Residential builders call on governments to work together on housing supply crisis in 2024

Jan. 4, 2024 – With housing supply and affordability expected to dip even further in 2024, the Residential Construction Council of Ontario (RESCON) is calling on political leaders from all three levels of government to step up their efforts and work in unison to tackle the urgent crisis.

RESCON is proposing three initial steps to get the ball rolling: reduce taxes, fees, levies and development charges on new housing; streamline, speed-up and simplify the development approvals system; and embrace and invest in offsite construction as a means of speeding up construction.

“Last year was a painful year for housing construction and, at the rate we are going, we’re not even close to fixing the crisis,” says RESCON president Richard Lyall. “Ridiculous red tape, along with excessive fees, taxes, levies, development charges and bureaucracy are choking housing supply and pushing home ownership out of reach of many. Builders often must wait years to get approval for projects. This is a major pinch point that is unnecessary and slows construction of new homes.”

For starters, RESCON is suggesting that serious efforts be made by all levels of government to reduce the burden of fees on new housing as they are far too high. Taxes, fees and levies account for 31 per cent of the cost of a new home. On a $1-million home, a buyer is paying $310,000 to governments. Meanwhile, development charges on new housing are skyrocketing in cities like Toronto.

“First-time home buyers are being hammered by these fees and excessive add-ons,” says Lyall. “Governments should cut the GST and HST on owner-occupied housing, especially for first-time home buyers who are carrying the burden of accumulated excess taxation and red tape, same as what they did for purpose-built rental buildings. Adding more costs should be stopped. We should also allow RRSP funds to be used for purchasing principal residences by domestic first-time buyers and possibly those who are downsizing.”

RESCON also wants a modernized and digitized development approvals process that would move developments along more quickly.

“Notwithstanding all the talk of streamlining the system, the situation seems to have paradoxically worsened,” notes Lyall. “Modernization is proceeding at a glacial pace. We are deeply lagging in adopting digitization and technology to improve our development approvals process which only delays new residential construction projects.”

RESCON is also encouraging government leaders to provide financial assistance and tax breaks to incentivize companies to build more modular housing manufacturing plants in Canada, as well as provide research and development funding so the industry can keep pace with new technology and building techniques.

“To build enough homes to restore affordability to the market, we must find ways of improving productivity in the residential sector,” adds Lyall. “Offsite construction could be one of the pieces to the puzzle as it is a quick way to boost supply. We would begin manufacturing new homes the same way we mass produce cars. We’d build them in a factory and then truck them to the site for assembly.”

While some progress has been made in areas such as purpose-built rental housing, new housing supply remains trending in the wrong direction relative to population growth. Until housing supply is sorted out, RESCON maintains that adding more costs and further regulatory interventions should be stopped and systemic issues should be ironed out to speed up construction.

“Our housing supply system is severely strained, to say the least,” says Lyall. “The problem has been festering for decades under successive governments and for too long political leaders have fiddled around the edges of the issue, applying band-aid solutions. But the canaries are now singing, and the crisis is now hitting home. The residential construction industry is ready, willing and able to work with governments to turn the ship around. But we must start now with serious action.”

RESCON is the province’s leading association of residential builders committed to providing leadership and fostering innovation in the industry.