Nearly 15,000 affordable rental homes ‘stuck’ in the pipeline, city says

City staff say help from other governments is needed to get these homes built. ‘We need the federal and provincial governments to step up,’ says Coun. Gord Perks.

Thestar.com
Sept. 22, 2023
May Warren

In a city with few new rental apartment buildings, many purpose-built rental homes are “stuck” in the pipeline, including almost 15,000 affordable and deeply affordable ones, because of a lack of federal and provincial grants and low-cost financing.

That’s according to Toronto’s new HousingTO action plan annual progress update, which also asks for about $15 billion in funding from other levels of government.

“We are doing everything we can but it’s nowhere near enough and if we are going to meaningfully address housing affordability, we need the federal and provincial governments to step up,” said Coun. Gord Perks, chair of the planning and housing committee.

“Worldwide, Canada is one of the countries that has the least funding for housing and that has to change.”

In places with “robust” housing, such as Vienna, Glasgow and Berlin, there’s strong investment by more senior levels of government, he added.

“We don’t have that and as a result we’re stalled, and that’s creating problems for young families trying to find affordable housing, it’s creating problems for people seeking refuge, it’s creating problems for the people who’ve lost their homes. It’s echoing throughout our housing system.”

Last week, Prime Minister Justin Trudeau and federal Housing Minister Sean Fraser announced they would be scrapping the GST on new rental buildings to try to get more on the market. The province then said it would do the same for its portion of HST.

Fraser’s office, in an emailed statement Thursday, said this will help change the equation for builders and get shovels in the ground. Since announcing this move, they said, they’ve heard about projects moving ahead that otherwise “would have sat on the shelf.”

The city’s housing action plan update will go to the planning and housing committee next week and to full council on Oct. 11. It also includes a report identifying major streets for “missing middle” townhouses and small-scale apartment buildings (up to six storeys and 30 units) and a recommendation to conduct public consultations on zoning amendments.

Ray Wong, vice-president of real estate research company Altus Group, noted that stalled projects are an industry-wide problem that’s also affecting condos and new homes. “Construction and labour costs over the last four or five years have increased,” he said.

Jacob Gorenkoff, director of policy and government relations at the Canadian Housing and Renewal Association, a national affordable housing and homelessness non-profit, called the GST cut a “great first step.” But he said it’s only for new projects beginning construction.

“The projects that are already in the pipeline are being left to flounder,” he said. High construction and labour costs, coupled with high interest rates, also mean there’s less to go around in the pool of grants from higher levels of government.

“We need to find a way to offset higher borrowing costs, higher construction costs, with higher grant contributions or other alternatives that would allow for these projects to move forward,” he said.

“The reality is the housing shortage that we’re experiencing right now is an expensive problem and we’re not going to solve it with cheap solutions.”