To Tackle the Housing Crisis, Governments Must Be on the Same Page

When it comes to tackling the housing supply and affordability crisis, we seem to take one step forward and then two back.

Let me explain.

While senior levels of government have come up with promising plans to get shovels in the ground for market and purpose-built rental housing, municipal schemes often offset the benefits.

In Ontario, for example, the government has introduced legislation to cut red tape, streamline approvals and tackle other issues that add to the cost of a new home. One proposal is to standardize development charges (DCs) levied by municipalities to pay for infrastructure that supports new developments. The bill would also allow developers to remit DC payments at the point of occupancy instead of much earlier in the planning approvals process.

These are all solid moves.

The legislation would also give the provincial government a direct say in the development approvals process and place limits on how many studies a municipality could request from a home builder. 

The federal government, meanwhile, has committed to cut DCs in half on multi-unit residential projects and work with the provinces and territories to cover the loss of revenue. The feds also intend to eliminate the five-per-cent GST for first-time homebuyers on homes sold at or under $1 million. Earlier, the government eliminated the GST on the construction of new rental apartments.

The unfortunate part is that the measures will have to wait until fall when the feds present a budget.

Toronto Has Raised Fees

Some municipalities – notably Vaughan, Mississauga and Burlington – get it. They have found a way to reduce DCs. However, most have not heeded the call.

Toronto recently held the line on DCs which have skyrocketed over the past 15 years. As of June 6, 2024, DCs for a non-rental one-bedroom apartment or condo were $52,676, up from $4,985 in 2009, while DCs for a unit with two or more bedrooms were $80,690, up from $8,021 in 2009.

Disturbingly, though, the city chose to raise the fees that are charged to developers and builders for lane closures to allow them to build. Permit and road closures fees were costing $98,800 for closing one lane of traffic, 20 to 50 metres in length, for four years in a construction hub. It increases to $183,000 under the new system. 

Such levies will take a significant toll as new home buyers will eventually bear the burden of these new charges, further chilling housing starts.

Actions such as these only add to the fees that developers must pay and the ongoing housing crisis will only get worse.  

Green Standards Hike Costs

The Ontario government also intends to remove municipal powers to create local construction standards, something that has been used by some municipalities to require developers and builders to adhere to costly features above and beyond those required by the Ontario Building Code (OBC). Legislation introduced recently signals the end of the municipal green standards.

In many instances, municipalities have approved over-restrictive green building standards that significantly add to the cost of housing. The standards were a knee-jerk reaction to climate activism and muddied the approvals process for those who build across municipalities with different standards.

The OBC adequately covers the methods and materials of construction. It was introduced in 1975 after five years of painstaking consultation and has evolved over time based on the latest building science and analytics. The OBC provides all municipalities with a common set of rules.

Instead of adding more restrictions and creating confusion, municipalities should instead focus on their core responsibilities. Building code issues are the responsibility of the province and the rules have been developed based on solid building science. Adding more restrictions creates confusion and chaos and only raises housing costs which are already unaffordable.

Municipalities should not be spending staff time and money developing individual green standards. The focus should be on hitting their housing targets.

Hurdles Must Be Removed

We are in the midst of the most serious housing supply and affordability crisis since the Second World War. Yet the residential construction industry continues to face exorbitant hikes to taxes on new housing and restrictions that only complicate and make building more costly.

New home starts have plummeted. The condo market in Toronto has slowed to its worst point in more than three decades. The national picture doesn’t look any better. In March, housing starts were down 12.5 per cent year-over-year in centres with a population of 10,000 or greater. 

All levels of government need to be on the same page. We can not give with one hand and take with another. We must remove the hurdles in the way of building. It is time to change the pattern.