Builder rebate to encourage Ontario market rental construction
Municipalities to decide which projects are eligible for $125 million in development charge refunds.

TheStar.com
Nov. 29, 2017
Tess Kalinowski

It will be up to municipalities to determine which new rental developments qualify for $125 million over five years in development charge rebates from the province.

Some of that money will help encourage the builders to construct market-priced rentals, in addition to affordable housing, said Housing Minister Peter Milczyn on Wednesday.

"This would support housing in the missing middle — average people looking for rentals," he said at a downtown apartment building that was opened last spring above a parking garage.

"This (money) would be targeted at private developers who want to build market rental housing. It would be up to the municipality to work out the details project by project," said Milczyn.

Only luxury buildings would be exempt, he said.

Government research shows that only 6 per cent of housing built in the last 20 years was market rental.

Milczyn's remarks came a day after a report from Canada Mortgage and Housing Corporation (CMHC) showed that the Toronto region's vacancy rate has hit a 16-year low of 1 per cent, down from 1.3 per cent in 2016.

In addition to the development charge rebate, the province has said it will develop 2,000 housing units on surplus provincial land.

Two-thirds of those would be market rentals, said the minister.

The Toronto area needs between 6,200 and 8,000 new rentals a year to return the vacancy rate to a healthier 3 per cent, according to recent reports from the Federation of Rental-housing Providers of Ontario (FRPO) and the Ryerson University City Building Institute.

According to CMHC, there were a record 7,000 purpose-built rentals under construction in the Toronto area this year. There were 2,240 completed units between June 2016 and June 2017.

Milczyn would not specify a target for the number of new homes the government wants to see built, only that the province has fallen far short of those levels in recent decades.

He downplayed a report that said plans for 1,000 rental units have been dropped since the province expanded rent controls to newer buildings in the spring.

"The rent control regime we've had in place for many years didn't seem to be helping with the construction of rental housing. The changes we've made, I don't believe they've had that negative impact," he said.

However, Milczyn added, "We do understand the government needs to do something to support the construction of rental housing in our communities."

Jim Murphy, who heads the FRPO, an association of developers and property managers, commended the province on assessing rentals at the lowest residential property tax rates.

The industry has invested $5.2 billion in upgrading rental properties since 2012, he said.