Recently, an "More Homes, Built Faster"  action plan was introduced. This is a proposed plan from the Ontario government to increase housing in Ontario. This Action Plan is not yet official but it does pose some very interesting ideas.

The plan talks about reducing bureaucratic costs, minimizing red tape, streamlining processes, and focusing on intensification. It acknowledges our housing crisis and how difficult it truly is to create new housing in Ontario. It is, hopefully, a step in the right direction.

The goal of the program is to build 1.5 million homes over the next 10 years. This will not solve our housing shortage, but if the pieces they are proposing do come to fruition, it is certainly going to have a positive impact on our housing supply.

In order to provide more homes, the government is looking for what they call “gentle density.” This they have defined as “increasing the number of units in urban areas with minimal impact on existing neighbourhoods.” A big step towards doing this will be their plan to make three residential units on a single residential lot “as of right.” This would potentially mean all lots that are residentially zoned to become eligible to have up to three independent living units (i.e. a triplex or a duplex and a garden suite).

This would gently intensify the area and current zoning would not limit this purpose. These new units would still be subject to municipal bylaws and the Ontario Building Code. However, there is a possibility that municipal bylaws that prevent this intensification will be overridden. Not requiring zoning variances or minor variances will shorten timelines, reduce costs to develop, and also limit NIMBYism.

They’re encouraging density around transit hubs by removing site plan control for buildings, with 10 units or less. They claim to be streamlining and speeding up proceedings with the Ontario Land Tribunal as well. Further, they are considering steps to prevent land speculation, updating heritage policies, and reducing taxes on affordable housing. Currently, affordable housing is taxed in the same way as all other housing. They’ve also proposed a vacant home tax as well as increasing the non-resident speculation tax. To reduce government charges on buildings, they will re-evaluate municipal charges like development charges, parkland dedication fees and community benefits charges.

From the perspective of many of us as real estate investors, it will allow us to intensify properties we already own and take areas previously unable to cash flow or complete a successful BRRR to become more profitable again. Previously, when the government first mandated intensification by allowing basement or secondary suites, it was an opportunity and I see that opportunity happening again now.

We have builders approaching us daily since this announcement as they realize the value of adding third detached units to properties. There are more and more coming to provide this service, which will inevitably make them have to be cost competitive as well. We’re now seeing builders offering detached units in the area of $200,000 to $300,000. These units would fetch $2,000 to $2,600 in rent per month in Durham (various factors apply). When was the last time you saw the 1% rule in action!?!

For our real estate investors, this Action Plan could mean incredible upside and the return of a more profitable BRRR opportunity. Our team is focused on keeping ourselves educated and up to date on these changes. We’re reviewing zoning, permitted uses, and municipal bylaws regularly in order to find the best opportunities for our clients. In turn, our clients can buy great properties, in great areas, with great potential to create good housing for tenants and still remain cash flow positive.

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