Buying New Construction in Ontario: What You Need to Know

By Team Apex

Purchasing a newly built home in Ontario is an exciting opportunity to own a modern, energy-efficient property tailored to your tastes. However, the process comes with unique considerations specific to the Ontario market. From legal protections to hidden fees, understanding the full picture will help you make an informed decision.

In this guide, we’ll explore the pros and cons of new construction in Ontario, additional fees to budget for, and provide a comprehensive checklist to navigate the process successfully.


Pros of Buying New Construction in Ontario

1. Modern Designs and Energy Efficiency

New homes in Ontario are built to meet stringent energy-efficiency standards. Features like high-performance windows, modern insulation, and Energy Star appliances can save you money on utilities while reducing your carbon footprint.

2. Tailored to Your Taste

Many Ontario builders offer personalization options, allowing buyers to choose finishes, layouts, and upgrades that suit their preferences.

3. Low Maintenance and Warranties

New construction homes come with warranties through the Tarion Warranty Corporation, protecting you against defects in workmanship, materials, and major structural issues for up to seven years.

4. Community Perks

Many new developments in Ontario offer amenities like parks, walking trails, community centres, and proximity to schools, making them ideal for families.

5. Modern Infrastructure

New construction homes are often located in developing areas with improved roads, public transit access, and planned retail and recreational spaces.


Cons of Buying New Construction in Ontario

1. Higher Initial Costs

New construction homes often come at a premium compared to resale homes in the same area. Upgrades and customizations can further increase the cost.

2. HST on Purchase Price

Unlike resale homes, new builds are subject to Harmonized Sales Tax (HST) in Ontario. However, if you intend to use the home as your primary residence, the builder typically applies for the HST rebate on your behalf, reducing your upfront costs.

3. Limited Negotiation

Builders in Ontario rarely negotiate on the base price. However, you may be able to negotiate upgrades, incentives, or closing cost assistance.

4. Construction Delays

Weather, supply chain issues, or labour shortages may delay construction. Be prepared for potential setbacks in the timeline.

5. Unfinished Neighbourhoods

When moving into a new development, the area may still be under construction, leading to noise, dust, and incomplete amenities.


Understanding Tarion and Interim Occupancy

What is Tarion?

Tarion is a not-for-profit organization in Ontario that administers the Ontario New Home Warranties Plan Act. It protects new home buyers by ensuring builders meet their warranty obligations. Coverage includes:

  • – Workmanship and Materials: Protection against defects in finishes, electrical, plumbing, and HVAC systems for up to two years.
  • – Major Structural Defects: Coverage for up to seven years.
  • – Deposits: Tarion safeguards your deposit up to specific limits in case a builder fails to deliver.

Before purchasing a new construction home, verify the builder is registered with Tarion and understand what the warranty covers.

What is Interim Occupancy?

If you’re buying a condominium unit in Ontario, you may encounter an interim occupancy period. During this time:

  • – You can move into your unit, but you do not yet own it.
  • – The developer may not have completed construction or received final approvals to transfer ownership.
  • – You’ll pay a monthly fee (called interim occupancy fees) to the builder, which often includes estimated property taxes, maintenance fees, and interest on the unpaid balance.

Interim occupancy can last several months, so it’s important to budget for these fees and understand when final ownership will transfer.


Additional Costs to Budget For in Ontario

1. HST (Harmonized Sales Tax)

New homes are subject to 13% HST. If the home is intended for personal use, the builder typically applies for the HST rebate on your behalf, reducing your upfront costs. However, for investment properties, you may not qualify for this rebate.

2. Development Charges

Municipalities charge builders fees for infrastructure like roads, schools, and utilities. Builders often pass these charges on to buyers as part of closing costs. These fees can range from $5,000 to $30,000 or more, depending on the municipality.

3. Tarion Enrolment Fee

Builders must register new homes with Tarion, and this cost is often passed on to the buyer. The fee depends on the purchase price and can range from $385 to over $1,500.

4. Upgrades and Add-Ons

Model homes often showcase premium finishes that are not included in the base price. Carefully review the cost of upgrades to avoid sticker shock.

5. Closing Costs

Closing costs in Ontario include legal fees, title insurance, and land transfer taxes. Be sure to confirm these with your lawyer to avoid surprises.


Checklist for Buying New Construction in Ontario

1. Research and Preparation

  • – Determine your budget, including HST, development charges, and upgrade costs.
  • – Research the builder’s reputation on the Tarion Warranty Corporation website and review their past projects.
  • – Compare developments in different areas to ensure the location meets your lifestyle needs.

2. Understand the Purchase Agreement

  • – Hire a real estate lawyer experienced in new construction contracts in Ontario.
  • – Review the agreement for clear details about what’s included in the base price and any additional charges.
  • – Confirm timelines for construction completion and any penalties for delays.

3. Verify Warranty and Protections

  • – Ensure the builder is registered with Tarion.
  • – Understand what is covered under the Tarion Warranty and for how long.
  • – Ask the builder about the process for addressing deficiencies after closing.

4. Plan for Delays and Occupancy

  • Confirm move-in dates and have contingency plans for unexpected delays.
  • For condos, understand the interim occupancy period, associated fees, and final closing timelines.

5. Review Closing Costs

  • Confirm all closing costs, including land transfer tax, legal fees, and development charges, with your lawyer.
  • Check eligibility for the HST rebate if the home is your primary residence.

6. Explore the Neighbourhood

  • Visit the area at different times of the day to assess traffic and activity levels.
  • Research schools, public transit options, and long-term development plans for the community.

Final Thoughts

Buying a new construction home in Ontario offers the chance to own a modern, energy-efficient property tailored to your preferences. However, it’s crucial to do your homework, budget carefully, and work with experienced professionals to navigate the process.

With the right preparation, you can avoid common pitfalls and enjoy the benefits of a brand-new home designed just for you.

Ready to find your dream home in Ontario? Contact us today to explore exciting new construction opportunities!

📞 Call/Text: 519-279-6869
📧 Email: info@teamapex.ca
🌐 Visit: www.teamapex.ca

As we look ahead to the new year, Dufferin County remains a place of connection, creativity, and growth, continuing to foster memorable experiences for its residents and visitors alike.

Contact us today or book a FREE, no obligation appointment below!

 

TEAM APEX REAL ESTATE

info@teamapex.ca
519-279-6869

Check out our social media pages for more videos!