In an important move to address British Columbia’s ongoing housing supply challenges, the provincial government has announced a major policy change that could help developers access capital more easily and get new projects underway sooner.
On July 2, 2025, Housing Minister Ravi Kahlon shared that starting in January 2026, developers throughout B.C. will be permitted to use on-demand surety bonds instead of traditional irrevocable letters of credit to secure municipal development fees. While this may sound technical, the impact could be substantial especially for smaller and mid-sized builders.
💡 What’s Changing?
Currently, developers must:
Pay at least one-third of their municipal development charges when a subdivision or building permit is approved.
Pay the remaining balance within two years.
Under the new system:
Developers will only need to pay 25% at permit approval.
The remaining 75% can be deferred until occupancy or within four years, whichever comes first.
Additionally, the province is expanding the use of surety bonds, which are already being used in municipalities like Vancouver, Burnaby, and Surrey. These bonds act as a financial guarantee but don’t tie up capital the way traditional letters of credit do—allowing developers to reinvest in construction rather than locking funds away.
🏗️ Why This Matters
B.C. is in the midst of a housing affordability crisis, and developers have been facing increasing barriers:
Rising material costs due to tariffs
Softening presale activity
Lower immigration numbers
High interest rates
Tightening credit markets
Fewer rental property investors
These financial pressures have made it difficult for many developers, especially smaller ones, to get projects off the ground. Some have even had to lay off employees or cancel developments entirely due to the inability to secure enough capital.
By easing upfront financial requirements and expanding bond options, the province hopes to:
Encourage more housing starts
Lower early-stage carrying costs
Make projects more viable
Support a faster delivery of homes across the province
🗣️ What Industry Leaders Are Saying
Terry Hui, CEO of Concord Pacific, called the announcement a “good initiative” and acknowledged the immense pressure developers are under from all angles. “This policy will help, especially as financing becomes harder to secure,” he said, noting that smaller builders stand to benefit the most.
Anne McMullin, President of the Urban Development Institute, emphasized that requiring full payment of development charges upfront has been increasingly “onerous” and was slowing down new supply. “By shifting payment to occupancy, the provincial government is enabling more projects to move forward,” she said.
🚪 What’s Next?
This policy will officially take effect in January 2026 and applies to all communities in British Columbia. The goal is to unlock stalled or delayed housing projects and improve affordability through increased supply.
As someone deeply engaged in the real estate market, I see this as a positive step forward. The combination of more flexibility and better capital access could play a critical role in getting new homes built—and in helping more people find a place to call home in B.C.
If you’re thinking about buying or selling, or just want to stay informed about local housing policy, I’d love to chat.
✨ Tara Kennedy
🏡 REALTOR®, ABR, RENE, SRS
📞 236-992-8989
🌐 tarakennedy.ca
📍 Serving the Tri-Cities and surrounding areas
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