Last update Dec 12, 2022
Update: Bill 23 was passed by the Ontario legislature on November 28.
More Homes, Built Faster Act was passed by the Ontario legislature on November 28 and was done fairly quickly. This is the Ontario government’s plan to build 1.5M homes in the next 10 years.
Many local municipalities are against this provincial act. One of the “selling features” of this act was to reduce development charges to encourage more development. Cities are set to lose out on 10s to 100s of Millions of dollars in revenue. This would result in property taxes going up to replace that missing revenue.
Mississauga would be expected to build 120k new homes in 10 years. In fact, Mississauga just sent a flyer outlining their position on it, see pictures below.
Moreover, more development means less parkland, sacrificing wetlands and developing greenbelt zones raising environmental concerns. We need more housing, but also responsible and sustainable housing options.
The challenge we face is that Canada is welcoming almost 500k newcomers every year. Where are they going to live? If we don’t build more homes, home prices are going to continue to rise to even more unaffordable levels. The only solution to the housing crisis is we need more homes.
The question is that if we scrap the development charges, the developers will pocket the profit. Do you think they will pass the savings on to new buyers? What’s your take on this?
The Ford government proposed the More Homes, Built Faster Act to address Ontario’s housing crisis, aka Bill 23, on October 25, 2022.
Canada’s Housing Crisis
The housing crisis is a Canada-wide problem, with many elements – such as high interest rates, construction material costs, labour shortages, rising inflation, bureaucratic red tape, development charges, conservation restrictions, and increasing immigration (I know… it’s a lot.) – all adding to the crisis.
Home ownership is now out of reach for many Canadians, cities in Ontario, British Columbia, Nova Scotia and Quebec have home prices 30% to 50% above the affordability rate for the average Canadian.
One survey shows three-quarters of Canadians interested in purchasing a home cannot afford to do so due to rising housing costs.
What is the More Homes Built Faster Act, 2022 (“Bill 23”) ?
Bill 23 is part of More Homes, More Choice: Ontario’s Housing Supply Action Plan, a long-term housing strategy to increase the supply and provide attainable housing options.
Some of the provincial government’s past legislative includes Bill 108, More Homes More Choice Act, the Housing Affordability Task Force Report, and Bill 109, More Homes for Everyone Act.
Their goal is to reform these processes at the provincial and municipal levels to ensure all Ontarians can find a home that meets their needs and budgets. The bill aims to build 1.5M more homes over the next 10 years which means doubling the rate of housing construction.
How are they going to do that? What challenges do they have to overcome? Is this going to make housing more affordable?
Below are some of the highlights of Bill 23:
Reform the Ontario Land Tribunal Processes
Lengthy approvals and high costs have slowed down the building of new housing and rentals. The bureaucratic red tape delays approvals, permits and ultimately construction is one of the main factors that is pushing home prices even higher. The more delays, the more costs the developers incur, and the more costs that get passed down to buyers.
The approval process in Canada is one of the longest in the world. Bill 23 proposes to amend the Ontario Land Tribunal Act to allow the Ontario Land Tribunal to prioritize cases that would create the most housing.
The Tribunal would have the power to dismiss appeals without a full hearing and restrict “third party” appeals on official plan amendments, zoning by-law amendments, consents, and other minor variances.
The timeframe for an applicant to appeal a non-decision to the Tribunal would be shortened from 120 days to 90 days after the application for a permit is made.
Side note: NIMBYs are part of this problem. NIMBYs is an acronym for “Not In My Backyard,” describes the phenomenon in which residents of a neighbourhood designate a new development (e.g. shelter, affordable housing, group home) or change in zoning for developments as inappropriate or unwanted for their local area. They want to protect the way of life they are used to and object to building more homes – this casts barriers to new construction.
Streamline The Red Tape and Reduce The Fees
Municipal housing targets for 2031
Ontario is asking 29 municipalities to pledge to increase their targets in municipal land use and plans to increase infrastructures like roads, sewers and schools.
