By Steve Pomeroy, Industry Professor and Executive Advisor, Canadian Housing Evidence Collaborative, McMaster University. 

This week the Ontario government tabled proposed new legislation with its intent clearly articulated in its title — the More Homes Built Faster Act, 2022. As always, the devil is in the details as to whether these impacts are good or bad – and there are many details with a mix of both.
 
The critical question for this proposed legislation is whether a massive increase in supply is realistic. More important, will it achieve the more critical issue of improving unaffordability? My assessment is probably not, with a few small exceptions.
 
As reported in media stories,  a contentious change is requiring municipalities to permit up to three units on existing single detached areas. This applies only to adding a suite in the existing dwelling or in the backyard – it does not include demolition and redevelopment with more units (which might add a larger quantum, albeit not necessarily affordable. It could add moderately affordable options, including enabling seniors in large homes to downsize and make better use of the property to create new homes. But the overall scope of this lightening rod option is actually extremely small – only 50,000 homes across the entire province in 10 years (that only 3% of the 1,5 million target).
 
The far bigger impact, in terms of both units added and potential for community reaction is in requiring municipalities to pre-zone sites around transit stations – most likely to be high density high-rise development. Such pre-zoning removes the lengthy rezoning process and expedites development. If time is money, this reduces development cost. But will savings be passed on to consumers? In a soft falling market perhaps but, in an overheated market, unlikely.
 
Previous legislation created authority for municipalities to enact inclusionary zoning (IZ) around transit. It is proposed to restrict the scope of this legislation, to a maximum of 5% of total units or floor area, and maximum 25-year compliance to affordability criteria. And the affordability criteria are proposed at no more than 80% of local average market rent or 80% of average resale home price – this massively biases in favour of discounted ownership vs. rental, and at 80% of current average prices these will not be that affordable. This severely limits the potential to achieve more truly affordable supply via the IZ mechanism.
 
Purpose built rental, both in transit areas and elsewhere, would be eligible to have discounted development charges (tiered to encourage larger units). One positive benefit for the affordable housing sector is a proposal to fully exempt any housing developed by a non-profit from Development Charges, Community Benefit Charges and Parkland levy – so that helps create more affordable housing, especially if also assisted under the NHS subsidy programs. The same exemptions are available to a private developer, as long as they meet the aforementioned affordability criteria – which is unlikely to add much affordable rental.
 
Another positive is the direction for the Ministry of Finance to examine how property taxes are assessed on non-profit affordable housing development, which could also be beneficial to the sector.
 
A significant negative is the proposal to review the authority of municipalities (to enact rental protection bylaws aimed to replace existing low rent units (currently only Toronto and Mississauga have this). This is precisely the type of regulation needed to address the issue of rapidly eroding low rent stock. Rather than curtail it, this authority should be extended.
 
Another negative is removing affordable housing and housing services as eligible costs in development charge bylaws – which will significantly reduce revenues municipalities currently use to support affordable housing contributions.
 
There are numerous other important matters in this proposed legislation with a wide array of amendments across five ministries and existing acts. Many of these tilt in favour of reducing regulation and speeding development, which is not a bad thing. But overall, despite the breadth of initiatives, there is only modest help to expand truly affordable development and assist those most impacted by the housing affordability crisis.