A windfall for developers? Mayor’s proposal for new homebuyer financial incentive sparks debate at London city hall

The London Home Builders Association hopes to partner with the city on a financial incentive for new homebuyers, however not everyone was on board

Mayor Josh Morgan’s proposed financial incentive program to reimburse the Development Charges (DC’s) on new homes sparked a marathon debate at city hall.

At issue, whether the program would primarily benefit cash-strapped homebuyers, or local developers struggling with a glut of unsold houses.

On Tuesday, the Strategic Priorities and Policy Committee (SPPC) considered whether to endorse the terms, eligibility, and financing for the Affordable Home Ownership Incentive Program announced by Mayor Josh Morgan during his State of the City Address last week.

The incentive program would reimburse DC’s on newly-built houses that sell below the average market price ($630,648).

It would equate to a savings of $50,564 on a single or semi-detached houses within the urban growth area, and $21,970 on row housing.

The program would run until the end of 2026 and be cost-shared 60 per cent from city hall and 40 per cent from members of the London Home Builders’ Association (LHBA).

The CEO of the LHBA explained to the committee his members’ rationale for partnering on the mayor’s plan.

“This will be in a very significant way helping clear the backlog of inventory homes that exists in our community right now, likely in the hundreds at this point over the last couple of years. This will help spur on new home construction,” Jared Zaifman told the committee.

However, Coun. Sam Trosow openly questioned the motives behind the proposed incentive, “A lot of public comment that I’ve heard is that this is a windfall for the development industry.”

Mayor Josh Morgan shot back, “It’s not a windfall for the development community. Do they have some inventory that is sitting there? Sure, they do. But what’s happening here is the building community is putting their own money on the table.”

Anticipated to help up to 260 homebuyers, the program would utilize $5 million from one-time federal funding intended for housing programs, and not impact property taxes.

Coun. Susan Stevenson expressed reservations about how quickly the complex program was designed, and emphasized that housing affordability is the responsibility of the senior levels of government.

“We keep saying we shouldn’t backfill the province or we shouldn’t backfill the federal government even as we do it. We keep doing it,” she argued.

Coun. David Ferreira and Coun. Skylar Franke each raised concern that the incentive would work against free market forces, because the excess supply created by developers would drive down prices on all housing citywide.

“The market corrections that we have been trying to make for the last three years are happening,” explained Franke. “If (home builders) want to clear their inventory, they can lower the price by themselves.”

“If there is a backlog of new builds that are not able to be sold, I would say let the market decide what happens to those new builds,” said Ferreira.

Morgan pushed back, “The reason why there’s inventory on the market is because it’s not affordable. We’re going to lower that price through a program like this. People are going to be able to afford it.”

The committee recommended restricting eligibility to first-time homebuyers who are already residents of London.

It also extended the requirement that homebuyers occupy the house as their primary residence for a minimum of 10 years, doubling the five-year period recommended by the staff report.

The mayor’s incentive program was narrowly supported by the committee 8 to 6.

If approved by Council on February 10, the program will be reviewed after six months (July, 2026).