Municipalities are encouraged and incentivized to immediately accelerate growth and identify what they will do to address the housing supply.
In Ontario, we have 36 conservation authorities under Conservation Ontario, each with its own development regulation. The bill aims to streamline all the different regulations into one. This will offer a more focused mandate to help reduce flooding risks to ensure people and property are protected from the impacts of natural hazards.
The bill also adds amendments to Ontario Heritage Act. It renews and updates the current heritage policies, streamlines development approval, and ensures safety while balancing the time and work it takes to comply, assess and enforce.
Increase Density and As-Of-Right Zoning
The bill promotes building up near transit stations, it will increase density around main transit locations to limit urban sprawl. Urban sprawl requires more infrastructure and more land.
Reforming zoning to create more “gentle density” allows homeowners and developers to build up to 3 units for each plot of land without a municipal by-law amendment.
The opportunity here is to add units to rent out and supplement homeowners’ expenses or take care of their ageing parents.
These 3-unit properties would be exempt from development charges and parkland dedication fees so long as they comply with the building code and municipal by-laws for standards regarding matters such as height restrictions.
If you are thinking about buying a home, you might want to consider a property that has the potential for additional units.
Inclusionary Zoning and Exempting Fees for Affordable Housing
Protecting home buyers and tenants, and rental supply by utilizing parcels of surplus provincial land to build more attainable homes. Municipalities will be required to spend or allocate at least 60% of their development charge and parkland reserve balances at the start of each year.
An inclusionary zoning policy would require new residential developments to include affordable housing units, creating mixed-income housing.
Currently, there is no upper limit to the set-aside rate in the Provincial Regulation. Ontario is proposing to limit the maximum set-aside rate a municipality can require to 5%, with a maximum 25-year affordability period. After an initial phase-in period, Municipalities will require set-aside rates that range from 5% to 10% of condominium developments (those with over 50 ownership units or 3,600 square metres of residential area) as affordable housing beginning in 2022, depending on where the development is located.
- For the City of Mississauga, you can find the detailed News release on inclusionary zoning here.
- For the City of Toronto, you can find the Inclusionary Zoning Policy Overview here.
Affordable housing, non-profit housing, inclusionary zoning units, and select attainable housing units are exempted from municipal development charges, parkland dedication levies, and community benefit charges.
More proposals
- Ontario increases the foreign home buyers speculation tax to 25% to further discourage speculative foreign investment. Moreover, to curb speculation, the federal government has also put in place a 2-year ban on foreign buyers starting in January 2023.
- The Ford government is proposing to amend the Planning Act, the Development Charges Act, and the Conservation Authorities Act to freeze, reduce, and exempt fees typically levied by municipalities and other authorities, which can significantly impact the cost of 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. It is now proposing to freeze, reduce, and exempt fees to spur the supply of new home construction and help address Ontario’s housing supply crisis.
Is this going to solve our housing crisis?
Bill 23 is a good start. Will we actually achieve this goal of 1.5M homes in 10 years? I doubt it, but at least we’re looking at making changes and we’ll be better off than not increasing our goal.
Keep in mind that developers and property owners want their bottom line to be met, they are not doing this not-for-profit. Without a strong focus and money pouring into building more affordable housing, co-ops, rentals or not-for-profit housing, the housing crisis – in my opinion, is here to stay. Giving developers huge discounts to build is good incentive, but will builders pass on those savings or does this give them bigger pay cheques?
Another challenge is we don’t have enough construction workers to build these homes. We will be limited to how fast we can build even with all the red tape removed. On top of that, with 500k newcomers every year, the housing supply is not keeping up with the demand, the shortage of housing will further intensify the housing crisis.
The Housing crisis is a supply and demand problem. It’s interconnected. We need more affordable housing options to offer more choices, and by increasing the supply, it will bring affordability to everyone. These proposed changes are a good start, but will it be enough?
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