Why don’t we zone for rental apartments?

Posted on January 8, 2023 in Debates

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TheStar.com – Opinion/Contributors
Jan. 7, 2023.   By John Lorinc, Contributor

There’s no law of nature preventing provincial and municipal policymakers from establishing a land use designation for purpose-built rental housing.

Amidst the breathless rhetoric about the need for more housing, there’s a weird anachronism in Ontario’s planning laws that almost guarantees what will get built in the coming years is not what’s required most urgently.

Yes, Toronto has a housing shortage. But what the residents of this over-priced region need in particular is more purpose-built rental housing, i.e., apartment buildings with a single landlord, as opposed to condos filled with absentee investors renting out their units. In fact, the Ontario government’s More Houses Built Faster Act perversely encourages the demolition of older rental apartment buildings.

Every policymaker who hasn’t been asleep in recent years understands the math: individuals and families with average incomes simply cannot afford to buy a condo or a house. It takes years just to put together the down-payment, and bank stress tests, coupled with high interest rates, have put ownership permanently out of reach for most people.

Yet municipalities are not allowed, under current planning law, to zone land specifically for purpose-built rental buildings. They can only establish land use policies that govern physical features, like height, density, setbacks and so on. But regulating tenure is a no-no.

Here’s the wrinkle: in the City of Toronto’s voluminous comprehensive zoning bylaw, which runs to over 1,200 pages, there are regulations dictating the zoning for literally hundreds of land uses, from service stations to churches to massage parlours to triplexes.

The bylaw has provisions governing cabarets, market gardens and crematoria, some of which are exquisitely complex. There are lots of regulations about short-term rentals, a relatively new addition. But besides rules geared at affordable housing complexes, there’s virtually nothing about purpose-built rental, and definitely no provision — either in the city’s official plan or the province’s planning legislation — which enables municipal councils to formally designate certain areas as exclusively for conventional apartment buildings.

Why not?

Canadian planning law has traditionally avoided zoning geared at certain groups (e.g., tenants or families) — a practice that enabled racist land use policies in many U.S. cities.

Nonetheless, we came up with workarounds, e.g., zoning exclusively for detached residential, which is effectively zoning for single families.

There’s no law of nature preventing provincial and municipal policymakers from establishing a land use designation for purpose-built rental housing. The decision to not take, or even explore, this step is nothing but a policy choice, and a bad one at that.

The result, however, is that while council, at the direction of Queen’s Park, will up-zone many parts of the city, especially around transit stations, the lion’s share of those new buildings will be condos sitting atop retail outlets. Many of the individual units will, in turn, be bought by investors, who will rent them out for whatever the market bears … until they decide to sell.

What’s more, condo developers will almost always beat out the handful of firms that still specialize in rental housing. The reason? The speculation-driven condo business model encourages high prices for land, a dynamic that favours firms that want to get in and out quickly instead of operating a rental building for decades.

It’s worth saying that hundreds of thousands of Torontonians make their homes in about 1,100 private, purpose-built highrise apartments, most constructed in the 1960s and 1970s thanks to an obscure federal tax credit that made such projects attractive to investors.

That loophole, however, is long gone and the condo laws enacted in the 1970s and 1980s shifted vast sums of investment capital away from large property management firms and into the coffers to condo developers — a dynamic encouraged by the strange fact that apartment buildings are taxed higher than condos. Today, we build almost nothing but condos.

City officials pretend these units provide a supply of new rental apartments — except they don’t. Condo developers are very good at marketing tiny units that were never designed to be lived in for long periods of time. What’s more, many of these buildings suffer from severe structural, financial and governance defects, while the tenants of those investor-owned units are basically at the mercy of whomever owns them.

Suffice it to say, this approach is not a housing policy designed to address today’s crisis. Simply building more condos won’t alleviate the large and growing demand for decent private rental apartments. Policymakers are deluding themselves if they think this is the right path.

As the Star and other media outlets have reported, an ever-growing cohort of younger and middle-income Torontonians are voting with their feet, abandoning a city that refuses to provide suitable housing for people permanently priced out of the ownership market.

Zoning tailored to encourage rental apartments won’t end the housing crisis, but it will definitely get us a good deal closer to a solution than what currently passes for housing policy.

Toronto journalist John Lorinc is a senior editor for Spacing Magazine.


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