Building Affordable Rental Housing in Toronto

Affordable rental housing is a critical issue in Toronto, as rising housing costs have made it increasingly difficult for many residents to find suitable and affordable places to live. This research argues for increasing private sector participation in affordable housing development in the City of Toronto. It explores the demand for affordable rental housing in Toronto, examines the national, provincial, and municipal legislative situation affecting Toronto, and demonstrates the potential for the municipality of Toronto to update and implement policies to produce more affordable housing with private sector developers.

Toronto is experiencing a significant housing crisis, with home prices soaring by 20% since 2019 while median annual income has only grown by 0.4%. This growing wealth divide is pushing many residents out of the housing market and driving some to leave the city entirely. The City of Toronto has committed to advancing its HousingTO Action Plan, with the goal of constructing 285,000 new homes by 2031, including 41,000 affordable rental units. The demand for affordable rental housing is particularly high among low- and middle-income households, who struggle to find housing that is both affordable and suitable for their needs.

The legislative situation affecting affordable rental housing in Toronto is complex, involving national, provincial, and municipal policies. At the national level, the Canadian government has implemented various initiatives to address housing affordability, such as the National Housing Strategy. At the provincial level, the Ontario government has also introduced policies to support affordable housing development, including funding programs and regulatory changes. The City of Toronto has its own set of policies and programs, such as the HousingTO 2020-2030 Action Plan, which aims to create 40,000 new affordable rental homes by 2030. These policies provide a framework for addressing the housing crisis, but more needs to be done to encourage private sector participation.

Private sector participation is crucial for increasing the supply of affordable rental housing in Toronto. Policies used across Canada and the United States to encourage or require affordable housing contributions from private sector developers can provide valuable insights. For example, the City of Toronto’s Open Door Affordable Rental Program offers financial contributions to private sector and non-profit applicants, including capital grant funding, fee waivers, and property tax relief. This program also includes fast-tracked planning approvals to speed up the development process. By providing incentives and reducing regulatory barriers, the city can attract more private sector investment in affordable housing projects.

Examining case studies from other municipalities facing similar housing pressures can highlight effective strategies for addressing the affordable housing crisis. Vancouver, Montreal, and San Francisco have all implemented policies to increase the supply of affordable rental housing. In Vancouver, the city has used inclusionary zoning policies to require a percentage of affordable housing units in new developments. Montreal has implemented rent control measures to protect tenants from rapid rent increases. San Francisco has utilized density bonuses to encourage developers to include affordable units in their projects. These examples demonstrate the potential for municipalities to use a variety of tools to promote affordable housing development.

Increasing private sector participation in affordable housing development is essential for addressing the housing crisis in Toronto. By understanding the demand for affordable rental housing, examining the legislative landscape, and learning from successful case studies, the City of Toronto can update and implement policies to produce more affordable housing with private sector developers. Encouraging private sector involvement through incentives and regulatory changes can help create a more sustainable and equitable housing system for all residents.