to Manitoba's 3.2 per cent).

It also said if Ottawa expects provinces to follow its lead with taxation policies, it ought to listen to Saskatchewan's calls to kill the carbon tax.

In regard to the rental building tax, Saskatchewan Opposition NDP jobs and economy critic Aleana Young said in an emailed statement that the province needs to "stop squandering hard-earned taxpayer dollars on pet projects no one asked for, like the Saskatchewan Revenue Agency, and scrap this tax."

Home Builders say governments need to improve housing

In a statement released last week after the federal announcement, the Saskatoon and Region Home Builders' Association commended the move.

The association said the province should take that one step further and remove the PST for all new construction, both homes and rentals.

"Industry needs every support they can get to in order to stimulate housing at a time when we are on the cusp of a housing crisis and an affordability crisis," Nicole Burgess, the Saskatoon and Region Home Builders' Association CEO, told Radio-Canada.

The Canada Mortgage and Housing Corporation's recent January rental market report for 2022 found Saskatoon's market was the tightest it had been in nearly a decade.

In Regina, it found demand outpaced supply, leading to a 3.2 per cent vacancy rate, less than half what it was the year prior.

LISTEN | How does Saskatoon compare with Canada on the rental scale?: 

Stu Niebergall, president and CEO of Regina and Region Home Builders' Association, said that while such a tax cut could improve the vacancy rate in Saskatchewan and reduce or at least stabilize rental costs, focusing on rental properties does not drive home ownership.

He called it a significant win, but only for a segment of the industry.

"They're not just giving a tax break on for-purpose rental, this is coming after several years of making it increasingly more difficult for Canadians to access home ownership," he said.