Corinne McCabe , Broker

Ontario to hike fines and penalties for ‘unethical’ condo development practices.

The Ontario government announced plans this week to increase penalties on real estate developers who behave in an unethical way, particularly as it concerns pricing on new condominium developments.

The change comes after widely publicized stories of buyers being asked to pay more than they expected for new condo developments after entering into preconstruction agreements with developers. These price hikes caught buyers by surprise and put them in a challenging position. Those who are unable or unwilling to pay the increases have their purchase cancelled and are abruptly forced back onto the market. Though they will get their money back, those who bought in years ago will now find their money doesn’t go as far in the current market.

Government and Consumer Services Minister Ross Romano said that the proposed new regulations will come into effect in 30 days and be retroactive to the date of Thursday’s announcement. The proposed changes would double penalties for developers found to be acting against the provinces Home Construction Regulatory Authority’s Code of Ethics for builders. Those found in violation could face fines up to $50,000 for individuals or $100,000 for corporations on a first offence. Repeat offenders could face even higher fines or have their operating licenses revoked.

You could also frame the price increases as price gouging on the part of the developer. In a market with such low supply, many have called for increased developments as a necessary need to help cool things off. If developers are allowed to freely increase prices on a whim, affordability remains incredibly hard to achieve and consumers bear the burden of corporate greed.

Whether or not a price increase is, in fact, a necessary result of material costs or an attempt to increase profits will vary from case to case, and in reality, could lie somewhere in the middle. Though measures are set to be put in place next month, the province will still have to undergo lengthy investigations and deliberation on a case-by-case basis to reach a clear decision on whether to impose penalties.

“We’ve given notice. Developers need to take notice that we are not going to accept this behaviour,” said Minister Romano. “These are all tools that we are giving our regulatory authority to ensure that we are protecting the little guy.” A consultation process is underway for the proposed rules. Overall, consumer protections are a benefit to buyers. However, the actual impacts of such regulations rely on a proactive and diligent regulatory body, and some have concerns on how stringently these new regulations will be enforced.

Almost A Quarter of Canadians Now Permanently Work from Home, Up Over 300%

As public health restrictions linger, more companies realize they don’t need office space. Statistics Canada data shows new public health restrictions had more people work from home in January. Nearly a quarter of labor now permanently works from home, with that share rising sharply in big cities. This shift can change cities from places for work, to places that compete for quality of life.

Canada’s national statistics agency has found cities adopting the trend much faster. Urban areas have seen 25.6% of the labor force adopt a permanent work from home arrangement in January. In rural regions, the share working from home is 17.2%, much lower than in the cities. More workplaces realize they don’t need an office as they’re forced to work remotely longer. Stat Can notes the 2016 Census revealed only 7.5% of workers did so at the time. The pandemic has accelerated this trend by years. In just 5 years, the share of the population working from home is over 300% higher.

Two very expensive housing markets now lead for those who permanently work from home. The share of labor working from home is highest in Ottawa (40%), with Toronto (34.7%) not far behind. Both cities have seen housing soar in price, partially due to the proximity to work. Having such a large share of highly mobile labor should be a concern for policymakers. They’re now located in the city for quality of life, not because they have to be.

Testing the waters? A significant share of workplaces has now adopted “hybrid” arrangements. Another 1 in 20 workers in the Labour Force Survey said they go into work some days and work from home the remainder. Some of the world’s largest companies have been using this to test the waters for a more decentralized office. This allows them to tap a much larger talent pool while testing if the situation is still manageable.

A highly mobile workforce can also lead to deflationary pressures in expensive markets. Top talent from all over the country is now competing, much of it in more affordable regions. This can eliminate the pressure of housing on higher wages for expensive regions. At the same time, it can be a boost for wages in more affordable regions that have less competition. Once again, this won’t be clear until the new “normal” is revealed.

Doug Ford dropped rent control on new units in 2018. Since then, thousands have come online and tenants facing double-digit increases ask: was it worth it?

In 2018, the Ontario government introduced legislation that scrapped rent control on new builds. So, if you move into an apartment, a condo unit, or a basement unit that was first occupied as a residential space after November 15, 2018, there will be no legal limit set on how much your landlord will be able to raise your rent. In other words, the rent for the brand-new basement apartment unit that you’ll be moving into next month (the one you chose to rent because it is more affordable than apartments or condos) could become unaffordable for you in a year if your landlord wishes to raise your rent to make more profit. People in Toronto and other unaffordable cities in Ontario will once again face economic eviction in an unregulated rental market.

