Rethinking inclusionary zoning to restore building viability

Ontario needs more homes – urgently. But just as important as volume is reliability. We need a housing system that can deliver consistently, across market cycles, without stalling every time costs rise or financing tightens. 

That is why RESCON supports the provincial government’s proposal to pause inclusionary zoning requirements in Toronto, Mississauga and Kitchener that force developers to include a certain percentage of affordable apartments in major housing projects near transit stations.

For many, the forced inclusion of inclusionary zoning into developments simply adds one more hit to the economic viability of housing projects. 

Why inclusionary zoning can add pressure

At first glance, inclusionary zoning might sound like a sensible way to encourage a greater supply of affordable housing. In practice, under current market conditions, it has done the opposite. The math doesn’t work.

Requiring developers to include below-market housing only adds cost, complexity and uncertainty at a time when many residential projects are already struggling to remain viable. When projects don’t proceed, no housing gets built – affordable or otherwise.

We’re facing a significant market correction already and inclusionary zoning has long since shown it has a chilling effect on new building.

The reality facing Ontario’s homebuilding sector today is stark. 

Inclusionary zoning compounds an already challenging situation where development charges, taxes, fees and levies now account for up to 36 per cent of the cost of a new home in parts of the Greater Toronto and Hamilton Area. Lengthy approval timelines, restrictive zoning frameworks and inconsistent municipal interpretation further compound the problem.

Adding mandatory affordable unit requirements on top of this cost structure doesn’t redistribute value – it erodes it, often to the point where projects are shelved entirely.

We’ve seen this play out in real time. In municipalities where inclusionary zoning has been implemented or proposed, builders have increasingly paused or cancelled projects after running the numbers. The result has not been a surge in affordable housing, but fewer housing starts overall. 

Current or pending inclusionary zoning policies in municipalities such as Toronto, Mississauga and Kitchener have not contributed to growth in affordable housing options. In fact, they‘ve given rise to pause on the part of homebuilders who, when reviewing all cost drivers associated with projects, conclude that economic viability does not exist.  

In a housing crisis, policies that suppress supply are counterproductive.

A pause – not a retreat

Pausing inclusionary zoning until at least 2027 is not about abandoning affordability. It is about recognizing that affordability cannot be mandated into existence when the underlying economics don’t work. 

The province’s proposal gives the industry breathing room to restart stalled projects, restore confidence and get shovels back in the ground. 

RESCON has recommended that the 2027 date be treated as a review point rather than an automatic reinstatement, allowing policy to respond to actual market conditions rather than an arbitrary deadline.

Scaling what works: Multiplex housing

At the same time, Ontario must focus on the forms of housing that can be delivered quickly, repeatedly and at scale. Small-scale multiplex housing like triplexes, fourplexes and sixplexes within existing neighbourhoods use familiar building envelopes, repeatable construction systems and well-understood servicing constraints, and can be built much more quickly.

That repetition is an advantage. It allows trades, suppliers and designers to standardize what should be standard, reduce risk and shorten timelines. In short, multiplex housing can deliver steady supply without overwhelming neighbourhood character or municipal capacity.

To unlock that potential, Ontario needs a smarter, more standardized approach to delivery. Early GIS-based site screening, supported by PropTech solutions like LandLogic, can quickly identify viable lots and reduce false starts. Front-end financial modeling helps property owners understand when conversions make sense, particularly as financing tools like CMHC’s MLI Select program reward energy efficiency, accessibility and long-term affordability. 

None of this requires lowering design standards or sacrificing planning objectives. It requires aligning policy with how housing is actually built.

Ontario has the land, the skills and the industry capacity to address its housing shortage. What it cannot afford right now are policies that unintentionally stall construction. 

Pausing inclusionary zoning is a pragmatic step – not a retreat from affordability, but a recognition that supply is the foundation on which affordability is built.

If we want more affordable homes tomorrow, we need viable projects today. That means removing barriers, restoring confidence and focusing on housing forms that can be delivered consistently, at scale, across Ontario’s communities.

Removing inclusionary zoning alone will not solve the housing supply crisis. There are many other factors that must be addressed. But it is another welcome move by the provincial government to get the ball rolling on housing.