Several barriers to homebuilders may leave buyers in Ontario out of the real estate market due to a lack of supply, according to a new report by the Fraser Institute. Steve Lafleur, a senior fellow at the Fraser Institute, highlighted that the high cost of housing in Ontario is a major concern, with government barriers at both the municipal and provincial levels contributing to the issue.
Lafleur identified five main barriers for homebuilders. The first barrier is fees and taxes, including application fees, development charges, and community benefits charges. For example, high-rise building developments in the Greater Toronto Area face per-unit fees ranging from $46,412 to $121,562. Lafleur suggested implementing maximums, reviewing services, and exploring alternative financing models as potential reforms.
Another barrier is government regulations related to building requirements, such as zoning bylaws and design guidelines that restrict building sizes and types. Lafleur noted the requirement for land developers to build single detached homes as an example. He recommended considering reforms like aligning the number of units permitted on properties with infrastructure capacity and updating plans to reflect demand.
Land costs also pose a challenge for developers, as high acquisition costs hinder development. Lafleur pointed out that government-imposed limitations on urban growth create distortions in land markets. To address this, he suggested relaxing urban containment policies and exploring controlled land releases as potential solutions.
Additional costs, such as high levels of staffing and holding costs, further burden housing developers in Ontario. Long wait times for permit approvals can increase building costs. To make it less expensive to build homes, Lafleur recommended streamlining the development approval process using a digital portal to shorten timelines.
Uncertainty in the government approval process for home development creates challenges and may require mid-project changes, deterring developers. The report proposed making official plan development part of a community engagement process to reduce the need for ongoing consultations in different project phases. By reducing or removing barriers to development, governments in Ontario can address the housing crunch and increase affordability across the province.