Housing is expensive, our rules are part of the problem.
It’s easy to understand that we don’t build enough homes, but understanding why we’re having trouble building more is a bit more complicated. What’s limiting our ability to build? Red tape and land use rules are two big factors, which not only slow down development, but also makes it more expensive.
Zoning and Land Use Rules
Zoning and land use rules determine the quantity, type and size of new developments urban planners and municipalities are allowed to approve in a given neighbourhood. These rules are a complicated blend of provincial and municipal policies, plans and by-laws, and often make it difficult for rental housing providers, developers and government to work together to solve our province's housing crisis.
For example, one provision within the Official Plan, an overarching document which outlines broad policy objectives for urban planning in Toronto, requires all new housing to jive with the “physical character” of a neighbourhood. In more practical terms, this means, for the most part, new construction is limited to low-density or detached housing.
What’s the cost?
While the rules make it difficult to increase supply, it also makes it more expensive too. Today, government fees and delays add between $57,000 and $87,000 to the cost of a 2,000 sq. ft. home in the GTA. On high rise units, the additional costs average between $44,000 to $66,000, according to a new study by the Building Industry and Land Development Association. Development and planning fees add an additional $93,700 to a typical lowrise home and $57,0800 to a typical highrise apartment.
With all of the fees and taxes combined, the cost amounts to almost 25 per cent of a new home in the GTA, according to BILD. That’s immense, especially in markets where demand outpaces supply.
The solution is simple.
So what’s the solution? We need to unlock the potential of our neighbourhoods by allowing for more dense housing and rental-purpose buildings. We also need to streamline the rules and approval process for new developments, so new supply isn’t held back by red tape and bureaucracy.
