Toronto has long stood at the crossroads of rapid urban development and a pressing need for affordable homes. But a recent policy shift by Ontario’s government has raised questions and opportunities for everyone watching the market.

What Happened and Why It Matters

Earlier this year, the City of Toronto proposed converting nearly 70 employment lands into residential zones, with one important condition: developers had to set aside a share of new units for affordable housing. The plan aimed to generate thousands of new homes that would remain affordable for up to 99 years.

But just before the provincial election, the Ford government approved the land conversions with a key change. Instead of requiring affordable housing, it now merely encourages it. This change could put an estimated 5,000 affordable homes in jeopardy.

So why the reversal? At least three major real estate investment trusts (REITs) voiced concerns during the provincial review process, arguing that the affordability quotas could make development financially unfeasible. For some sites, they suggested, it could mean no homes would get built at all.

The Developer Perspective

CT REIT, which owns land on Sheppard Avenue East, warned that the city’s original rules might prevent any redevelopment. They called the plan “unauthorized” and “premature.” Choice REIT, with property in Scarborough, echoed similar worries, saying the requirements could sterilize future development. Another group, 401 Weston Centre Limited and Calloway REIT, said the city’s policies could delay projects that might otherwise bring 36,000 new homes to life.

While these developers aren’t against affordability, they’ve suggested tackling it later in the process, once feasibility studies and tenant leases are resolved.

What This Means for Buyers, Sellers, and Investors

If you’re a homebuyer or investor tracking affordable housing in Toronto, this policy change may feel like a setback. But it also signals a larger conversation unfolding between the city, the province, and private developers. The city still wants to ensure housing remains accessible, while the province is focused on speeding up new builds.

According to Paul Hess, a planning expert at the University of Toronto, the situation highlights a deeper issue: the province has the final say on what cities can and cannot do. While Toronto can propose ambitious housing goals, provincial approval remains the gatekeeper.

What’s Next for Affordable Housing in Toronto?

The good news? Toronto isn’t giving up. City officials had initially approved the land conversions because of the promises tied to affordability. Even after the change, the city continues to explore options to balance private development and public interest.

Meanwhile, Ontario’s government is staying focused on its goal of building 1.5 million new homes by 2031. Premier Doug Ford recently emphasized cutting red tape to speed up construction, arguing that a smoother development process will lead to more homes on the market sooner rather than later.

Key Takeaways

• Toronto’s plan to mandate affordable housing on newly converted lands was changed by the province to a non-binding suggestion.
• Developers cited financial feasibility as the main barrier to meeting city-set quotas.
• The policy shift may delay or reduce the creation of affordable housing in Toronto, but conversations are ongoing.
• Buyers and investors should stay informed as both city and provincial leaders push forward with new solutions.

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