N.B. housing minister pursuing HST exemption for construction of detached homes

New Brunswick's housing minister says he's pursuing the removal of sales tax from the costs associated with building new detached homes and townhouses.

With early success seen from the removal of HST from new multi-unit construction costs, David Hickey said expanding the program to include single-family homes should be "on the table" in order to improve affordability for home buyers.

"I see this as a solution to conversations around solving that missing ... middle-of-the-road-priced housing," said Hickey.

"You know, if we look at thresholds somewhere around $300,000, maybe that's the conversation. Maybe the conversation is around [exempting HST on] townhouses and different types of longer-term home ownership."

Hickey's comments came after he addressed a room full of home builders attending a conference hosted by the Canadian Home Builders' Association in Fredericton on Tuesday.

Hickey emphasized his goal of making New Brunswick the most attractive place to build homes in Atlantic Canada and pointed to his government's recent removal of HST on multi-unit building costs as a step in that direction.

The federal government moved in the fall 2023 to rebate the GST on the construction of apartment buildings with four or more units and invited provinces to join in removing the provincial portion of the sales tax.

New Brunswick was a late adopter among its Maritime neighbours, with the province agreeing to participate in the exemption starting last November.

Hickey's remarks were followed by a question from the audience about when the exemption would be extended to other types of residential construction.

"That's the push," said Hickey, in response.

"Last week I met with the federal minister of housing in Ottawa — Nate Eriskine-Smith — and I said our next target is to do the same thing on single-unit housing construction. I think it's a really important step and if we're really committed to driving down those barriers and driving down the cost of the units, that's got to be part of it."

In an interview after the event, Hickey said the exemption would first need to be implemented by Ottawa before New Brunswick signed on, because of the large amount of administrative work that's required of the Canada Revenue Agency.

"It would be a massive lift that we don't have the capacity to do, which is why we lean on the feds to lead those files," he said.

CBC News asked Erskine-Smith's office for an interview about expanding the HST exemption, and a spokesperson deferred comment to Finance Canada.

Finance Canada was unable to provide a response by Tuesday afternoon.

Similar proposals pitched federally

Last fall, Conservative Leader Pierre Poilievre announced he would remove the GST on new homes purchased for under $1 million if he became the next prime minister, and he wrote to premiers encouraging them to remove the provincial portion of the sales tax.

As part of his campaign to become the next leader of the Liberal Party, Prime Minister Mark Carney pledged to eliminate the GST on homes costing less than $1 million for first-time home buyers.

NDP Leader Jagmeet Singh has not made a similar pledge but said if the GST were cut from new home sales, it should be targeted at first-time home buyers and should not apply to investors who want to own multiple properties.

Home builders welcome proposal

Constructing a new entry-level home costs about $400,000 for 3 Rivers Construction Ltd. in Miramichi, Darren Henderson, an employee, said.

If the company could save 15 per cent on those costs, he said the final product could be about that much cheaper for the end user.

"We're looking at a 27 building-lot piece of land, and that [HST exemption] would really solidify our decision on proceeding to build affordable housing," Henderson said.

"I think you would see a growth in the single family housing sector."

Richard LeBlanc owns Riko Passive Homes, a New Brunswick company that specializes in building energy-efficient homes.

He said the cost of construction has been "constantly increasing" year over year, adding that U.S. tariffs are expected to make things worse.

In light of that, getting a break on the sales tax paid on construction costs could help make projects more feasible.

"We're in the pre-sold market ... so of course, if the price costs less for them, then those projects may proceed," he said.

People buying new homes can now get a rebate on the GST of up to 36 per cent, to a maximum of $6,300, for homes valued at $350,000 or less.

For homes valued at more than $350,000, and up to $449,999, the rebate is gradually reduced until it reaches zero for homes that are $450,000 or more.

LeBlanc said the homes he builds typically cost $500,000, making the current rebate irrelevant to his clients.

"You can't build a house under $450,000, therefore, that rebate is not used," he said.