Last week the Ontario Government introduced legislation that, if passed, is intended to support “More Homes Built Faster.” A summary of the initiatives of this plan are provided below with commentary related thereto further below.
More Homes Built Faster Act, 2022 – Summary of the Initiatives:
Addressing the Missing Middle: up to three residential units would be permitted “as-of-right” on most land zoned for one home in residential areas without needing a municipal by-law amendment. These units would also be exempt from development charges and parkland dedication fees.
Building More Homes Near Transit: move towards “as-of-right” zoning to meet planned minimum density targets near major transit stations, reducing approval timelines and getting shovels in the ground faster.
Supporting the Growth and Standardization of Affordable and Rental Housing: creating the conditions for building more affordable and purpose-built rental housing.
Ontario is also taking action to help streamline the construction and revitalization of our aging rental housing stock that in some cases is many decades old, grossly energy inefficient, and is starting to fail.
Freezing, Reducing and Exempting fees for Building Attainable, Affordable, and Non-Profit Housing: Government charges and fees significantly impact the cost of housing—adding up to nearly $200,000 to the overall cost of building a home.
Streamlining Bureaucratic Processes to Get More Homes Built Faster: remove site plan control requirements for most projects with fewer than 10 residential units.
Improving the Ontario Land Tribunal to Support Building More Homes Faster: help speed up proceedings, resolve cases more efficiently and streamline processes.
Creating a New Attainable Housing Program: leverage provincial authorities, surplus or underutilized lands, and commercial innovation and partnerships to rapidly build attainable homes in mixed-income communities that are accessible to all and will help families to build portable equity.
Protecting Ontario Homebuyers from Unethical Developers: further strengthening consumer protections for new home buyers by doubling maximum fines for unethical builders and vendors of new homes who unfairly cancel projects or terminate purchase agreements.
Taking Action to Crack Down on Land Speculation: Ontario will work with industry partners to consult on the issue of land speculation as a detriment to the housing supply goals of the government, and whether potential regulatory changes under the New Home Construction Licensing Act, are needed to address the issue.
Improving Ontario’s Heritage and Growth Planning: strengthen the criteria for heritage designation and update guidelines.
Reducing Taxes on Affordable Rental Housing: calling on the federal government to come to the table and work with us on potential GST/HST incentives, including rebates, exemptions and deferrals, to support new ownership and rental housing development.
Promoting Fairness to Support Affordable and Other Rental Housing: explore potential refinements to property tax assessment methodology used to assess affordable rental housing so that it better reflects the reduced rents that are received by these housing providers. In addition, Ontario will consult with municipalities on potential approaches to reduce the current property tax burden on multi-residential apartment buildings in the province.
Helping Homebuyers and Renters by Addressing Vacant Homes: consultation on a policy framework setting out the key elements of local vacant home taxes.
Strengthening the Non-Resident Speculation Tax: At 25 per cent and provincewide, Ontario now has the highest and most comprehensive Non-Resident Speculation Tax (NRST) in the country.
Konfidis and Industry Commentary
While the new legislation has been applauded by some, other industry experts caution potential negative consequences.
If we remove development charges revenue, where will the municipal fiscal shortfall come from? Toronto Mayor John Tory said the removal of those development charges could cost the city hundreds of millions of dollars. "What we can't afford to see happen is to see one government make promises and pay for it with somebody else's money," Tory said at a recent press conference. "These charges we collect are not just charges that go into the general revenue stream. They are charges that are specifically allocated to things that need to get built under the principle of growth paying for growth." Tory said he is supportive of "the thrust" of what the legislation seeks to do but is "very concerned" about the development charges aspect. "(New buildings) have to have sewers to take away the wastewater. They have to have water to supply those buildings. They have to have roads and transit to connect those buildings up to the rest of the city and those were and are paid for in part by development charges." (Full article here).
Doug Ford’s new housing plan could be bad news for renters. Here’s why. Mayor John Tory and members of Toronto city council are spooked with the section that has to do with Ford’s provincial government giving itself powers to “make regulations imposing limits and conditions on the powers of the city to prohibit and regulate the demolition and conversion of residential rental properties.” If the bill passes, the province will be empowered to weaken or even eliminate a long-standing city hall policy that requires developers who demolish rental apartment buildings with more than six units to provide rental replacements for units they knock down. City hall’s rental replacement policy isn’t perfect but it’s at least kept some of the city’s dedicated rental units from fading away as condo-mania ran wild. Without the city’s replacement requirement, thousands of rental units could have been lost, with no protections for tenants. (Full article here). Further, the NDP is calling the new plan a “devastating attack” on renters. Ontario's official opposition is asking the province to scrap part of its new housing plan because, the NDP says, it will weaken tenant protections and further deplete the stock of affordable rental properties. NDP housing critic Jessica Bell said a proposal in Ontario's new housing plan would allow the province to curb the powers of municipal rental replacement bylaws. "Doug Ford wants to make it easier for developers to toss tenants out by the hundreds and turn these affordable purpose built rentals into luxury condos," Bell said. "The consequences of [the bill] are potentially disastrous for housing affordability." (Full article here).
Unintended consequences raised by conservation authorities related to risking critical infrastructure and flood vulnerable areas. Ontario's conservation authorities are raising concerns about the potential risks of rolling back their involvement in how and where homes are built across the province. Conservation Ontario, which represents the 36 conservation authorities, says Premier Doug Ford's new bill to speed up housing development could have "unintended consequences" and is hopeful the government is open to changing it. (Full article here). Further, “It seems like they are trying to stop us from commenting on municipal planning applications altogether,” said John MacKenzie, the chief executive officer of the Toronto and Region Conservation Authority (TRCA). “If the government is successful in removing TRCA from these processes, this substantially increases the risk that development decisions will be made that put the lives of Ontarians, their properties, and critical infrastructure at risk, including new housing proposals in flood vulnerable areas.” Full article here.
In conclusion, while the attempt to address the clear issue of a lack of new housing across Ontario to meet the accelerating demand (see the recent Konfidis Insights - A Deep Dive into (the lack of) Housing Supply) is a step in the right direction, backlash from the intended legislation highlights just how difficult it is to create new housing stock – which has become as much a political issue as an economics matter.
With this backdrop, Konfidis continues to see a very compelling landscape for single-family rental ownership and the long-term supply and demand fundamentals that support strong home price appreciation and inflation protection.