Affordable Housing: Proposed Legislation Update

By Ashley Hizo and Slonee Malhotra

The Ontario government recently proposed Bill 134, a new legislation called the “Affordable Homes and Good Jobs Act.” If passed, this legislation would update and expand the definition of affordable housing units that would qualify for development-related charge discounts and exemptions.

Under s.2(2) of the Development Charges Act, a development charge may be imposed against land to pay for any of the following:

• The passing or amendment of a zoning by-law under s.34 of the Planning Act;
• The approval of a minor variance under s.45 of the Planning Act;
• A conveyance of land to which a by-law under ss.50(7) of the Planning Act applies;
• The approval of a plan of subdivision under s.51 of the Planning Act;
• A consent under s.53 of the Planning Act;
• The approval of a description under s.9 of the Condominium Act; or
• The issuing of a permit under the Building Code Act.

Development Charges can be significant and can very well add over $100,000 to the cost of a single-family home in many Ontario municipalities. Adding household income as a measure of affordability would enable more housing units to be exempt from the imposition of a developmental charge. The anticipated effect of these changes is to incentivize lower purchase and rental prices, since affordable housing units would be cheaper and easier to build.

The updated definition in Bill 134 would include local income as a measure of affordability. Under the proposed change, an affordable residential unit would be defined as follows:

For rental housing, where the rent is no greater than the lesser of,

1. The income-based affordable rent for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
2. The average market rent identified for the residential unit set out in the Affordable Residential Units bulletin.

In identifying the income-based affordable rent applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,

1. Determine the income of a household that, in the Minister’s opinion, is at the 60^th percentile of gross annual incomes for renter households in the applicable local municipality; and
2. Identify the rent that, in the Minister’s opinion, is equal to 30 per cent of the income of the household referred to in clause (a).

For ownership housing, where the price of the residential unit is no greater than the lesser of,

1. The income-based affordable purchase price for the residential unit set out in the Affordable Residential Units bulletin, as identified by the Minister of Municipal Affairs and Housing, and
2. 90 per cent of the average purchase price identified for the residential unit set out in the Affordable Residential Units bulletin.

In identifying the income-based affordable purchase price applicable to a residential unit, the Minister of Municipal Affairs and Housing shall,

1. Determine the income of a household that, in the Minister’s opinion is at the 60^th percentile of gross annual incomes for households in the applicable local municipality; and
2. Identify the purchase price that, in the Minister’s opinion, would result in annual accommodation costs equal to 30 per cent of the income of the household referred to in clause (a)

Put plainly, a home or rental unit is deemed ‘affordable’ if the cost is at or below the average market rent/value, or does not exceed 30% of a household’s annual income.

Bill 134 has not yet been passed and is at this present time of no force or effect. However, with the increasing cost of living and an overall lack of affordable housing options In Ontario, the proposed legislation could not come at a better time.

For questions related to this article or legal assistance regarding a real estate matter, please reach out to one of our experienced real estate lawyers at SorbaraLAW.