1.1K 
Toronto City staff have proposed a plan to develop 20,000 new rental homes. Detailed in a report titled Build More Homes: Expanding Incentives for Purpose-Built Rental Housing, the initiative — to be considered by the Executive Committee on November 5 and if passed, presented to City Council later in the month — aims to increase the housing supply while also making a significant portion of these units affordable for low- to moderate-income residents.
Toronto has been grappling with a severe shortage of purpose-built rental housing — a problem made worse by decades of underinvestment since the early 1990s. High interest rates, rising construction costs, and inflation have further strained the market, leading to fewer new residential developments.
The Purpose-built Rental Homes Incentive supports 20,000 new units, of which up to 16,000 would be purpose-built rentals, with at least 4,000 designated as affordable housing. To jump-start the process, the City would commit to build 7,000 rental homes through its own resources.
Developers participating in the program would receive incentives. These include an indefinite deferral of development charges — estimated at $37,636 per unit — as long as the property remains as a rental. Additionally, a 15% reduction in property taxes for 35 years is on the table, amounting to about $20,396 per unit. Affordable rental units would benefit from even more support, with full financial incentives, including foregone taxes and fees, at approximately $97,264 per affordable unit.
To qualify, projects would have to ensure that at least 20% of their units are affordable, based on the City's new income-based definition of affordable housing. This affordability must be maintained for a minimum of 40 years, with a target of up to 99 years. Construction on these projects would have to commence by the end of 2026.
Mayor Olivia Chow expressed support for the initiative, stating, “We’re offering up incentives to build thousands more purpose-built rentals and affordable homes. With partnership from the provincial and federal governments, we can build thousands more homes and reshape the housing landscape for a more inclusive and affordable Toronto for everyone.”
The plan is structured in two phases. The first City-led phase involves the immediate release of a call for applications to approve 7,000 new rental homes, comprising 5,600 purpose-built rentals and at least 1,400 affordable units.
The second phase targets 10,400 purpose-built 2,600 affordable homes, hinging on further support from the provincial and federal governments. City staff recommend that Toronto City Council request a $1 billion Build More Homes Rebate from the provincial government, which would cover the value of development charges and provide additional property tax reductions. City staff are also seeking $7.3 billion in low-cost financing from the federal government to support these developments.
In addition, staff have recommended the Canada-Ontario-Toronto Build program to pool resources across all levels of government, targeting funding from provincial and federal governments at $225.3 million each to support at least 2,600 homes.
A new Multi-Residential Property (Municipal Reduction) Tax Subclass is also proposed. Through this measure, the City proposes a 15 percent property tax reduction for all new rental housing developments for 35 years.
The initiative advances the City's HousingTO 2020-2030 Action Plan, which has revised its targets to approve 65,000 rent-controlled homes by 2030. This includes 41,000 affordable rentals, supporting the City's pledge of 285,000 housing starts by 2031.
The staff report will be considered by the Executive Committee on November 5, 2024, with the intention to subsequently be approved by City Council later in the month.
* * *
UrbanToronto has a research service, UrbanToronto Pro, that provides comprehensive data on construction projects in the Greater Toronto Area—from proposal through to completion. We also offer Instant Reports, downloadable snapshots based on location, and a daily subscription newsletter, New Development Insider, that tracks projects from initial application.
