How Canada can turn housing investments into more rental homes

The federal government’s $51 billion Build Strong Communities Fund represents a significant commitment to addressing Canada’s housing crisis, but ensuring those investments translate into new homes will require strong coordination between all levels of government, according to a major rental housing provider. Howard Paskowitz, vice president, development & public affairs, Canadian residential at Starlight Investments, says the company has a pipeline positioned to build thousands of new rental units across Canada over the next decade, but projects continue to be challenged by high upfront costs—particularly development charges that can make otherwise viable projects financially impossible. On a recent episode of Hub Hits, The Hub spoke with Paskowitz to better understand the obstacles preventing federal housing investments from reaching the ground and what changes could accelerate purpose-built rental construction across Canada. Below are the five key takeaways from the conversation. 1. Federal funding needs faster coordination The federal government’s housing strategy has identified the right problems, according to Paskowitz, but translating budget commitments into actual housing-enabling infrastructure and homes requires seamless cooperation across government levels. “The federal government comes up with a great plan to build the infrastructure and conditions needed to create housing, but it requires the provincial governments and the municipal governments to get together to execute it,” Paskowitz said. He compared the current process to the game show Plinko, where “you drop the chip at the top, you hope it gets where you want it to go, but it’s bouncing off a lot of different obstacles along the way.” The Build Strong Communities Fund exemplifies this challenge. While $51 billion sits in federal accounts designated for housing-enabling infrastructure, the money must navigate through provincial and municipal bureaucracies before reaching actual construction sites, which delays projects that are otherwise ready to move forward. 2. Development charges create financial barriers Development charges—municipal fees meant to cover infrastructure costs from new development—have become one of the most significant cost considerations affecting new rental housing construction, according to Paskowitz. “The binding constraint is costs. The costs of projects exceed the values,” he explained. For rental developers like Starlight, these charges represent a particularly heavy burden because they must be paid upfront while rental income accumulates slowly over decades. Paskowitz noted that condo developers can pass these costs to initial purchasers, but that approach means “the first buyer of a condo is paying for the development charges, not the people living there until the end of time.” For rental providers making long-term commitments to properties and operating quality homes, carrying these upfront costs can create challenges for long-term project economics. Several municipalities in Ontario, including Vaughan, Mississauga, and Toronto, have begun reducing development charges after recognizing that increasing these charges may raise rates on paper, but if no projects proceed, municipalities ultimately collect no revenue to fund infrastructure, Paskowitz said. 3. Infrastructure financing needs restructuring Ontario’s proposed municipal infrastructure corporation approach represents a promising solution to the development charge problem, according to Paskowitz. This model would allow municipalities to borrow at government rates to build infrastructure upfront, then recover costs over time through utility payments. “The province, by talking about this new municipal infrastructure corporation, would be borrowing money at their rate of borrowing upfront, creating the infrastructure, and then knowing that over time, just like as you use your water and you pay your water bill, that infrastructure can be paid out,” Paskowitz explained. This approach would eliminate the need to front-load infrastructure costs onto developers or initial homebuyers. It would also address an absurdity in the current system: HST is charged on development charges, creating what Paskowitz called a “tax on a tax.” By allowing infrastructure to be financed over time rather than embedded entirely in upfront fees, projects that are currently stalled could become financially viable without reducing municipal revenue in the long term. 4. Shovel-ready projects await policy changes Starlight’s development pipeline demonstrates that housing supply isn’t constrained by lack of plans or capacity—it’s constrained by policy barriers. The company focuses primarily on infill development within existing rental communities on underutilized land. “I can show you drawings that we’ve got ready to go. We just need the entire project to make sense,” Paskowitz said. One current project under construction at 557 West Mall in Etobicoke, ON, has already created over 500 jobs despite being only two-thirds complete. These infill projects offer particular advantages because they “utilize existing amenities, utilize existing infrastructure,” and add to rental communities that already exist, avoiding the introduction of entirely new uses to neighbourhoods. Many of these projects leverage infrastructure that is already in place, meaning public dollars can go further when policies encourage intensification where services already exist. “Intensification must be encouraged and facilitated at all levels of government. Building more rental housing creates jobs, places to live and preserves opportunity.” Similar projects have been completed and are planned in the Greater Toronto Area and in Greater Vancouver, highlighting the role infill development can play in accelerating rental supply in established communities. He added that predictable rules around redevelopment and rental replacement are essential to attracting long-term capital into Canadian housing. “When the framework is clear and consistent, developers can underwrite projects with more confidence,” Paskowitz said. 5. Urgent action is needed to prevent further decline With the condo market slowing significantly in Ontario, particularly in the Greater Toronto Area, construction companies are laying off workers or relocating to provinces with more active construction sectors like Alberta. This creates a potential labour shortage when projects do become viable again. “What’s going to happen when we’re ready to start a new project? We’re not going to have the people to build it,” Paskowitz warned. He suggested that a temporary freeze on development charges for one or two years might be necessary to restart construction. “We do not have the time to waste. We’re losing opportunities to provide housing, and we’re losing opportunities to provide jobs,” he said. Paskowitz emphasized that housing construction is fundamental to building strong communities and supporting economic growth. “It creates an opportunity for people to come together. It’s city building. It’s also job creation,” he said. He added that Canada’s rental housing sector is ready to deliver new supply under the right conditions, with thousands of units already planned across the country. This story was edited using AI.