Nothing is ever free, someone has to pay.
Therefore when Ontario’s Ministry of Municipal Affairs and Housing announced on Monday that it will be proposing legislation for “inclusionary zoning” my first reaction was: ‘new homebuyers are going to have to pay more.’
While Monday’s official press release sounds good, it is very concerning to anyone who would like to buy a home.
Inclusionary zoning as a concept enables municipalities to mandate the inclusion of affordable housing units in new development projects. Practically speaking then the cost of the “affordable” housing unit is borne by the other market value units.
In an age where government taxes and fees amount to 20-25% of the cost of a new home, this will be an additional burden for new home buyers, unless of course the new legislation diverts government fees to cover the underpriced unit, in that case it is the taxpayer who bears the cost.
There are superior more affordable strategies to create inexpensive housing. For example, promoting secondary suites (this allows self-contained units to be constructed in established homes), relax regulations for the size of units, lots and architectural standards, allow and promote micro-housing, laneway housing and other forms of economical housing, and offer a fixed incentive for builders who develop this type of housing.
If people are allowed to be creative they can usually find the solutions that best fit them rather than being pushed into expensive government programs that yield little return on investments.
No one will find a more economical solution to provide affordable housing than the private sector and they will ensure that they receive a return on investment.
Monday’s press release did offer some hope of a reasonable attitude to housing with the government’s commitment to creating “a framework for a portable housing benefit that would give people who receive housing assistance the flexibility to choose where they want to live.”
This means a portable housing benefit will follow the person rather than be attached to a government issued housing unit. This is a more flexible and realistic approach to affordable housing.
People need to have access to affordable and adequate housing and the Ontario government states it is committed to investing $178 million towards this end.
Investing is a word I like; it implies there will be a return on that investment, however whenever the government states they are ‘investing’ I somewhat cynically think of money getting flushed away. I hope this does not happen.
A smart government gives incentives to the public to find the solutions rather than a rigorous set of un-scalable regulations.
The press release nicely states that: “Investing in long-term, stable funding for affordable and adequate housing is part of the government’s economic plan to build Ontario up and deliver on its number one priority — to grow the economy and create jobs.”
One can only hope.
Anita De Vries: Executive Officer, Durham Regional Home Builders’ Association
The allure of inclusionary zoning is easy to see: add more affordable housing by tweaking zoning requirements to require affordable homes in high-rise projects containing more than 300 units. Sounds like a win all around. But it is not.
On your average high-rise of 300 units, my back of the envelope calculation indicates that the buyers not eligible for the affordable units will pay about $15,000 more per unit. The belief that developers will pay for affordable housing is a false one given financing requirements by banks and financial return criteria by investors.
What planners and politicians fail to recognize is that this is just another tax on the first-time buyer/middle class. Surely this cannot be considered fair.
It also prices some of these buyers out of the market, which will ultimately reduce the supply of badly needed housing in the Greater Toronto Area. Equally objectionable is a new bevy of red tape that will envelope this proposal, slowing approvals and creating more deadening bureaucracy for both developers and government.
The answer to a lack of affordable housing lies in less red tape and more targeted government support programs. It is simply not realistic to assume that inclusionary zoning is a free ride for all.
Brian Johnston: Chief Operating Officer, Mattamy Homes
In the last 17 years development charges in Toronto have increased 1,259 per cent. It takes an average of 10 years to take a building project from concept to occupancy. Staggering numbers to be sure, which beg the question as to why this is the case?
Canada has already been cited as a nation that performs badly in dealing with construction permits – we rank 53rd out of 187 countries. Not a stellar ranking. There are 45 independent government bodies with their fingers in the building process with no real oversight on their collective actions. Hence the costs of producing housing of all every kind has increased dramatically in the past 20 years.
The time required to save for a down payment, for example, has increased from 5 years in 1974 to over 15 years now in the GTA according to a recent Star article quoting Professor Paul Kershaw’s research. Social housing waiting lists and pressure on millennials continues to rise.
So, inclusionary zoning needs to be put in perspective. Its costs will be borne by new home buyers depending on their ability to pay. No one should fool themselves that further market distorting measures will solve a housing supply problem.
Rather governments for once at all levels need to look at the massive inefficiencies in the current regulatory and approvals process. There is a serious lack of analysis on the supply side economics of housing as well as huge gaps in accountability and transparency regarding how projects get reviewed and approved from land use planning to building permits.
In the past year, we have sponsored two separate reports by the Consumers Council of Canada and by the Canadian Centre for Economic Analysis, which respectively identify systemic barriers and provides a new accurate housing affordability index. The problem is responsibility for housing is divided between different levels of government and between a multitude of agencies therein.
The unfortunate reality is while government has remained adept at announcing new measures and ribbon cutting, it has yet failed to examine how their own existing system is driving up the cost of land and building. This is driving new housing further and further out of reach for an ever growing share of the population who are on average experiencing real declines in incomes. This is not sustainable and inclusionary zoning is no a genie in the bottle.
Richard Lyall: President, Residential Construction Council of Central Ontario, Vaughan