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  • Writer's pictureTori Phillips

What Are Development Charges?

If you've been thinking about purchasing a pre-construction condominium unit, you may have heard the term "Development Charges". So what is a development charge?

Development charges (also known as development levies) are a fee imposed by the municipality on land development & redevelopment projects to help pay for the capital costs of the infrastructure and improvements that are needed to service the new development such as water, waste management, roads, recreation centres, libraries, parks and more. In in case of pre-construction condominiums, the municipality will charge the developer a per-unit price and that cost is passed down to the buyer of the unit as part of their closing costs. It's not uncommon to see development charges between $20,000-$50,000 per unit in many areas of Toronto, but the cost will vary depending on the location and city where the development is being constructed. This is one of the many reasons why it's important to align yourself with a real estate agent who is experienced in pre-construction before even stepping foot in a pre-construction sales office, let alone signing an agreement of purchase and sale. A real estate agent experienced in pre-construction will know the right questions to ask the builders representative on your behalf, including "are the development levies capped and if so, at how much?". Capped development levies means that the developer will put a cap (a limit) on the cost of the development charges that you will be on the hook for. For one bedroom units in Toronto, the average cap is currently around $8,000-$15,000 and $10,000-$18,000 is the average for two bedrooms or larger. This will vary by project and area. Most developers do not automatically cap the development charges for you and this is something you will need to request, usually through your lawyer during your 10 day cooling period. Which brings me to my next point; when purchasing pre-construction it is also crucial to have a lawyer that is well experienced in pre-construction agreements review your agreement of purchase and sale and condominium documents during your 10 day cooling period. Your lawyer will ensure that the agreement is industry standard and that there are no unusual fees or clauses. During this time your lawyer will also be able to give you a breakdown on what you can expect to pay for your closing costs as a whole for the unit, which is important to know so that you are prepared when it comes time to close on your unit. If you are working with a real estate agent well versed in pre-construction, they should be able to recommend a great pre-construction lawyer to you. And remember, when buying pre-construction using a realtor is free to you, as it's the developer who pays the realtor. Going by yourself to the sales office and buying from a builders representative directly will not get you a discount. The developers representative represents the developers best interests in the transaction. Having an experienced pre-construction realtor representing your best interests in the transaction is crucial.

If you are interested in purchasing a pre-construction condominium unit or have any questions, please don't hesitate to reach out. I have spent over 5 years of my life working in pre-construction sales offices representing multiple developers and have seen it all. Now I can bring my experience and knowledge to the other side of the table to represent YOU in one of the most important transactions you can make - the acquisition of real estate.

Yours Truly,

The Condo Confidential


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