Housing Supply Approval Processes: How Ontario measures up to leaders in Canada and around the World

As we have previously discussed, the reasons for the supply gap in Ontario are many and complex. At this rate, Ontario will fall short of units needed to meet demand by more than 200,000 over the next decade. That is alarming and we need to meet this challenge, as more Ontarians are struggling to find a good, affordable place to call home every day.

The general gap in supply in Ontario is even more apparent when looking at the rental housing sector. Before the pandemic, vacancy rates hit record low numbers. This is especially true for Toronto and the GTA, where a majority of all renters in the province live. Providing relief will require comprehensive measures taken by governments at the provincial and municipal levels, in collaboration and consultation with builders and investors from the private sector.

In its action plan on housing, the Government of Ontario identified several key areas for targeted improvements to address the supply crisis. First among them was time. The time it takes from getting the first approval to breaking ground, and then finally to the development being finished, is in most cases too long. Builders are faced with a myriad of rules, regulations, and permit applications which are not always straightforward or transparent. While the average time it takes to get a purpose-built rental development through the approval process is 2-3 years, in worst-case scenarios it can take up to 10 years to welcome new tenants in a purpose-built rental building in Ontario. This scares away builders and potential investors from building purpose-built rentals. It is, therefore, imperative that municipalities and local councils work together to expedite the approval process in order to bring more housing supply to market faster.

Looking at some numbers can bring perspective to the time problem in Ontario. When looking at a range of Canadian cities across the country, it becomes clear that Toronto and Mississauga rank consistently near the bottom when it comes to application processing and approval times across various categories.

More specifically, it routinely takes more than 12 months in Toronto and Mississauga to get approval for an Official Plan amendment, while in cities like Calgary, Edmonton, Montreal, Halifax, and Regina it typically takes about 7 months. Zoning By-Law Amendments in other Canadian cities takes about 4 months to 6 months, but more than 12 months in the GTA. It takes as little as 2 months in other cities to get a Site Plan approval, but the same approval can take up to 2 years in Toronto. This is particularly problematic when the Planning Act calls for a timeframe of 30 days for making a decision about a site application.

The approval times are so long in Ontario that developers estimate that about 85% of the time needed to complete a development is time spent waiting for approvals. The chart below shows the difference in approval process lengths between different Canadian cities.

Approval processes are the biggest factor in the long development times for housing in Ontario. With these extended timelines, the province risks losing investment to other jurisdictions that could be leveraged to build more housing and more purpose-built rental units in Ontario and help to take pressure off our housing supply crisis.

In fact, the World Bank ranks Toronto in 64th place in terms of approval times and ease of construction. Toronto is far behind leading cities such as New York, London, Sydney, Shanghai, Berlin, and Tokyo among many others. According to the same study, Toronto lags far behind the average of other cities in the OECD when it comes to approval times, with 249 days to get a permit compared to an average of 152 for other OECD cities in the study.

The contrast is even starker when comparing the time it takes to get approvals in Toronto to other global cities we should be trying to emulate. For example, getting a new building permit in Singapore, one of the world leaders in development approvals, takes two weeks on average. Singapore achieved this by completely reforming its system to make it streamlined and standardized, with more input from the private sector, before moving the entire process to an e-permitting platform. Closer to home in New York City, the approval time takes an average of 35 days. Having a streamlined, standardized, and almost completely electronic system to submit applications for permits plays a big part in the success of New York too. Most of the application and approval processes in Ontario are still done using traditional pen and paper.

Time delays play a big part in curtailing new supply in Ontario. The government identified time as an important factor in their housing supply action plan. The approval system and building code should be a main target for modernization. Moving the entire process away from pen and paper to a standardized digital platform is just one potential action to streamline approvals. In the next post, we will look more closely at some other potential solutions that have contributed to the success of top-performing cities. Addressing the problems with the approval process is essential to inviting more investment, spurring more purpose-built rental units to be developed, and bringing more supply to market in Ontario.

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