04/16/2026
Saving on new build homes requires careful negotiation of the Agreement of Purchase and Sale (APS) and a thorough understanding of how builders calculate HST rebates. In Ontario, as of March 2026, the provincial government has removed the 8% HST on new homes up to $1 million for first-time buyers, in addition to the federal rebate.
Here is a guide to common hidden charges and how to structure your quotation/negotiation to save money, along with tips on managing the HST rebate.
1. Negotiation Strategies to Avoid Hidden Charges
Builders often include clauses that allow them to increase the purchase price after you have signed. Use these tips during negotiations (usually during the 10-day cooling-off period) to protect your budget:
• Cap Development Charges/Levies: Demand a "maximum cap" on development charges and educational levies. These are often listed as "adjustable" and can add thousands of dollars at closing.
Quotation Example: "The Vendor agrees that the total development charges, levies, and contributions shall be capped at a maximum of $5,000, and any amounts exceeding this cap shall be borne by the Builder."
• Cap Utility Connection Fees: Ensure that fees for water, hydro, and gas meters are capped.
• Negotiate Against "Vague" Clauses: Watch for clauses allowing the builder to add costs for "unforeseen site conditions" (e.g., rock excavation).
• Clarify Upgrade Prices: Ensure all upgrades chosen are fixed-price. Avoid "allowances" (e.g., $5,000 for lighting), which are usually too low and result in extra costs.
2. Protecting the HST Rebate (Ontario Focus)
Builders almost always include the HST rebate in the advertised purchase price, meaning they assign the rebate to themselves to reduce their costs.
• Confirm Rebate Eligibility: Ensure the builder clearly states in the contract that the purchase price includes the HST rebate, so you are not paying the full HST upfront and waiting to reclaim it.
• Watch for "Rebate Miscalculation" Clauses: Some contracts state that if you do not qualify for the rebate (e.g., you are buying as an investment and not as a primary residence), you must pay the amount back to the builder (often $24,000 - $130,000 depending on price).
• Review Section 19.3.1: As of March 2026, new Ontario rules allow a 13% total HST rebate for first-time buyers on homes up to $1M (max $130k). Ensure the contract reflects this new, higher rebate, rather than the old $24k cap.
• The "Primary Residence" Requirement: To get the rebate, you must live in the home as your primary residence. If you are a flipper or an investor, you generally do not qualify, and the builder will charge you the full price.
3. Checklist to Save on New Builds
• Use a Lawyer Specializing in New Builds: A general real estate lawyer may not catch the nuances in a builder's contract.
• Review the HST Schedule: Verify that the "purchase price" on the front page is actually the price after the rebate, and that the rebate amount matches current 2026 regulations.
• Choose Standard Financing: Builders sometimes offer perks if you use their preferred lender, but ensure their rates are competitive.
• Avoid "Over-Upgrading": Focus on structural upgrades (e.g., higher ceilings, rough-ins) during construction, and do cosmetic upgrades (light fixtures, flooring) later.
Disclaimer: Real estate regulations and tax policies can change. Consult with a real estate lawyer in your local area to review your contract.
