Ontario restructuring ‘broken’ new homes regulator to restore consumer faith

Theglobeandmail.com
February 21, 2019
Shane Dingman

The Ontario government has announced it is coming after “bad apples” in the home building industry, announcing changes to the provincial regulatory framework intended to restore consumer faith and punish those who have abused that trust.

In a release, Bill Walker, Minister of Government and Consumer Services, described Tarion, Ontario’s home warranty operator and home construction regulator, as “broken.” The government plans to split the agency up and empower the Home Construction Regulatory Authority with a new board and new mandate to create rules to crack down on issues that have frustrated consumers, such as large-scale condo cancellations or chronic maintenance problems.

“Really, the focus would be on those bad apples. We’ll penalize them and almost try to squeeze them out of the marketplace,” Mr. Walker said in an interview.

Projects comprising more than 4,000 condo units were cancelled in Ontario in 2018 -- double the previous record of 1,678 set in 2017 -- most of which came from two large-scale developments in Vaughan, north of Toronto, that are now embroiled in litigation. In September, Gupta Group cancelled its sold-out, 55-storey Icona building at the Vaughan Metropolitan Centre, affecting buyers of 1,633 units. Six months earlier, Liberty Development cancelled its Cosmos condo project, also on Highway 7, affecting buyers of nearly 1,000 units.

Consumer advocates have criticized Tarion as too close to the development industry, and unwilling to act as a strong check on abuses. Mr. Walker said, so far, the developers he’s spoken with are receptive to the changes.

“The meetings I’ve had, they want to be part of this. They have the most stake in the game, they want to clean this up as well,” he said. “I don’t want to go after the good builders.”

Mr. Walker also acknowledged he has had little in the way of public consultations with nonindustry stakeholders as of yet.

The ministry will also consult on ending Tarion’s monopoly on new home warranty insurance offerings, with plans to study such markets as Alberta and British Columbia that allow third-party insurers.

As part of the review, Tarion’s board itself will receive greater scrutiny, raising the possibility of governance and management changes.

Some of the key elements of the plans come from a 2016 review of Tarion by Justice Douglas Cunningham. The former Liberal government introduced some recommendations stemming from that report in legislation in 2017’s Bill 166, though many of its provisions were never proclaimed and thus are not in force.

As of 2017, 5,549 builders and vendors were registered with Tarion and in that year 68,945 new homes, 46 per cent of which were condominium units, were enrolled in the warranty program.