Confused about buying new? Here’s some answers – Advice | Industry Insider

Question: What are development charges?

Answer. Development charges are fees levied by the municipality on new construction. Those fees are intended to cover the cost new infrastructure like sewer pipes, community centres, roads and fire stations. Instead of taxpayers taking on these costs, they are charged to the developer and then later passed onto the purchasers, either partially, or in their entirety.

It’s crucial to protect yourself before you sign your purchase agreement and to negotiate with the developer to add a clause in order to “cap” these development charges. This is something you can do before signing, or during the conditional period, with the help of your lawyer and real estate agent. If, for example, the fees are capped at $5,000 and the total charge is $25,000, you will be accountable for $5,000. The developer is accountable for the additional $20,000. In my experience, a $5,000-$7,500 cap is pretty common in Ottawa. Depending on the market and the popularity of the project, the buyer may have the power to negotiate this cap to a lower number. If you’re buying after the ground has been broken, the developer should be able to give you a good idea of the development charges, or cap it, without much pushback.

Q. What are the advantages to purchasing a newly constructed home?

A. Knowing that you are the first owner of a home is a great feeling. The biggest advantage of buying pre-construction though is the ability to choose the look and design of the space. While some developers will only allow you to choose the finishes, others will give you the freedom to make changes to the actual layout.

Another huge bonus is the Tarion Warranty. Tarion is a non-profit organization established to protect the rights of new-home buyers and regulate new-home builders.

Q. How do I make sure to pick the right finishes for my new home?

A. When time comes to choose your interior finishes, I suggest steering clear from passing fads. Choose neutral, timeless, un-imposing design features that will appear to a broad range of buyers in the future.

While it’s nice to express yourself through your home style, you can do so through light fixtures, paint colours and furniture. When it comes to finishes that are harder to change in the future, like flooring and kitchen cabinetry, try to stick with styles that are not too personal. Avoid too many dark finishes – dark hardwood floors with a dark kitchen tend to make spaces seem darker and smaller than they really are.

If you feel overwhelmed or unsure of your own design skills, hiring a professional interior designer to visit the show room with you could be an investment worth making.

Q. What are occupancy fees?

A. This fee is essentially rent paid to the developer during the period of time between the date of occupancy and the registration date when you buy a pre-construction condo. This period is also known as “interim occupancy.” The occupancy date is the date you get the keys to the unit and have the legal right to occupy the property, but not ownership. Once the building reaches a certain percentage of occupied units the developer can start the registration process with the City in order to declare the building as a condominium. Once the building is registered, you would become a homeowner and start paying your mortgage, property taxes and condo fees. Interim occupancy can last anywhere from a few weeks to over a year, which is why it’s extremely important to be aware of this and budget accordingly. The occupancy fee is made up of three parts: interest on the remaining balance of the purchase price of your condo, municipal taxes for your unit, condo fees for your unit. The good news is that a majority of the time this amounts to less than actual rent would be for the property. It’s essential to note that most developers do not allow rentals in the building during interim occupancy. This is detrimental to investors, since this could result in months of vacancy and lost income. Make sure to negotiate with the developer and attain the right to rent your unit, if that’s the reason for your purchase.

Q. What is the best source of information for upcoming developments?

A. Unfortunately, shopping for a pre-construction property can be time-consuming. The resale world is a lot more straightforward, as essentially everything is listed in the MLS system and can be found on When it comes to pre-construction developments buyers often have to go to multiple websites and sales centres to gather all of the necessary information. is a great source of information on present developments and is the website I often use for reference. I also suggest working with an agent that’s experienced in pre-construction sales in the areas of the city you’re looking in – it’s our job to stay fully informed on upcoming projects, completion dates and price differences between various developments.