Ford government pausing its own affordable housing policy, calling it ‘red tape’

The Ford government is delaying its own affordable housing measures in several major Ontario cities, calling the rules it wrote “unnecessary red tape and requirements” that make it more expensive to build.

The pause will affect inclusionary zoning rules in Toronto, Kitchener and Mississauga, a policy that requires developers to provide a minimum number of affordable housing units in certain situations.

Legislation introduced by the government in May 2025 said municipalities could mandate new projects near transit stations to include five per cent affordable units for a maximum of 25 years after their construction.

It was a provincial compromise that Toronto Mayor Olivia Chow said came nowhere near what she had hoped she could ask for from developers, but which she grudgingly accepted in a meeting with Premier Doug Ford.

“I went in and said, ‘Give us 20 per cent.’ In fact, I appealed for 30 per cent. I said to the premier, ‘We need to build housing — not all of it, but 20, 30 per cent people can afford. It’s a perfect opportunity,’” Chow said at a news conference on Tuesday.

“He said no and now it’s five per cent. I had no choice, I said, ‘OK, five per cent, all right. At least it’s five per cent.’”

Now, the government is pausing its own plan, saying requiring developers to build even five per cent of their units at affordable rates will hurt the construction of new homes.

“We need to get more shovels in the ground to build homes for families across the province — now is not the time to be adding unnecessary red tape and requirements that only increase the cost of building a home,” a spokesperson for Housing Minister Rob Flack, who introduced the legislation less than a year ago, said.

“These temporary measures will help to ensure project viability so more people can call the city of Toronto home.”

The regulation posted by the provincial government proposes pausing the five per cent inclusionary zoning until July 1, 2027. It said Kitchener had already opted to pause its program.

“MMAH has heard from stakeholders expressing concerns that implementing IZ at this juncture, particularly in Toronto, could have a negative impact on overall housing supply and could result in the cancellation or pause of projects,” the regulation said.

Chow, however, said she didn’t believe the requirement was slowing development in her city. She said most builders had stopped working in current conditions, and the few that were still in construction were doing so because of financial incentives from city hall.

“People need homes they can afford,” she said. “Right here, in Toronto, seven out of 10 homes that are being built, if you see a crane, most likely it’s made possible, the building is made possible, because the city has put in financial incentives.”

The Building Industry and Land Development Association said in a statement that the delay was a “prudent” move.

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“This will safeguard the already very fragile pipeline of new housing in the province as the market grapples with the lowest sales seen in decades, declining starts and mounting layoffs in the GTA,” the statement said.

“Present cost-to-build challenges, new home sales, and market conditions are extremely dire in the province and adding even more costs through IZ requirements would simply further erode project viabilities and result in even fewer housing units coming to the market.”

The Ford government ran its 2022 election campaign partly under the promise that it would build 1.5 million new homes by 2031 to lower the cost of housing in the province. It’s a strategy that has stalled to the point that the finance minister recently called the 1.5 million goal a “soft target,” after years of failing to hit key milestones, even after watering down the criteria.

Flack told Global News last year that recent provincial housing measures were designed to revive the spring market for 2026, after consecutive years where the number of housing starts in Ontario fell — often at sharper rates than the rest of the country.

The fall-off in development has perhaps been most acute in Toronto.

Between 2020 and 2025, 25 projects have stopped sales on more than 3,200 new units in and around Toronto, numbers compiled by BILD show.

A total of six projects stopped selling in 2020, with five more giving up the following year. In 2022, 10 projects abandoned sales attempts, while four more folded in 2023.

BILD said no projects had stopped selling in 2024 or 2025 because fewer than 10 highrises have even tried to launch over the last two years, as builders struggle to make the costs work and buyers stay away.

The low sales matter to builders because most condominium projects require the majority of their units to be sold in order to finalize financing to get construction off the ground.

Richard Lyall, president of RESCON, said recent data shows “we are staring into the abyss” when it comes to residential construction.

— with a file from The Canadian Press

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