Provincial ban on city mandating affordable housing percentages near transit hub developments has East Toronto politicians frustrated

By MATTHEW STEPHENS

Provincial legislation to temporarily ban three major cities from requiring a minimum percentage of affordable units in residential developments near transit hubs has local politicians wondering what it means for the future of affordable housing in Toronto.

As of Jan. 29, the Ontario government has paused new inclusionary zoning regulations in Kitchener, Mississauga, and Toronto until July 1, 2027, calling the rules it originally put in place an “unnecessary” roadblock impeding the progression of new development.

But that’s a position Beaches-East York Liberal MPP Mary-Margaret McMahon is not buying.

McMahon called the new policy of Premier Doug Ford’s Progressive Conservative government a “dinosaur mentality,” and that access to transit is needed most by those who require affordable housing.

“I’m so outraged. I’m livid about this. He needs to get with the program that we live in a great urban centre,” said McMahon.

“People taking transit, they’re doing it because A, it’s the smart thing to do in an urban setting like Toronto. And B, because it’s an affordable option – much more affordable than owning a vehicle. Stripping that away from people who are seeking affordability, I just don’t know what they’re thinking.

Local resident Adam Smith said the legislation shows the Ontario government is in favour of supporting developers’ profits over the needs of residents seeking affordability.

“The loss of inclusionary zoning is yet another example of the Ford government’s focus on profits for the housing industry over people,” said Smith. “It’s abundantly clear this is not about good planning principles. These policies are entirely ideological and designed with no other purpose than to prop up the housing industry that backs the Ford government.”

The province said their motivation to ban inclusionary zoning is to help boost the number of housing units being built by removing obstacles, both regulatory and market-driven, that make it difficult for developers to get the financing needed to start projects.

A Fall 2025 Housing Supply Report from CMHC reported significant declines in condominium apartment starts in the City of Toronto, citing “a pullback in investor demand during the first half of 2025 which reduced project feasibility and lead to cancellations, delays and a sharp drop in starts.”

CMHC reported that a strong rental demand, and “near-record-low” interest rates sparked a surge in condo presales between 2021 and 2022, which quickly drew investors to the Toronto market. However, a drastic increase in housing supply over the following years resulted in slowed pre-construction sales, which effectively limited new condominium starts in the first half of 2025.

Despite investor’s interest coming to a halt in recent years, Beaches-East York Councillor Brad Bradford said he continues to work with developers in the community to help build more affordable housing.

“I believe we need more affordable housing in Toronto. It’s something I’ve consistently fought to have included in new developments that have been proposed in our community. Toronto’s housing crisis is getting worse because so few new projects are breaking ground – and that’s because the math doesn’t work right now,” said Bradford.

He said reducing development charges for builders, rather than banning inclusionary zoning, could be the answer to speeding up progress and encouraging more affordability in the city.

“Something needs to change. But instead of the province pausing inclusionary zoning, I would rather have (Toronto) City Hall reduce development charges, a move that would also move the needle and help get shovels in the ground on new and more affordable homes.”

Existing projects that were issued a building permit before Jan. 29 of this year, are not exempt from the inclusionary zoning policy and are still required to include a maximum five per cent of affordable units.

With the municipal government losing regulatory powers over private development, the city itself can still incorporate affordable housing targets for residential projects on which they own the land.

In September last year, Toronto launched the Purpose-built Rental Housing Incentives Stream, a component of the November 2024 Rental Housing Supply Program, which approved more than 8,000 rental homes, including 2,000 affordable rental homes. The city initiative aims to deliver rent-controlled, affordable rental and rent-geared-to income housing units spanning across more than 44 projects that are currently under construction.

Of the 10,000 new city-built homes, nearly 7,100 are purpose-built rental with 50 per cent of that total being rent-controlled and affordable rental homes.

Inclusionary zoning policy was first introduced by the Ontario Government as the Inclusionary Zoning Act in 2018, giving municipalities statutory authority to require affordable housing in new developments.

The City of Toronto later developed its own Inclusionary Zoning Policy in 2021, which centred around major transit hubs approved by the province, and areas identified by the city as inclusionary zoning Market Areas, where housing demand, development viability, and market strength justified affordability requirements.

The city’s policy initially required new developments to include five to 10 per cent affordable housing units in designated areas such as transit hubs, with later plans to increase affordable units up to eight to 22 per cent by 2030, with a 99-year term. However, by May 2025, provincial regulations capped affordability requirements to a maximum of five per cent for 25 years.

And now, just one year after setting that cap, the province’s pause of inclusionary zoning altogether has ignited frustration among East Toronto councillors.

“It’s a real set back the Ford government is removing the requirement to provide affordable housing when they approve mega density – especially at their own Transit Oriented Communities,” said Toronto-Danforth Councillor Paula Fletcher.

“I have fought for years to have it included and am heartbroken that average-income residents will find it even more difficult to find an affordable place to live in Toronto.”

Scarborough Southwest Councillor Parthi Kandavel also stressed the importance of including affordable housing components at transit hubs, where he said it’s needed most.

“Requiring affordable units within new buildings around subways is one of the best tools we have to address the affordability crisis,” said Kandavel.

“The province’s ban on inclusionary zoning in Toronto would have potentially disastrous effects on our efforts to get families into adequate and affordable housing.”