We Need to Hit the Reset Button on National Building Code

Governments are taking action to reduce red tape, cut sales taxes on new homes for first-time buyers, speed up the approvals process and lower levies and development charges. However, our housing stats continue to get worse. We just aren’t building enough new homes.

Canada Mortgage and Housing Corporation (CMHC) figures up to 4.8 million new homes must be built over the next decade to restore affordability levels last seen in 2019, based on projected demand. 

That means between 430,000 and 480,000 new housing units are needed each year across the ownership and rental markets by 2035 – or double the current pace of home construction in Canada.

In 2023, the agency estimated the nation would need to build an additional 3.5 million housing units by 2030, on top of 2.3 million that were already projected to be built by that year, to reach affordability levels seen in 2004.

It’s a tall order. We therefore need to remove all impediments to building new housing.

NBC Is Driving Up Costs

At RESCON, we are encouraged that the feds recently passed legislation that eliminated the GST for first-time purchasers on new homes valued up to $1 million. The government also reduced the sales tax for first-time buyers on a sliding scale for homes between $1 and $1.5 million.

We are also supportive of the priorities outlined in the mandate letter sent by Prime Minister Mark Carney to his government colleagues, specifically the pledge to make housing more affordable. The dream of home ownership is critical to the economic prosperity of Canadians.

However, at RESCON we have some specific concerns about the National Building Code (NBC) which sets out technical requirements for the design and construction of new buildings. It is driving up the cost of homebuilding in the midst of a significant housing affordability and supply crisis.

Code Should Be Paused

We are therefore asking that the release of the 2025 NBC be paused while a full review and investigation is conducted to verify that the fundamental principles of bringing down costs for Canadians and making housing more affordable be fully considered as a principle of the NBC.

Since 2015, the code has been broadened to include direction far beyond the basic principles of health, safety, fire protection and structural sufficiency as minimum requirements. In our opinion, it has evolved into a regulatory mechanism for implementing social policy initiatives rather than focusing on its actual mandate of safeguarding building occupants. 

This divergence from the original mandate has significantly impacted construction costs, resulting in homes that fewer Canadians can afford. 

It is not a coincidence that housing affordability across Canada has been eroded since the release of the 2015 NBC.

Building code regulations should follow innovation by the industry, not lead them. The residential construction industry, which includes manufacturers, labour and regulators, should only be compelled to evolve and progress at a pace that is practical and economically viable.

When government and social policy objectives become the main driver of innovation, the free market tends to respond negatively. The rise in new home prices across Canada is evidence of this.

Housing Costs Are Rising

RESCON is worried. The 2025 NBC is scheduled to be released later this year and will add tens of thousands of dollars in construction costs to every new home built to meet its evolving requirements. 

This version of the NBC has taken aggressive leaps forward in social policy based upon mandates from the previous government, some of which date back as far as 2015. The 2025 NBC, therefore, is both ill-timed during a national housing affordability and supply crisis, and in direct opposition to the spirit and intent of the prime minister’s mandate.

Further, development of the 2030 NBC has already started and the mandates and directives for that code are also based on earlier directives and policies.

Considering the grim state of the new housing market, the government should roll back introduction of the 2025 NBC to make sure it truly dovetails with the mandate of the federal government. We should not be adding construction costs at a time when we need more housing.

In 2022, the Ontario government set a target of building 1.5 million homes by 2031. However, that number now appears to be higher, with up to 2.2 million homes needed over the next decade to return to pre-pandemic affordability levels, according to the CMHC. For Toronto, that would mean a 70-per-cent increase in homebuilding over the next decade to tackle affordability.

We are well short of that goal. According to the provincial budget, Ontario had 74,600 housing starts in 2024, and 71,800 are projected this year.

There is a lot of work to be done if we hope to come close to the targets. Hitting the reset button on the NBC would be a good start.