The government said it was meant to encourage more builds and increase the housing supply. The provincial government, backed by some academics and industry players, says the rent control exemption is a way to incentivize the development of much-needed rental supply with hopes of pushing rents down. But other academics and advocates argue the trade-off for tenants facing a lack of stability is too steep, and that the number of units actually built since the policy came into force hasn’t been enough to address demand.

This rental control was paused during the pandemic, but tenants in new builds will soon face a return to unrestricted rent hikes as the freeze came to an end at the end of 2021. Apartments that do fall under rent control have to follow Ontario’s rent increase guideline, which is capped at 1.2 per cent for 2022.

More than 7,500 purpose-built rental units have been built in Toronto alone since the policy was enacted, says market research firm Urbanation, plus an untold number of condos and other homes rented out by investors. And as the years go on, more and more tenants are finding themselves in units without rent control and facing the prospect of large rent spikes.

And with a pandemic-era rent freeze ending last month, Urbanation president Shaun Hildebrand expects some tenants who signed leases mid-COVID-19 — when some landlords offered lower rents or incentives amid lower demand — may see higher-than-expected jumps. “I think some tenants are going to face a bit of a shock,” he said. He thinks more renters ought to be aware of the rules and whether their unit qualifies before signing a lease.

The NDP is trying to pass a bill – The Rent Stabilization Act - that would ensure that when you move into a new apartment you pay the same rent as the previous tenant did. The bill is to stabilize rents and crack down on renovictions.

A wave of change is sweeping through the profession of city planning. A staff report going before council’s Planning and Housing Committee signals real changes coming to the city’s house-centric neighbourhoods. The report is the boldest and most progressive planning policy to emerge from city hall since the amalgamation of Toronto in 1998, where zoning rules expressly forbids anything except detached homes. The plan suggests “multiplexes” – buildings with two, three, four or more apartments to be allowed on the leafy streets where they are currently forbidden.

What kind of city do we want? How can we make room for housing to create the kind of city that works? Planning has been obsessed with protecting neighbourhood character. Toronto’s Neighbourhoods are reserved mostly for houses. This is known as “exclusionary zoning,” and in 2021 it locks down much of the city for multimillionaires. For years low rise residential areas In Toronto were basically off-limits to any kind of redevelopment except teardowns. Even more modest ventures, such as replacing a single-family home with a triplex, could face hurdles.

Toronto is considering reform through a planning effort called “Expanding Housing Options in Neighbourhoods.” Such neighbourhoods cover half of Toronto’s buildable land. It notes that increasing the population of these areas supports public transit, reduces carbon emissions by letting people walk or cycle, and uses existing infrastructure such as parks and schools more efficiently.

The reality is that even progressive city councillors who throw around terms like affordable housing fear the wrath of the NIMBY: “Not In My Back Yard”– highly organized residents’ associations that oppose development at every turn especially where they live.

Yet the city’s planning policies such as the principle of protecting stable neighbourhoods, are evolving bit by bit. Last year, council adopted a report which cautiously puts forward the notion of permitting missing-middle-type projects, such as garden suites, to go up in low-rise residential areas. And look at Toronto’s new laneway-housing future. The city’s architects provided proof of the concept for laneway housing back in the late ’80s. City Hall held back the future’s arrival with red tape, as it does, for about 30 years. In 2018, it finally passed a bylaw permitting the construction of laneway housing. Laneway housing provides new rental housing opportunities within established neighbourhoods, contributing to a wider range of housing options. 

Let’s be a modern voice of reason as opposed to homeowners who fear change, and city councillors who fear homeowners. Let’s take a risk.

Bosley Real Estate Ltd. is a full-service boutique brokerage operating in Toronto, Muskoka, Niagara-on-the-Lake, Port Hope, Cambridge, and Thornbury Ontario since 1928. We have three centrally located offices in Toronto and over 250 sales representatives selling and leasing homes and condominiums in all the vibrant communities we work in. Our brand is well recognized internationally thanks to our unique affiliation with Leading Real Estate Companies of the World. Our sales teams meet weekly to discuss market conditions, trending topics, and anecdotes that more accurately reflect the true temperature of the real estate market.