The Hub’s second annual Hunter Prize for Public Policy, generously supported by the Hunter Family Foundation, focused on solving Canada’s housing affordability crisis. A diverse group of ten finalists have been chosen from nearly 300 entries, with the finalists and winners chosen by an esteemed panel of judges, including Amanda Lang, Ben Rabidoux, and Mike Moffatt. The Hub is pleased to run essays from each finalist this week that lay out their plans to help solve this persistent policy problem.
As Canada grapples with its severe housing shortage, zoning reform is picking up steam. Whether nudged along by federal infrastructure funds or by taking their own initiative, more and more municipalities are moving to allow “gentle density” housing options as-of-right in formerly single-family neighbourhoods. These are welcome developments and represent hard-won progress for housing reformers who see municipal zoning laws as the key bottleneck holding back housing supply. But are they enough?
The CMHC estimated that Canada would need to build 5.8 million homes by the end of 2030 to achieve the affordability levels of the early 2000s, which would require tripling our current rate of homebuilding. It is not likely that even approaching such ambitious targets could be possible in this timeframe. But if we accept their grim number for the supply deficit, we can be certain that multiplexes and granny flats were never going to be enough.
Already, many projects enabled by these reforms meet death by a thousand cuts with rigid design rules, high land costs, and subjective approval conditions. By leaving reforms to individual municipalities, there is far too much inconsistency in the regulatory landscape to allow mass-produced homebuilding to scale up. Setback and coverage rules for a fourplex in Kitchener, Ont., may not be the same as one in Waterloo, Ont., making it harder for modular home manufacturers to design standardized models for large deployment.
It will be impossible to approach, let alone meet the CMHC’s targets without significant investment in labour-saving prefab techniques, which require predictable regulations to achieve economies of scale. For each of Canada’s 3,500 odd municipalities to establish their own unique, granular rules over otherwise commonplace structures and procedures adds bureaucratic bloat to the approvals process.
Another complication is that many cities share commuters and labour markets, especially in larger metro regions like Ontario’s Greater Golden Horseshoe and British Columbia’s Lower Mainland. Housing shortages in one jurisdiction can spill over to others within commuting distance that may have even less zoned capacity, as workers “drive until they qualify” (for a mortgage). Local housing markets cannot respond to demand shocks in a timely manner when each is governed by its own web of unique and prescriptive red tape.
An alternative approach: learning from Japan
Japan’s approach to zoning offers an attractive alternative to Canada’s hyper-localism. Zones are set by the national government and standardized across the entire country, keeping regulations uniform and predictable. Whether you’re building an apartment in Kyoto or Osaka, you have the same zones with the same rules. Each zone up the hierarchy becomes successively more permissive of uses and density, and even the most restrictive residential zone permits multi-family homes and small businesses.
The proof is in the pudding: homebuilding rates in Japanese cities put us to shame. In 2010, the city of Tokyo and Ontario had almost the same population at 13.1 million. Over the next twelve years, Tokyo grew by over 880,000 people, less than half the population gain of Ontario in the same time. Yet on average, Tokyo started 84 percent more homes per year. Abundant supply has helped keep Tokyo’s housing costs flat for two decades, despite an expanding populace and low interest rates. In 2022, prefabricated homes accounted for 13.1 percent of all housing starts.
There remains a fair question about how much population growth our own housing markets could accommodate even if we ran on all cylinders. Yet we can glean from this comparison that wherever that limit may be, we are woefully far below it.
In Canada, it is the provincial government that has ultimate jurisdiction over land use regulations. Since Canadian jurisprudence maintains that cities are “creatures of the province,” provincial governments have the authority to unilaterally override municipal regulatory roadblocks, unlocking the feasibility of more projects, and reducing the regulatory risk inherent to more discretionary local controls. This has been the model taken up by the government of B.C. and should be the model other provinces—especially Ontario—should adopt and expand on.
The proposal: establish a ‘right to build’
I propose that provinces should establish a “right to build” a wide range of residential buildings on any serviced land authorized for residential construction in their territory. The logic is to standardize and simplify zoning regulation for housing structures across the largest geographic jurisdiction possible while setting a high “floor” of permissible development opportunities across a maximal land supply. These provincial standards supersede all municipal zoning bylaws and create a unified, predictable, and flexible set of building permissions that carry across all city and neighbourhood boundaries. Municipalities would still be responsible for administering approvals but must allow permit applications that conform with all of these provincial permissions to proceed—without requiring any subsequent rezoning applications, public hearings, or committee of adjustment rulings.
There should be at least two tiers of permission categories, which represent the least and most permissive standards respectively. The lowest tier would apply to all residentially zoned land in the province by default. It would permit residential and low-impact mixed commercial buildings up to six stories tall without requiring any parking, side or rear setbacks, minimum lot sizes, unit limits, or floor area limits. It would also permit rooming homes, additional dwelling units, and additions on all existing property. The highest tier would apply to all lands within 15-minute walks of major transit stops and postsecondary schools. It would include all of the lowest-tier permissions, but expand them to allow unlimited heights, unlimited lot coverage, and more commercial activities. The logic of maximizing density here is to promote transit-oriented developments and create a buffer zone for student housing and amenities in close proximity to their schools.
Introducing standardized, permissive building rights across a large area has many advantages: 1) it saves builders time and money from navigating new regulations for every project; 2) it makes approvals timelines shorter and more predictable since fewer projects will require discretionary rezoning; 3) it increases competition among land-sellers, undercutting speculators; 4) it unlocks economies of scale needed for factory-produced home models that can reduce construction times and labour needs; 5) it enables a larger pool of small builders to enter the market and provide lower-cost options, increasing competition among housing providers.
This approach would also yield long-term savings for municipalities: 1) by cutting staffing needs in permitting and planning departments, potentiating automation for approvals processing; 2) because higher-density and mixed-use developments yield more property taxes and require fewer services per capita; 3) enabling more places for entrepreneurs to set up shop and grow the city’s wealth.
Conclusion
Most municipal up-zoning measures have been good on their own merits, but the variability in local rules and approvals regulations creates frictions that compound into longer delivery timelines. There already exists great momentum in Canada for these kinds of zoning reforms, but progress has been too slow and piecemeal for the scale of the crisis before us. The next step should be to carry them to their logical conclusion by being more ambitious at the provincial level. The regulatory paradigm must shift from one that forbids most housing by default, to one that permits most housing by default. To begin building our way out of the housing deficit, we must give Canadians back the right to build.
