What to know
- The federal government is investing up to $2.7 billion, alongside more than $700 million from the City of Toronto, to help build 5,600 rental homes on city-owned land across Toronto.
- The announcement comes in addition to $1.8 billion in low-cost federal financing for nine Toronto rental projects expected to create more than 3,700 additional homes.
- A housing expert says the investment could improve affordability, but it’s still unclear how many of the planned homes will be deeply affordable for low-income residents versus geared toward middle-income households.
- The expert also says the province’s absence from the announcement was unusual, noting that major housing initiatives often involve all three levels of government.
- While increasing rental supply is important, the expert argues governments also need to encourage homeownership and build more ownership housing to improve affordability across the broader housing market.
Billions of dollars and thousands of new rental homes are coming to Toronto, but will any of it actually make living in the city cheaper?
The Canadian government and the City of Toronto announced a major new housing partnership this week aimed at delivering 5,600 rental homes across the city, backed by $2.7 billion in federal funding and more than $700 million in municipal investments.
While one housing expert says increasing supply is a positive step, he says a crucial affordability question remains unanswered: how many of those homes will actually be within reach of Toronto’s lower-income residents?
Will Toronto’s new rentals actually be affordable?
Frank Clayton, a senior research fellow at the Center for Urban Research and Land Development at the Toronto Metropolitan University (TMU) tells Now Toronto that the announcement is overall positive for the city’s residents, as it can in fact support the creation of more affordable rental units.
However, he said it is hard to determine the extent of the impact of the project, as more specific information was not revealed during the announcement.
“[The announcement says] the projects on the city owned lands vary from supportive to deep affordable housing to mixed-income developments with long-term rent control,” he said. “But they don’t show how many are going to be deep subsidies like affordable to low-income people or those just affordable to more middle-income people.”
Why isn’t Ontario part of the announcement?
In addition, Clayton said having similar initiatives across other municipalities in the Greater Toronto Area (GTA) could further help bring housing prices down, avoiding that residents from other regions move into Toronto in search of affordable rentals.
“What can happen is that people from Mississauga or Markham can move into these housing units, and certainly some of them anyway, and so the residents of the City of Toronto don’t get the benefit of any subsidy that’s inherited,” he said.
“There’s all kinds of subsidies involved in this, and there’s no way really to only keep the residents that move in ultimately down to those who live in the City of Toronto now.”
In addition to the significance of the project, what surprised Clayton was the absence of provincial participation in the announcement.
According to the expert, it is “rather unusual” for the city and the federal government to collaborate on large housing projects without involvement from the province.
On the other hand, the expert acknowledges the province has supported other housing projects in Toronto, including collaborating with the federal and municipal governments on a $1.5-billion deal to reduce development costs by 40 to 60 per cent.
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“It’s very unusual, I think, to have something this big announcement that’s the City of Toronto and the Government of Canada, but not the province. That’s one thing I found kind of unique,” Clayton said.
Is building rentals enough to make Toronto affordable?
Although Clayton said the project initially seems to do a good job in adding more affordable rental units, he said it’s important for governments to also invest in the sale market in order to improve overall affordability for all.
On top of investing in rental projects, the expert said encouraging home ownership, building ground-focused housing, and incentivizing the densification of existing neighbourhoods can be important steps to increase affordability.
“We’ve got to get more housing built of the kind of housing that people want for the ownership market, because if… [a] first-time buyer buys an existing house or a new house, that frees up a rental unit for somebody else to move into,” he added.
