By Richard Lyall
RESCON
Chinese philosopher Confucius said, “Life is really simple, but we insist on making it complicated.” In other words, we tend to overthink and, by doing so, make problems more difficult.
The paragon of sages was a wise man and clearly onto something.
Perhaps such insight should be heeded when trying to tackle the housing supply crisis. We must simplify the system and speed up approvals so we can build homes quicker and at less cost.
We still have a lot of tower cranes up now, especially in Toronto, but the ones that are now coming down will likely not be replaced any time soon, amid the decline in demand for new condos.
High cost to build
Demand has dwindled for a number of reasons, but the cost to build is too high, in large part due to the excessive sales taxes on new homes, as well as mind-numbing delays in approval times.
The Ontario Association of Architects (OAA) released a report recently that shed some new light on critical delays in the site plan approval process and their costly impact on housing supply.
The report, done by Altus Group, reflects the urgent need for policy reform to reduce housing-related delays and related consumer costs.
According to the findings, Ontario municipalities take an average of 23 months to review site plan applications – far exceeding the provincially-mandated 60-day timeline.
The delays have significant financial repercussions.
For a 100-unit apartment building, for example, site plan holdups result in additional monthly costs ranging from $230,000 to $299,000, placing further strain on developers and potential homeowners alike.
Lost opportunities and inefficiencies
In calculating estimates of the annual value of building permits requiring site plan approval across Ontario, the site plan approval process is costing about $3.5 billion annually in lost opportunities and inefficiencies – a staggering increase from the $900 million estimated in 2018.
We must take steps to speed up sloth-like approvals. The red tape that builders must go through is ridiculous. Delays add significant project financing costs to housing which are ultimately paid for by the consumers.
Something has got to give.
In a new report, Canada Mortgage and Housing Corp. estimates that Ontario needs to build more than 2.2 million homes by 2035 to return to pre-pandemic affordability levels. We therefore need to increase housing starts by more than 130,000 annually to 226,698 units.
In Toronto, we’d need a 70-per-cent increase in homebuilding over the next decade to tackle affordability issues.
The provincial budget indicated Ontario saw 74,600 housing starts in 2024, with 71,800 projected for this year. The numbers are just not cutting it.
We won’t be able to do it under the present setup. A dramatic reset is needed.
The Ontario government has taken steps, with initiatives such as Bill 17, which will give the provincial government a direct say in the development approvals process and place limits on how many studies a municipality could request from a homebuilder. Importantly, the legislation also allows developers to defer development charges until completion of a project.
Additionally, the legislation provides consistency by clarifying that no municipality has the authority to pass bylaws that impose Green standards beyond those set in the Ontario Building Code.
Hogwash and hallucinatory
Yet, a City of Toronto staff report to the executive committee states there is no impact to the city’s ability to continue to apply Toronto Green Standards to new development.
That’s hogwash, of course. It is hallucinatory and a display of utter obliviousness. These municipal requirements only increase project costs and complexity at a time when we need housing.
While Rome burns, the City of Toronto is concerned about flouting the direction of the province on Green building standards. It’s a waste of time, especially with fewer houses being built.
To solve the housing problem, we need to build faster – not make approvals more difficult. A system that delays approvals by years does not work for anybody – developers, builders or consumers.
RESCON has called for more transparency in the approvals system. Municipalities should be required to publicly report and post quarterly development approval metrics, so the province can audit and accurately monitor whether a municipality is meeting timeframes. Municipalities should be required to undergo a third-party regulatory review if they fail to meet the targets.
We cannot continue with exceptionally lengthy approval timelines if we hope to solve the housing crisis. Regulatory hurdles must be removed, and the slow-moving approvals system must become more responsive.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
