In this write-up, we will discuss the concept of development charges and those specifically in the pre-construction Real Estate both for condos as well as freehold purchases from the builder.When you are looking to buy a high-rise condo, low-rise condo or a freehold property as a pre-construction project or by way of an assignment sale, we hear a term called Development Charges. Development charges are the fees collected by the local municipality from the developer or the builders when they apply for a building permit, and it is issued.

These charges are meant to ensure that there are enough civic amenities like parks, street lights, roads, transit infrastructure, sewer pipes setup, community centers, paramedic services, fire services and police services, water and stormwater management etc. The purpose of development charges laid by a city is to ensure the growth costs due to newer dwellings and houses are recovered from the new builds and not the existing taxpayers of the given municipality.

It’s important to understand that Development Charges are not meant for operating costs or maintenance of existing infrastructure; the cities collect property taxes for that purpose. The development charges are for the initial commissioning and provisioning of the infrastructure to support the amenities of the new dwellings or apartments in a new building.

A municipality in three scenarios collects the development charges:
Constructing a new building
Making an addition to the existing building
Modifying a structure resulting in its change of use

Here is a table that will enlighten you on the development charges currently prevalent in the City of Toronto for various property types.




In this visual we can see the development charge rates for various amenities which are taken by the City of Toronto, this is a classification of how the various property types are charged for these amenities in the new permit applications.

To safeguard us as a buyer, we need to understand what is called Development Charge Cap; when we enter into a new construction purchase agreement with a builder, for both condos as well as freehold projects, we must ensure it is Development Charges capped to a certain amount.
The development charges are built into the price that the builder charges us at the time of launch of a pre-construction project; however, if the city increases their fees & levies during the construction period, they transfer this amount and charge the purchaser at the time of closing. The capping of development charges in the purchase agreements will give you peace of mind.
When the city fees for development charges increase during construction and after the initial permit approval,  the builder transfers this amount and charges to the purchaser. However, if in your initial contract you had a capped ceiling on Development Charges, your builder can charge you only up to a maximum of that amount and the rest will bear themselves. The cap will avoid any surprises when closing and need to arrange extra cash.

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.


Mudit Mehta
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]