Toronto – The report “Launching the Rental Housing Supply Program” responds to Toronto City Council’s commitment to support 65,000 rent-controlled homes by 2030. To this end, City Council requested staff to review and recommend revisions to the existing Open Door Affordable Rental Housing program (Open Door program), which was launched in 2016 and has so far supported the approval of more than 21,000 affordable rental homes on public, non-profit, co-op and private land.
City staff are proposing a new Rental Housing Supply Program to advance the City’s expanded housing targets, align and build upon recent legislative changes by the Province of Ontario, and support new affordable, rent-geared-to-income (RGI), and rent-controlled homes within a broader economic context, which is making it increasingly difficult to adequately scale up the purpose-built rental housing supply in Toronto.
In addition to launching the new Rental Housing Supply Program, as an immediate action the report recommends allocating approximately $351 million in capital funding to 18 affordable rental housing projects, to enable them to start construction in 2024 and 2025. This first investment under the program will “unstick” almost 6,000 new rental homes, including 2,600 affordable rental and 3,380 rent-controlled homes.
This report will be considered by the Planning and Housing Committee on Thursday, June 13 and can be accessed on toronto.ca: https://secure.toronto.ca/council/#/committees/2565/24478.
Toronto’s housing challenges:
Toronto is facing two housing crises – one where there is a lack of deeply affordable and supportive housing for low-income marginalized and vulnerable residents; and a more recent one in which rising rents have made it increasingly unaffordable for middle income earners, key workers and professionals to live in the city. These challenges are evidenced by key measures, including but not limited to:
- The city’s current rental vacancy rate for purpose-built rentals is around 1.7 per cent. The vacancy rate in a well-functioning and healthy housing system should be three per cent or higher.
- City of Toronto data indicated that at the end of April 2024, the number of individuals experiencing active homelessness was 10,964.
- About 48 per cent of Toronto households (557,970 households) are renters, and 40 per cent of renter households are living in unaffordable housing, compared to 26 per cent of owners (based on 2021 Census data).
- The average rent for two-bedroom condominium apartment units in Toronto is $3,139, as reported by the Toronto Regional Real Estate Board in its Q1-2024 Rental Market Report
. This represents the main rental housing option affordable and available to key workers in Toronto’s economy, including transit operators, registered nurses and construction managers, but often entails limited security of tenure and rent control. - A report, The Cost of Inaction , released by The Toronto Region Board of Trade and WoodGreen in July 2021, estimates that the lack of affordable workforce housing is costing the Greater Toronto Area up to an estimated $7.98 billion per year in direct and indirect economic and social costs. More affordable homes are needed for lower and moderate-income households, including some of the region’s most essential workers, including cashiers, shelter staff, nurses, custodians, transit operators and restaurant workers.
Rental Housing Supply Program:
The new Rental Housing Supply Program responds to the city’s housing and homelessness crises by supporting a shift in Toronto’s housing system to deliver more RGI, affordable rental, and rent-controlled homes, and build the capacity of the Community Housing sector (non-profit, co-ops and Indigenous housing providers). The report provides a framework to support a range of rental homes from inception to construction start.
The Program and report include six major components:
1. Launching a new Community Housing Pre-development Fund
This new fund is a three-year pilot to provide approximately $10 million annually for Community Housing Providers, Toronto Community Housing Corporation (TCHC), and Toronto Seniors Housing Corporation (TSHC) to undertake early site development work, to increase their development capacity, and grow the pipeline of future affordable housing projects led by the Community Housing sector. This will be a revolving fund, where interest-free loans will be paid back to the City once projects reach construction start and have secured funding and financing from other orders of government.
2. Incorporating an income-based definition of affordable rental housing
Following extensive public and stakeholder consultations throughout 2020 and 2021, the City amended its Official Plan to adopt an income-based definition of affordable rental housing that better responds to the needs of low- and moderate-income households. The City’s affordable housing programs such as Open Door and Housing Now did not reflect this definition.
The Province’s new affordable rental definition under the Development Charges Act, while income-based, results in different rent levels compared to the City of Toronto’s in-force affordable rental housing definition.
To align the Rental Supply Housing Program with both City and provincial income-based definitions, affordable rents under this program will range from: studio at $1,088; one-bedroom unit at $1,378; two-bedroom unit at $1,992 and three-bedroom unit at $2,190.
3. Introducing a new program definition for rent-controlled homes
In addition to initiatives to support RGI and affordable rental housing, the report proposes a definition for rent-controlled homes whereby monthly rents are above the affordable rents, and at or below 150 per cent of the Average Market Rent (AMR), by unit type, as reported annually by the Canada Mortgage and Housing Corporation (CMHC).
