May 17, 2019
Twelve ways to increase the housing supply
Friday, May 17, 2019 | Published in The Lawyers Daily
Thursday, May 2, 2019, was a great day for the real estate development industry, homebuyers and renters in the province of Ontario.
The Liberal governments of Dalton McGuinty and Kathleen Wynne over the 12 years previous to the current Conservative government enacted dozens of pieces of legislation that restricted land supply, raised fees and taxes on new and used housing, and ultimately, limited choices for Ontario home buying consumers. I have documented previously the escalation in taxes, house prices and the shortage of homes.
A recent report from data company Altus Group showed that the cumulative effect of all Liberal legislation including, in particular, the overly ambitious growth plan which has resulted in a shortfall of 7,000 units per year needed to meet market demand, was a total of 98,000 missing homes.
The Liberal answer to rising prices was not to get to the root of the problem — being a shortage of supply — but to focus instead on limiting demand.
Two years ago, they introduced legislation that discouraged new rental construction by freezing rents on new purpose-built rentals and imposing a foreign buyer tax which discouraged foreign investment. Although some of these measures helped an already declining market, they did nothing to make housing more affordable or increase the supply. Combined with the stress tests introduced by the Liberals in January 2018, demand was further restricted, cooling off all Canadian markets but in particular Vancouver and the Greater Toronto Area (GTA).
We finally have a government that has recognized that if lack of housing supply is the issue, we need solutions to fix it.
On May 2, Steve Clark, minister of municipal affairs and housing, after six months of intensive discussions with all stakeholders (2,000 submissions, in fact, of which 85 per cent were from the public), came up with a comprehensive revamp to Ontario's housing policy to create more, and more affordable, housing.
My law firm partner, John Fox, has already commented on the new provincial community housing strategy to assist non-profits, co-ops, churches, etc. in creating more affordable housing for both renters and owners. Clark also tried to address the children of the middle class who can't afford to buy houses, immigrants and others who don't qualify for low-cost housing, but aren't rich enough to afford a $1.2 million single family home in Toronto.
Here are four of the 12 steps that came out of the proposals to create more and faster supply.
Surplus provincial lands
The province will free up surplus provincial properties for homes, long-term care facilities and affordable housing.
The province will hire more adjudicators to free up the approximately 100,000 units that are tied up at the Local Planning Appeal Tribunal (LPAT) (formerly the Ontario Municipal Board). This has delayed the development of numerous low-rise and high-rise sites that would increase supply across Ontario — in particular the GTA and the Greater Hamilton Area.
The rules of LPAT will be revamped to fix two major structural problems with the new LPAT imposed by the Wynne government:
- The tribunal will now have a full hearing with all the evidence before it. Currently, all evidence must be put before the municipal councils who are ill equipped to make judicial decisions. LPAT has and will continue to have independent adjudicators that can make the best planning decisions, ignoring nimbyism and political horse trading;
- LPAT will now be able to make the final decision at first instance as opposed to allowing the decision to go back to the municipality where the municipality's decision was adjudged incorrect and only having a right to make a decision on the second go-around. If there are 100,000 cases now tied up before LPAT, imagine how many more there would have been with the decision making going through two judicial processes; and
- The key guiding principle for LPAT decisions will be what is the best decision from a planning perspective, as opposed to the best municipal decision based on potentially political factors.
Development charge application dates
The level of development charges (DCs) will be fixed at the application stage as opposed to the date full permits are issued. Currently, municipalities will often delay issuance of permits to allow increases in DCs to take effect.
Planning decisions delay
Planning decision timelines will be substantially reduced from the lengthy ones that are now in place, to 120 days for official plans, 90 days for zoning bylaws and 120 days for plans of subdivision. No longer can municipalities use delay as a lever to extract concessions and defeat appropriate new developments.
Eight other changes that came out of the May 2 proposals will be covered in part two of this two-part series.