Three hurdles Ontario homebuilders must overcome to build new homes in a timely manner
The Ontario government has acted on a key tenet of its housing plan—holding a roundtable with municipalities and the homebuilding sector to streamline housing development approvals. This is good news for Ontarians, whose housing options are limited by a sluggish housing supply in the province’s most desirable cities.
Homebuilders are likely to tell the Wynne government precisely what they’ve consistently told us in our annual homebuilders’ survey: that they must overcome barriers before they can provide the new homes Ontarians need in a timely fashion.
First, the average time it takes for developers to obtain building permits—from the moment they first approach city hall to the moment shovels break ground for new homes—takes more than a year. Across the Greater Golden Horseshoe (where house prices are hottest in the province) it takes an average of 18 months to obtain a building permit, nearly two years in communities to Toronto’s east and north (Clarington, Georgina), and 14 months to its west (Burlington).
Second, these timelines are prolonged by the need to rezone property, a procedure allowing bungalows to become duplexes, townhomes or apartments. Rezoning is required for almost two-thirds of homebuilding across the Greater Golden Horseshoe, and can add between one month (like in King Township) and 11 months (in Hamilton, for example) to the building permit-approval process.
Third, during the permitting process, homebuilders incur “soft costs” associated with regulatory compliance (such as legal documents or blueprints) and fees triggered by rezoning (such as those permitted under Section 37 of the Planning Act). On average these costs and fees amount to almost $50,000 per unit across the Greater Golden Horseshoe.
It’s good to see the Wynne government showing an interest in boosting the housing supply by streamlining the development approval process—an important step towards a more affordable Greater Golden Horseshoe. As the province, municipalities and homebuilders pursue their roundtable, they should not lose sight of how long it takes and how much it costs to obtain building permits.