Toronto Multiplexes MAKING PROGRESS In 2023! What You Need To Know As a Toronto Real Estate Investor
With big immigration targets, we all know that we are gonna run into housing problems in Canada if we don’t change anything on the supply side.
And more specifically with limited land in Toronto, that’s where the bigger problem will be, and that’s why both the provincial and municipal governments have been trying to speed up the construction of new homes.
The provincial government has come out with Bill 23, which was passed in November 2022 and now permits up to three units to be built on all residential lots in Ontario.
Meanwhile, the City of Toronto has been working on a separate initiative focused on multiplex housing. They’ve made some progress on this front, and next up, the Toronto planning and housing committee will have a meeting on April 27 to talk about recommendations for how to move forward with this.
What’s going to be changing can be a big deal for real estate investing in Toronto, and that’s why we’ve been keeping an eye on this progress.
And in this video, we’ll summarise recommendations that we find are most important for real estate investors, so you also know what to look out for.
Toronto Multiplex Timeline
The Ontario Bill 23 lets people build up to three units on residential lots. But Toronto has a bigger housing issue, so the Toronto multiplex team is actually aiming higher, and the goal here in our city is to allow up to 4 units in the existing house to better meet our target of building 285,000 new homes in the next decade.
Here’s a quick timeline of what’s happened so far.
- Back in December 2022, the 2023 Housing Action Plan was approved, which really sped up the multiplex housing initiative in Toronto.
- In February 2023, draft amendments were shared for public feedback.
- Then last month, in March, the team continued to refine amendments and summarize feedback.
- So coming up next on April 27, we should see a final report, and the Planning and Housing Committee will be meeting to review it all before it gets presented to City Council in May.
Just for your reference, there’s no new and updated timelines for anything else beyond May of 2023 from the city.
But technically, the 3 units in all Ontario residential homes need to be implemented one year from November 2022, which would be November 2023.
Then, the city previously mentioned that we might see the Toronto multiplex plan get implemented in the Spring of 2024 so we’ll just have to wait to see if we get more updates closer to May.
The first easy one is zoning. Right now, if you want to build a multiplex, it’s not allowed in many houses in Toronto because zoning doesn’t allow for it.
Moving forward, we should expect to see duplexes, triplexes, and fourplexes permitted in not just the R residential and RM multiplex zones but also the rest of the low-rise residential house options (RT, RS, and RD).
There may also be a change to something called the U values in multiplexes, so they’ll make sure that you can create four units in all existing multiplexes in our city.
Build Form Changes
The next one is build form, which makes it physically possible for bigger builds like fourplexes to happen.
The City of Toronto’s presentation deck does a good job of describing all of this in detail, so I recommend that you head over here if you want to learn more specifics about this.
From a high level, they’re planning on increasing the build depth and height and excluding common areas in the gross floor area calculations to allow for bigger builds.
The other big more is that they will also make secondary suite requirements easier by permitting entrances to be in the main road-facing wall of the house, which isn’t allowed right now.
Development Charge Changes
But I think the biggest unknown now is what might actually change when it comes to development charges.
It’s not just real estate prices, development charges have gone on a rollercoaster ride lately too. Rates got bumped up in August of last year, 2022, and then were scheduled for more approved increases in 2023 and 2024.
But Bill 23 reversed this back down in November of 2023 for all units and a further increase of around 20% if it was intended for rental units.
Honestly, development charges are still very high at the current levels. If you were to convert a single-family home to a triplex, it might cost $200,000 in construction costs, but development charges alone would be close to that, which ends up almost doubling total costs and that ends up making it not worth it for most real estate investors.
And if it’s not worth it, the multiplex project won’t actually end up doing much to create housing.
So one key recommendation is to waive development charges for up to 4 units in multiplexes, which could end up being the game changer for Toronto.
On the other end, it would be a tricky one to get pass. This will be a big loss in revenue for the city, and city staff are already pushing back saying that it’s going to make it harder for the city to meet its housing goals.
How We Can Help
Luckily, it shouldn’t be long before we find out what’s actually going to happen, and we’re hopeful.
If development fees actually get scrapped, then it can open up a lot of opportunities for real estate investors and make investing in Toronto a lot more attractive, improving rental income, reducing capital requirements, and just giving a lot more options for growth for real estate investing in Toronto.
If you’re thinking about learning more about these kinds of opportunities, we’d love to have a personalised discussion with you to learn more about your situation. Just reach out to us!
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