Ontario is proposing to temporarily suspend rules that allow cities to require affordable housing units in new developments near major transit stations, arguing the policy is no longer workable in a weakened housing market.
The proposed pause would apply to Toronto, Mississauga and Kitchener—the only municipalities currently using inclusionary zoning—and would last until July 1, 2027. The province says rising interest rates, higher construction costs and slowing housing starts have made such requirements financially unviable for many projects.
Critics, including Toronto Mayor Olivia Chow, argue the move undermines efforts to address the housing affordability crisis, particularly near transit corridors. Chow said existing rules—capped at five per cent affordable units—are already insufficient, and she has been pushing for higher targets.
Mississauga Mayor Carolyn Parrish said the city is “deeply concerned,” noting municipalities cannot afford to subsidize affordable units on their own.
Builders and industry groups support the pause, saying inclusionary zoning discourages development and delays projects. Richard Lyall of the Residential Construction Council of Ontario said the policy shifts costs onto other buyers without increasing overall supply.
Opposition parties criticized the proposal as short-sighted. Liberal housing critic Adil Shamji warned Ontario is missing a rare opportunity to build affordable homes near new transit lines, while NDP housing critic Jessica Bell said the change could block thousands of affordable units annually. Green Party Leader Mike Schreiner linked the proposal to rising homelessness across the province.
The government maintains the pause is temporary and necessary to keep projects viable during current market conditions. Public consultations on the proposal are open until Monday.