The 2019 Ontario Budget entitled “Protecting What Matters Most” upholds that promise where housing supply in the province is concerned. The upcoming “Housing Supply Action Plan” addresses problems that I and many builders, developers and other real estate professionals have pointed out for years.
After public consultation, the Ontario Government is taking action regarding the following:
- that it takes too long for development projects to get approved;
- that there are too many restrictions on what can be built to achieve the right mix of housing where it is needed;
- that development costs are too high because of high land prices and government-imposed fees and charges;
- that tenants need to be protected, and it should also be easier to be a landlord in Ontario;
and that innovative solutions to increase housing supply should be encouraged.
As for bullet points #1 and #2, remember that the longer it takes to get approvals, the more costs go up, and of course, these are passed on to purchasers. Governmental red tape holds up the development and building of new homes and condos to the point that supply is low, and prices are unattainably high for far too many would-be buyers.
And let’s talk about #3, development charges. According to Dave Wilkes, president and CEO of BILD, in an article that appeared in November 2018, development charges for a single-family home in the City of Toronto increased last year from $41,251 from May 1 to $60,739 on November 1. As of November 1, that number will increase to $71,432 on November 1, 2019 and then to $80,227 on November 1, 2020. That will add $38,976 to the cost of a new home in three years. An Altus Group study commissioned by BILD last year showed that government fees, taxes and charges amounted to 22 per cent of the cost of a new home. Development charges mounted to 30 per cent of all charges. And it is not just Toronto: since 2004, development charges have increased between 236 and 878 pre cent across the GTA.
As for #4, yes, tenants must be protected, but right now, they are far more protected than landlords. Making landlord requirements less complicated will achieve balance. One thing potential investors can be sure of is the continued need for rental accommodations in the city. Many people who dream of owning a home have to rent until they can afford one, and nowadays, we see numerous empty-nesters looking to cash out on their large homes and move to a rental property for convenience or the fact that they are priced out of buying again at today’s prices.
The Budget contains the commitment for the Ontario Government to support the residential construction industry more, as it is a major source of employment in the province and extremely important to our economy. If we have ever needed a housing supply action plan, it is now! To read the contents of the Ontario 2019 Budget, visit http://budget.ontario.ca/2019/contents.html