Update Announcement
This notice was published to the Environmental Registry on October 25, 2022 for a 45-day public review and comment period. The notice was updated on March 28, 2025 to advise the public that there has been no change to the status of this proposal and that it is still being considered. The content of notice remains unchanged.
This consultation was open from:
October 25, 2022
to December 9, 2022
Decision summary
Changes were made to O. Reg. 232/18 - Inclusionary Zoning under the Planning Act to place a maximum 25-year period for which inclusionary zoning units must be maintained as affordable, and a 5% cap on the number or floor area of residential units that can be set aside as inclusionary zoning units.
Decision details
Changes were made to Ontario Regulation (O. Reg.) 232/18 -Inclusionary Zoning under the Planning Act. The changes establish:
- a maximum 25-year period during which inclusionary zoning (IZ) units must be maintained as affordable; and
- an upper limit on the number of units that can be required to be set aside as affordable, set at 5% of the total number of units or 5% of the total gross floor area of the total residential units, not including common areas.
The changes came into effect upon the filing of the regulation. The proposed changes apply to IZ units of both rental and ownership tenure.
The government is not proceeding with including a market-based definition of “affordable residential unit” in the IZ regulation as initially proposed.
Analysis of Regulatory Impact
The changes are intended to provide greater certainty and clarity on regulatory requirements for development while maintaining municipal flexibility on other elements of the IZ framework.
The changes will reduce regulatory and financial burdens for the development sector by making processes more predictable across municipalities. While there are no new administrative costs associated with the changes, municipalities who have already developed IZ frameworks may experience some administrative burden resulting from the need to update their IZ frameworks.
Effects of consultation
On October 25, 2022, the Ministry of Municipal Affairs and Housing posted a regulatory proposal on the Environmental Registry of Ontario (ERO 019-6173) for 45 days. The Ministry received a total of 98 comments on the proposal. The submissions the Ministry received were reviewed and considered prior to a decision being made. The following is a summary of comments received.
Feedback on the amendments to O. Reg 232/18 (Inclusionary Zoning) was mixed.
- Municipalities expressed concern about the loss of flexibility to tailor IZ requirements so that local conditions and needs are reflected.
- Some respondents stated that the 5% set aside cap on IZ unit requirements, and the maximum 25-year affordability period could potentially impact the supply of affordable housing. Some respondents expressed that the 5% cap represents a reasonable approach to introducing IZ requirements but only if this is increased over time, while others stated that flexibility to determine IZ requirements should remain with municipalities.
- The homebuilding sector supported the proposed changes as they would provide more cost certainty on a province-wide basis, and some suggested further changes that would include credits to developers/applicants for the provision of additional IZ units over the 5% cap, cash-in-lieu, or donation of land to non-profit housing providers.
Regarding the proposal for the market-based definition of affordable, stakeholder feedback was largely negative, especially from municipalities, affordable housing advocates and citizen groups.
- Municipalities expressed the importance of flexibility to determine levels of affordability that are suited to the local context.
- Some respondents expressed that an income-based definition of affordability is a better approach to creating affordable housing and is more equitable for those in need of affordable housing. They noted that a market-based approach to determining the lowest price/rent for IZ units would not adequately compensate for market prices which tend to increase at greater rates than household incomes.
The government is not proceeding with the definition of affordable residential unit as initially proposed in ERO-019-6173.
The Province and municipalities seeking to implement IZ may rely instead on the definition of “affordable residential unit” as set out in the Development Charges Act, 1997 (DCA) and the Provincial Planning Statement, which came into effect on October 20, 2024:
Affordable means,
a) in the case of ownership housing, the least expensive of:
1. housing for which the purchase price results in annual accommodation costs which do not exceed 30 percent of gross annual household income for low and moderate income households; or
2. housing for which the purchase price is at least 10 percent below the average purchase price of a resale unit in the municipality;
b) in the case of rental housing, the least expensive of:
1. a unit for which the rent does not exceed 30 percent of gross annual household income for low and moderate income households; or
2. a unit for which the rent is at or below the average market rent of a unit in the municipality.
Since the regulatory changes regarding IZ were first proposed, market conditions in Ontario have undergone a series of shifts that have impacted housing starts and costs, including significant increases in the costs of financing (i.e., interest rates) and construction.
The government undertook additional research and jurisdictional scans of IZ programs throughout North America and abroad to understand best practices and how different set aside rates and affordability periods affect housing development in areas with IZ programs in place.
