When it comes to building new housing in the Greater Toronto Area (GTA), municipal governments are the gatekeepers. They determine how much new housing will be built, where it will be located and what form it will take. Municipalities also influence how quickly housing is built and how much it costs. Delays in municipal building approvals and escalating municipal fees and charges on new homes are making it increasingly difficult to build the housing our region needs, according to a municipal benchmarking study recently conducted by Altus Group for the Building Industry and Land Development Association (BILD).
Focusing on 16 GTA municipalities, the study looked at planning features (services and guidance documents municipalities provide to applicants), the timeframes in which municipalities turned around applications for new housing projects and provided approvals, and the level of charges and fees they added to the cost of new housing. For approvals, the study only measured the time from when the municipality deemed the application complete to when approval was provided, in other words, only the time required for the municipality to process the application. This year’s study was a follow-up to a similar 2020 study, allowing comparisons over time.
The new study found significant increases in municipal approval timeframes, with the average approval timeframe across the GTA now being 21 months, and with approvals in some municipalities stretching to 32–34 months. Municipal approval timelines in the GTA are among the worst of major municipalities across Canada.
Building approval delays do not just slow down the addition of new housing supply, they also add significant costs to new home purchasers. Each month of delay adds, directly and indirectly, up to $3.30 per square foot to the cost of a new home. To put that in context, each month of delay in approvals adds $2,600 per month to the cost of a new 800-sq.-ft apartment and more than double that for a new single-family home.
In addition to the costs incurred as a result of approval delays, the study found that municipal fees and charges added to new homes continue to escalate significantly, increasing on average by 30-36% since the 2020 study. This is adding tens of thousands of incremental dollars to the cost of a new home. Nine of the 16 municipalities in the 2022 study have combined municipal charges (development charges, parkland charges, community benefits charges, planning fees) for a ground-oriented development (mix of singles and townhouses) that exceed $100,000 per unit, and seven exceed $125,000 per unit. These figures do not include HST and LTT.
Approval delays and added costs have a significant impact on GTA communities and the economy, causing many young families to leave the region for surrounding areas. Municipalities need to take a hard look at their approval and funding mechanisms and ensure they are helping to deliver the additional housing needed for our growing population. Now is the time for action on housing.
