The 2025 provincial budgets for British Columbia and Ontario introduced targeted tax measures aimed at easing housing challenges. Together, these reforms aim to improve affordability, encourage construction and stabilize market dynamics for renters, homeowners and developers across both provinces.
As housing market issues remain a pressing concern for many Canadians, the two provinces with the direst needs hope new tax policy changes can address these challenges.
Ontario and British Columbia both introduced measures in their 2025 provincial budgets that are intended to improve access to housing. These would build on recent federal provisions aimed at increasing housing supply, limiting speculation and improving overall affordability across the country.
Here is a look at Ontario and B.C.’s plans for their housing markets and how they could affect homeowners, renters, developers and taxpayers.
Ontario’s budget focused on reducing taxes to increase housing affordability.
Starting in 2026, municipalities can reduce property tax rates by up to 35 per cent for eligible affordable rental housing units. These reductions could lead to lower operating costs for landlords, who could potentially reduce rents for tenants.
The province will also eliminate the 13 per cent harmonized sales tax (HST) on qualifying new purpose-built rental housing. Ontario’s government hopes this measure will incentivize developers to build more affordable rental units. This, in turn, would reduce the overall cost of building new rental units—which could lead to reduced prices for buyers.
This provincial-level decision aligns with federal tax policy by complementing the federal GST rebate and creating combined tax savings for developers.
B.C. will increase its speculation and vacancy tax rates starting in 2026 with the goal of discouraging property speculation and ensuring vacant homes are put to use.
The higher tax rates are intended to increase housing supply by making it less financially attractive to hold onto vacant properties. Homeowners with vacant properties will face higher taxes, which could prompt them to sell or rent out these homes.
These measures could also affect property values as more homes enter the market. Property values may stabilize or even decrease, making it easier for first-time buyers to enter the market.
B.C.’s new taxes align with federal tax measures like the underused housing tax (UHT) as both levels of government aim to limit underused or speculative ownership, especially in high-demand areas. However, the provincial measures go a step further by applying its vacancy tax to both residents and non-residents.
These policy changes are poised to reshape the real estate markets in both provinces. For taxpayers, the benefits include increased housing availability and potentially lower rental costs. However, homeowners and investors may need to adjust to new tax structures and market dynamics.
Homeowners with vacant properties in B.C. may need to reconsider their investment strategies due to higher taxes, while Ontario renters can look forward to more affordable housing options as new developments benefit from tax incentives.
Both provinces offer new opportunities for developers to contribute to the housing supply while benefiting from tax reductions and incentives.
Ontario and B.C.’s new housing measures signal a shift in how provincial governments are tackling affordability and supply shortages.
By combining tax incentives with market-focused policy changes, these initiatives aim to build more inclusive, accessible housing markets. As these changes roll out, they are poised to create both opportunities and challenges for individuals and businesses involved in real estate in these major markets.