This research showed that it is critical to establish a set-aside rate and length of affordability period for IZ that are not too high, as this could stall the development of both market units and affordable IZ housing units.
Particularly in the context of current market conditions, the changes to the IZ regulation support the government’s priority of addressing the housing supply crisis and providing housing that is affordable and within reach of more Ontarians.
No other modifications were made to the proposed amendments based on the consultation results.
Supporting materials
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Some supporting materials may not be available online. If this is the case, you can request to view the materials in person.
Get in touch with the office listed below to find out if materials are available.
777 Bay Street
13th floor
Toronto,
ON
M7A 2J3
Canada
Connect with us
Contact
PlanningConsultation@ontario.ca
Original proposal
Proposal details
Everyone in Ontario should be able to find a home that is right for them. But too many people are struggling with the rising cost of living and with finding housing that meets their family’s needs.
Ontario’s housing supply crisis is a problem which has been decades in the making. It will take both short-term strategies and long-term commitment from all levels of government, the private sector, and not-for-profits to drive change. Each entity will have to do their part to be part of the solution to this crisis.
Ontario needs more housing, and we need it now. That’s why the Ontario government is taking bold and transformative action to get 1.5 million homes built over the next 10 years.
To support Ontario’s More Homes Built Faster: Ontario’s Housing Supply Action Plan: 2022-2023, the government introduced the More Homes Built Faster Act, 2022, which, if passed, would ensure that cities, towns, and rural communities grow with a mix of ownership and rental housing types that meet the needs of all Ontarians. These visionary changes will place Ontario at the forefront of housing policy in North America.
These changes are providing a solid foundation to address Ontario’s housing supply crisis over the long term and will be supplemented by continued action in the future.
Inclusionary Zoning Background:
Inclusionary zoning is a land use planning tool, authorized under the Planning Act, that municipalities may use to require affordable housing units to be included in residential developments of 10 or more units in identified Protected Major Transit Station Areas (PMTSAs) or in Community Planning Permit System (CPPS) areas ordered by the Minister. The Minister also has the authority to prescribe municipalities to adopt official plan policies authorizing the use of inclusionary zoning. Inclusionary zoning can be a useful tool to facilitate the supply of affordable housing in areas that generally have characteristics such as growth pressures, high housing demand and availability of higher order transit.
The Planning Act and O. Reg. 232/18 set out the legislative and regulatory requirements for municipal implementation of inclusionary zoning, including the authority for municipalities to adopt inclusionary zoning official plan policies and make inclusionary zoning by-laws. Beyond the prescribed minimum requirements, municipalities have flexibility and discretion to tailor their inclusionary zoning policies to their local context. Currently under the regulation, municipalities have the discretion to establish an affordability period, to determine the percentage of total units to be set aside as affordable, and to develop an approach to determining affordable prices/rents for inclusionary zoning units.
Proposal:
The proposed amendments to O. Reg 232/18 would establish an upper limit on the number of units that would be required to be set aside as affordable, set at 5% of the total number of units (or 5% of the total gross floor area of the total residential units, not including common areas). It would also establish a maximum period of twenty-five (25) years over which the affordable housing units would be required to remain affordable. Amendments would also prescribe the approach to determining the lowest price/rent that can be required for inclusionary zoning units, set at 80% of the average resale purchase price of ownerships units or 80% of the average market rent (AMR) for rental units. These proposed amendments would only apply on lands within PMTSAs.
The proposed changes would provide more development cost certainty and establish a more consistent approach to inclusionary zoning requirements across the province. It would also support government priorities to provide housing that is affordable and within reach of more Ontarians.
Analysis of Regulatory Impact:
- The anticipated regulatory impacts of the proposal are neutral to positive. The proposed changes are intended to provide greater certainty and clarity on regulatory requirements for development while maintaining municipal flexibility on other elements of the inclusionary zoning framework. The changes will reduce regulatory and financial burdens for the development sector by making processes more predictable across municipalities. While there are no new administrative costs associated with this proposal, municipalities who have already developed inclusionary zoning frameworks may experience some administrative burden resulting from the need to update their inclusionary zoning frameworks.
Supporting materials
View materials in person
Some supporting materials may not be available online. If this is the case, you can request to view the materials in person.
Get in touch with the office listed below to find out if materials are available.
Comment
Commenting is now closed.
This consultation was open from October 25, 2022
to December 9, 2022
Comments received
Through the registry
91By email
7By mail
0