Overview
Recent policy directions of the Government of Ontario will further undermine efforts to build more affordable housing in Mimico and Toronto more broadly. The combination of its 2025 decision to limit the percentage of new housing that is affordable to 5% and this week’s doubling down by blocking efforts at inclusionary zoning until at least July 2027 demonstrates that it is tone-deaf on the need for bold and imaginative leadership to tackle the housing affordability crisis.
We recommend that the Government of Ontario withdraw its plan to delay and erode efforts at inclusionary zoning and instead reinstate the ability of municipalities to work with local residents and developers in creating solutions that ensure that market housing better reflects the housing needs of its residents.
Introduction
In 2025 and early 2026, the Ontario government enacted significant changes to housing policy, primarily through O. Reg. 54/25 and the Fighting Delays, Building Faster Act, 2025 (Bill 60). These actions have effectively overridden municipal mandates and will delay the implementation of Inclusionary Zoning (IZ) in cities across Ontario, including Toronto.
Coupled with the tendency of the Ontario Land Tribunal (OLT) to support development applications that are well beyond the scope of the cities’ approved balanced growth and housing intensification plans, these measures give a clear signal that any housing project should be approved, and we’ll just punt the problems down the road. Sound planning has been replaced by chaos.
This approach has led to the mess we face today, where thousands of small units, primarily designed for investors, now sit empty or unsold because they do not meet the needs of residents and are no longer financially viable for a shrinking pool of investors. The “missing” parts of the government’s analysis involve the long-term opportunity costs and the structural gap between market housing and community needs.
The idea that if that’s what gets built, people will just have to adapt to “the changing reality” isn’t working. Instead, we need to look at the mix of housing that families and households in Toronto need and find ways to make that happen. Simply increasing the supply of housing, without any real consideration of its affordability or the mix of housing types, is a recipe for disaster. We need to look at both opportunity costs and the growing affordability gap.
The Opportunity Cost of Land and Real Estate
Building “unaffordable” housing does more than just miss the target; it consumes finite resources that cannot easily be recovered:
- Irreplaceable Land: Prime transit-oriented real estate is often occupied by high-density “luxury” or investor-targeted towers. Once built, these sites are locked in for 50–100 years, preventing that land from being used for truly affordable or family-sized social housing.
- Wasted Construction Capacity: The province faces a “construction cliff” where labour and materials are increasingly scarce. Directing these resources toward unneeded investor units reduces the capacity available to build purpose-built rental or non-market housing
The government’s strategy relies on the discredited notion of the “trickle down” theory (in this case, the idea that new expensive homes make older ones cheaper).
This analysis fails both the sniff test and a deeper dive into market dynamics for several reasons:
- Risk and Reward Mismatch: Public policy by governments creates massive value through housing intensification plans, yet governments fail to secure any of the benefits in the form of land trusts as part of this process to fund non-market housing and infrastructure.
- Income-Rent Gap: Research shows filtering only reduces prices by a few percentage points, which does not close the massive structural gap between stagnant incomes and skyrocketing housing costs.
- Product Type Mismatch: The current oversupply is concentrated in “micro-condos,” while the actual demand is for family-sized units (3+ bedrooms) and deeply affordable rentals.
- Financialization: Because the private sector requires 15–20% profit margins and high market rents to secure bank loans, it physically cannot build housing that the bottom 50% of earners can afford without deep public subsidies.
Economic Benefits of Social Housing Overlooked
The provincial government’s analysis often misses the broader economic return on non-market housing:
- GDP Boost: Studies from 2024–2026 suggest that increasing community housing to just 7% of total stock could boost Canada’s GDP by up to $179 billion by 2030 by improving labour mobility and productivity.
- Stacked Savings: Non-profit models can be 20% to 25% cheaper to build simply by removing private profit margins and another 15% to 30% cheaper if built on public land.
By limiting affordable requirements to 5% and blocking inclusionary zoning until 2027, the province is effectively doubling down on a private-market-only model that current 2026 data shows is struggling to deliver housing that people want and can actually afford to live in.
It’s time for a reset: One focused on creating the affordable housing people want and need
The disconnect between intensification plans and land acquisition to create land trusts highlights a core structural failure in current Ontario housing policy. By announcing massive intensification (such as around major transit stations) before securing land, the government carelessly triggers land value capture for private owners rather than the public and the broader community.
The policy implications of this failure are significant:
1. Fuelling Speculation Over Sustaining Community Value
- Announcement Effect: When the province or a municipality designates a “Major Transit Station Area” for high-density growth, the land value instantly spikes based on future development potential.
- The Cost of Inaction: Because governments typically wait to negotiate affordable housing until the development application stage, they must pay “market rates” that have already been inflated by their
own policy announcements. This makes land acquisition for Community Land Trusts (CLTs) or social housing prohibitively expensive.
2. The “Private Land Holdings” vs. Public Land Trusts
- Hoarding Land: Experts have noted that many major intensification sites are currently “banked” by private developers or speculators who wait for the most profitable market conditions to build.
- Lack of Public Leverage: Without a parallel stream of public land acquisition (land banking), the public loses its primary lever for long-term affordability. Once land is in private hands, the government is restricted to “incentives” or small mandates (like the 5% cap) rather than being able to mandate 100%affordable units on public land.
3. Alternative 2026 Models: Public Land Banks and Community Land Trusts
While the Ontario government has largely focused on market-led supply, other levels of government are moving toward the “land-first” model described above:
- Federal Public Land Bank: In 2024 and 2025, the federal government launched a Public Lands for Homes Plan, which identifies surplus federal property for long-term leasing rather than selling.
- Rise of Community Land Trusts (CLTs): As of early 2026, approximately 45 Community Land Trusts exist across Canada, with more emerging as a direct response to the failure of traditional housing models to address land speculation. CLTs remove land from the speculative market permanently, ensuring that the benefits of public infrastructure investments stay with the community.
4. Fiscal Impacts on Municipalities
- Infrastructure Gaps: Municipalities like Toronto have warned that provincial legislation (such as Bill 23 and Bill 60) has stripped their ability to collect the development charges needed for the very infrastructure that supports major intensification efforts.
- Compounding Debt: If cities must build the infrastructure to support private intensification without having secured the land for accompanying social services (parks, schools, affordable housing), they are forced to buy back that land later at speculative prices, further straining municipal budgets. This is a “lose-lose” scenario that is both nonsensical and unsustainable.
In summary, by separating intensification planning from clear land acquisition plans, current policy ensures that the “massive uplift” in land value created by public investment (like new subways) and rezoning is almost solely captured as private profit, leaving affordable housing as an expensive and often unattainable afterthought.
We can and must do better.
First, we recommend that the Government of Ontario withdraw its plan to delay and erode efforts at inclusionary zoning.
Second, that it reinstate the ability of municipalities to work with local residents and developers in creating solutions that ensure that market housing better reflects the housing needs of its residents.
Third, that the Government of Ontario work closely with both federal and local governments to promote land acquisition planning in advance of intensification planning, and that it work toward ensuring that cities and local communities can create public land banks and CLTs to strengthen their ability to build and maintain an adequate stock of affordable housing units.
Comment Submitted to the Ontario Regulatory Registry of the Ontario Government
By the Mimico Residents Association
January 19, 2026