Several barriers to homebuilders may leave buyers in Ontario out of the real estate market due to a lack of supply, a new Fraser Institute report says.
“The high cost of housing remains a major concern for Ontarians, and government barriers, both municipal and provincial, to home construction remain part of the problem,” said Steve Lafleur, senior fellow at the Fraser Institute.
“Despite recent positive policy shifts, substantial obstacles hinder housing development,” he wrote in his report, Barriers to Housing Supply in Ontario and the Greater Toronto Area.
Mr. Lafleur noted there were five main barriers for homebuilders.
Fees and Taxes
The high cost of fees and taxes can be burdensome for builders. These include application and permitting fees, development charges, parkland dedication, and community benefits charges.One example in the report was the per-unit fees for high-rise building developments in the Greater Toronto Area, which range from $46,412 to $121,562.
Opportunities for reform, according to Mr. Lafleur, include implementing maximums, reviewing services, and exploring alternative financing models.
Building Requirements
Government regulations often restrict building sizes and types, the report said. These can include zoning bylaws or design guidelines. One example was the requirement for land developers to build single detached homes.
It was recommended that reforms to these requirements be considered, including aligning the number of units permitted on properties with infrastructure capacity, relaxing property dimension rules and parking requirements, and updating plans to reflect the “magnitude” of demand.
Land Costs
Developers pay a lot for land acquisition, Mr. Lafleur noted in his report, which hinders development. He also said that government-imposed limitations on urban growth “create significant distortions in land markets.”Two options to ease the cost of land include relaxing urban containment policies and looking at models of controlled land releases.
Additional Costs
Housing developers face high levels of staffing and holding costs, according to the report. Those looking to build in Ontario are often in for long wait times for permit approvals, which increases the cost of building, Mr. Lafleur said.To ease the burden and make it less expensive to build homes, Mr. Lafleur recommended streamlining the development approval process by using a digital portal, which can shorten timelines.
Uncertainty
The government approval process for home development creates uncertainty around projects, and may even require mid-project changes, which deter developers. To overcome the obstacles, the government could make official plan development part of a community engagement process, the report said. This will reduce the need for ongoing consultations in different project phases.“By reducing or removing barriers to development, governments in Ontario can help address the province’s housing crunch and increase affordability for families across the province,” Mr. Lafleur wrote.
The Epoch Times reached out to the City of Toronto and Ontario’s housing minister but did not immediately hear back.
