Despite recent progress, municipal and provincial policies still impede new home construction in Ontario

Barriers to Housing Supply in Ontario and the Greater Toronto Area

• Worsening housing affordability in Ontario, particularly in the Greater Toronto Area, underscores the importance of reviewing governments’ impact on homebuilding.
• Despite recent positive policy shifts, substantial obstacles hinder housing development. Five key categories of barriers are: high fees, onerous building requirements, ancillary and holding costs, land costs, and uncertainty.
• Fees and taxes on development
  • Multiple fees, including application and permitting fees, development charges, parkland dedication, and community benefits charges, significantly affect housing costs.
  • Opportunities for reform include Implementing maximums, reviewing eligible services, and exploring alternative infrastructure financing models.
• Building requirements
  • Municipal and provincial regulations impose physical constraints on housing projects, limiting building sizes and types.
  • Opportunities for reform include aligning the number of units allowed on each parcel with infrastructure capacity, relaxing rules on property dimensions, structures, and parking requirements, and updating official plans to better reflect the magnitude of demand.
• Ancillary costs
  • Developers face substantial staffing and holding costs over time.
  • Opportunities for reform include streamlining the development approvals process through a provincewide digital portal to reduce requirements and shorten timelines.
• Land costs
  • Land acquisition represents a significant portion of development costs.
  • Government-imposed limitations on both upward and outward urban growth create significant distortions in land markets.
  • Opportunities for reform include relaxing urban containment policies and exploring models of controlled land releases.
• Uncertainty
  • Approval process uncertainties and potential mid-project alterations deter homebuilding.
  • Opportunities for reform include making official plan development the primary stage for community engagement to reduce extensive consultations in subsequent project phases.