Rents will be controlled under this program, with rental increases maintained at no more than the provincial rent increase guideline (under the Residential Tenancies Act) plus two per cent annually for a minimum of 40 years.
This approach is being taken to support tenants renting new homes to have increased certainty about rent increases, and Community Housing Providers to have sufficient rental revenue to maintain a state of good repair.
New rental homes at this rental level are needed to provide affordable housing to key workers in Toronto’s economy including nurses, transit operators, and construction managers.
4. Providing Financial Incentives to Rent-controlled Homes Delivered by Community Housing Providers
Through the adoption of this report, Community Housing Providers will be able to receive City incentives (including waivers of building permit and planning application fees, and property tax exemptions) for new rental homes that meet the new program definition for rent-controlled homes (described above).
The Rental Housing Supply Program will continue to support affordable rental homes including RGI homes through waivers of development charges, community benefits charges, parkland dedication fees that are now partly mandated under Bill 23, as well as waivers of building permit and planning application fees, and property tax exemptions.
To encourage developing mixed-income communities, projects must include at least 30 per cent affordable housing to be eligible for rent-controlled housing incentives.
5. Prioritizing Capital Funding for RGI and Affordable Housing Projects
Through the new program, the City will allocate up to $260,000 per RGI and affordable rental home to supplement other measures needed to make these projects financially viable. Subject to the approval of the recommendations in this report by City Council, the City will allocate $351 million to a number of projects. The information needs to remain confidential because its release could prejudice the competitive position or interfere with the contractual or other negotiations of impacted organizations.
This investment will enable 18 affordable rental housing developments to start construction in 2024 and 2025, adding to the 47 projects already funded that are under or nearing construction.
The first round of funding will be provided from the City’s Capital Budget. Funding provided through future calls is anticipated to be funded from other sources of funding including the federal Housing Accelerator Fund.
6. Expediting Development Review Process
RGI and affordable rental housing projects approved under the Rental Housing Supply Program will continue to be supported through a prioritized development review process.
The City will expand access to the Priority Development Review Stream for new rent-controlled housing projects approved under the Program.
Intergovernmental partnership
While the City is committed to taking every possible action within its jurisdictional and financial capacity to tackle the housing crisis, strengthened partnerships with the federal and provincial governments are needed to complement Toronto’s efforts.
New and enhanced policy, program and financial tools are urgently needed to meet Toronto, Ontario and Canada’s respective housing supply targets. This includes a new fiscal deal to support the structural changes that will put Toronto on a path to long-term financial sustainability, as well as a commitment from the federal and provincial governments to invest in addressing the City’s housing needs.
Other key Housing reports
Besides the report on the Rental Housing Supply Program, the Planning and Housing Committee will consider two additional key reports at its June meeting that outline a series of measures across the housing continuum that will support existing renters, and protect, maintain and grow the community housing sector. These include:
- A “Renovictions Policy Implementation” report that recommends a made-in-Toronto renovictions policy and bylaw be developed, based on learnings form the City of Hamilton, to protect existing renters from illegal renovictions.
- A new “Community Housing Sector Modernization and Growth Strategy” which will support the non-profit, co-op, and Indigenous housing providers maintain their stock as affordable and well-maintained; acquire more homes that can be converted to perpetually affordable homes, through the changes to Multi-Units Residential Acquisition Program (MURA); and build capacity to grow their housing stock to respond to the growing need for RGI and affordable rental homes.
Housing types and definitions
Affordable rental housing – As proposed in the Rental Housing Supply report, the City’s new income-based definition of affordable rental housing shifts the definition of affordable from a market-based approach to an income-based one. Affordable rents will now be the lower of the City’s Official Plan definition and the provincial Affordable Residential Units Bulletin 
definition.
Average Market Rent – The average monthly rent paid by tenants for the use of a rental home. It is calculated annually by the CMHC through the Rental Market Survey which collects data on private rental homes in buildings with three or more rental units that were purpose-built to be rental housing.
Community Housing – Includes housing developed and operated by not-for-profit corporations, non-profit housing co-operatives (co-ops), Indigenous housing providers, as well as Toronto Community Housing Corporation (TCHC) and Toronto Seniors Housing Corporation (TSHC).
Rent-Geared-to-Income (RGI) housing – includes housing where rent is 30 per cent of the monthly household income.
Non-profit housing co-operative (co-op) – A corporation that is owned and operated by the people who live in it. People who live in co-ops are called members, not tenants. Each co-op is governed by a board of directors elected by members of the co-op.
Rent-controlled housing – As proposed in the Rental Housing Supply report, Housing units where the rent is higher than the City’s new income-based definition, but no higher than 150 per cent Average Market Rent (AMR) as reported by CMHC. Annual rents in these homes will be capped at no more than the provincial rent increase guideline plus two per cent.