RESCON: blame slow approval process for lack of housing supply

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There is an abundance of zoning bylaws in this country that limit the supply of homes and too many agencies involved in the approval process.

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Famous theoretical physicist Albert Einstein is credited with saying that the definition of insanity is doing the same thing over and over again and expecting different results.
He was right. If we are to tackle the current housing crisis in Ontario, we must think outside the box and find new ways to increase supply.

The current way of doing things is not working. We have the lowest number of housing units per capita of any G7 country. To equal the G7 average ratio, 1.8 million homes would have to be built. This will not happen, as we have an average of 188,000 home completions per year over the past decade.

The shortage has contributed to the rising cost of housing. The prices of new construction and existing homes have increased. The Toronto Regional Real Estate Board reports that in July, the average selling price of a single-family home in the GTA rose 21.7 percent. Prices for semi-detached and row houses have also increased. The lack of inventory also led to bidding wars for existing homes and rentals.

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A recent RBC poll found that more than a third of Canadians between the ages of 18 and 40 no longer believe they will ever be able to own a home. So it is obvious that minor adjustments will not get us where we should be. We cannot keep doing the same things when it comes to our housing policy and expect different results.

The situation has economic consequences. With more than 400,000 new immigrants expected in Canada in 2021 and 2022, the situation will only get worse. The affordable housing shortage is already estimated to cost the GTA up to $ 7.9 billion annually. Over a five-year period, these cumulative losses could amount to approximately $ 29.4 billion to $ 37.9 billion.
So that’s the picture. What is the solution?

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The crux of the matter is the dysfunctional nature of the system. There is an abundance of zoning bylaws in this country that restrict the supply of homes and too many agencies involved in the approval process.

To start with, we need a standardized electronic permitting system in Ontario to speed up routine approvals for projects that will provide housing. Another idea would be to have a planning coordinator at the local level who would be responsible for working with a developer’s consultation team to help coordinate approvals between municipalities and conservation and transportation authorities. This is done in Texas and Denmark for larger projects. Delays increase risk and it reduces supply and increases prices.

Japan is perhaps the world’s best example of democracy with an abundance of affordable housing in compact, low-carbon neighborhoods. The key to Japan’s success is its unusual degree of national control over zoning and building rules. Centralized authority prevails over local housing obstructionism.

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The national government of Japan controls the use of land and buildings to a higher degree than national authorities in other wealthy democracies. Equally important, the national government of Japan also controls building codes.

Germany, Austria and Switzerland have also always had excellent results. These countries typically use rules-based building authorization systems: if your plans tick the boxes, the building authorities have no choice but to sign.

Countries like Canada, Australia, UK and US lag behind as their authorization systems are more often discretionary, giving municipal authorities the power to approve or deny applications.

Currently, there is not a single agency in Canada or in Ontario that is responsible for ensuring that there is an adequate supply of housing. Therefore, we have a crisis.

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A provincial housing summit would be a good idea to determine what steps need to be taken in order for the province to meet demand. Maybe we should review the More Homes More Choice Act. What the legislation achieved was a step in the right direction, but further fixes may be needed.

We need a system that recognizes that housing is essential to our quality of life, our economic growth and our competitiveness. The lack of housing will hamper our recovery from the pandemic. We must act as soon as possible.

Richard Lyall, President of RESCON, has represented the construction industry in Ontario since 1991. Contact him at [email protected]

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