Bill 23: How Ontario's Housing Legislation Affects Pre-Construction

Bill 23: Ontario's Bold Move to Boost Housing Supply

If you've been following Ontario's real estate news, you've likely heard about Bill 23, also known as the More Homes Built Faster Act. Introduced in late 2022, this sweeping Ontario housing legislation aims to tackle the province's housing crisis by cutting red tape, reducing fees, and encouraging more home construction. For anyone interested in pre-construction homes in the GTA, understanding Bill 23 is essential—it could shape the market for years to come.

In this post, we'll break down what Bill 23 actually does, how it affects pre-construction buyers, and what you should keep in mind if you're considering a new build in Toronto, Mississauga, Vaughan, or anywhere else in the Greater Toronto Area. We'll also share practical tips and point you to tools like our mortgage calculator and land transfer tax calculator to help you plan.

Always consult a licensed real estate lawyer or financial advisor for advice specific to your situation. This article is for informational purposes only and is not legal or financial advice.

What Is Bill 23 and Why Was It Introduced?

Bill 23, the More Homes Built Faster Act, was introduced by the Ontario government in October 2022 and received Royal Assent in November 2022. It's part of a broader plan to build 1.5 million homes over 10 years. The province argued that outdated regulations, lengthy approval processes, and high fees were stifling construction and driving up costs.

The act makes significant changes to several pieces of legislation, including the Planning Act, the Development Charges Act, the Ontario Heritage Act, and the Conservation Authorities Act. The goal? Speed up approvals, reduce costs for builders, and ultimately increase housing supply—including pre-construction condos and homes.

But Bill 23 has also been controversial. Municipalities worried about lost revenue, environmentalists raised concerns about weakened protections, and some housing advocates questioned whether it would truly deliver affordable homes. As a buyer, it's important to understand both the intended benefits and the potential pitfalls.

Key Changes Introduced by Bill 23

1. Reduced Development Charges

Development charges (DCs) are fees municipalities levy on new construction to pay for infrastructure like roads, water, and transit. Bill 23 phases in reductions and exemptions for certain types of housing:

• Purpose-built rentals: DCs for rental units are reduced by up to 25%.
• Affordable and non-profit housing: Exempt from DCs.
• Inclusionary zoning units: Exempt from DCs.

For pre-construction buyers, lower DCs could mean developers save money—though whether those savings are passed on to buyers is not guaranteed. In some cases, it might make certain projects financially viable that otherwise wouldn't be.

2. Inclusionary Zoning Changes

Inclusionary zoning requires developers to include a percentage of affordable units in new projects. Bill 23 altered how inclusionary zoning can be applied, including capping the percentage and limiting how long affordability must be maintained. This could affect the mix of units in new pre-construction buildings, potentially reducing the number of affordable units.

3. Site Plan and Heritage Approvals Streamlined

The act removes site plan control for certain projects (like some residential buildings under 10 units) and limits the ability of municipalities to designate heritage properties. This could speed up approvals for pre-construction projects, but may also reduce local input on design and heritage preservation.

4. Conservation Authority Powers Curtailed

Bill 23 limits the role of conservation authorities in reviewing development applications, particularly regarding wetlands and floodplains. While intended to reduce delays, critics worry about environmental impacts. For buyers, this could mean faster approvals in some areas, but also potential risks if proper environmental assessments are skipped.

5. Changes to the Ontario Land Tribunal

The Ontario Land Tribunal (OLT) handles appeals on planning decisions. Bill 23 introduced changes to streamline appeals and reduce delays. This could mean faster resolution for developers, potentially bringing projects to market sooner.

How Bill 23 Affects Pre-Construction Buyers

So, what does all this mean if you're in the market for a pre-construction condo in Toronto or a new home in Mississauga? Here are the key takeaways:

Potential for More Supply

By reducing fees and speeding up approvals, Bill 23 aims to increase the number of housing units built. More supply could eventually lead to more choice and more competitive pricing. However, the impact won't be immediate—it takes time for projects to move from approval to construction to occupancy.

Possible Cost Savings—But Not Guaranteed

Lower development charges reduce costs for builders. In a competitive market, some of those savings might be passed on to buyers. But in high-demand areas like Toronto, where land and construction costs are already high, the savings may be absorbed by other cost pressures. It's also worth noting that DC reductions are phased in, so the full effect may take years.

Changes to Deposit Structures and Closing Costs

Bill 23 doesn't directly regulate deposit structures or closing costs, but it could influence them indirectly. For example, if developers save on DCs, they might offer more flexible deposit schedules or incentives. However, always read your purchase agreement carefully and consult a lawyer. Typical pre-construction deposits in the GTA range from 5% to 20% of the purchase price, paid in installments. Closing costs include land transfer tax, legal fees, and adjustments—use our land transfer tax calculator to estimate your obligation.

Impact on Assignment Sales

Assignment sales (selling your pre-construction unit before closing) are governed by your purchase agreement, not Bill 23. However, if Bill 23 leads to more supply, it could affect assignment market conditions. Always check your contract for assignment clauses and any fees. Consult a real estate lawyer before assigning.

Cooling-Off Periods and Buyer Protections

In Ontario, pre-construction condo buyers benefit from a 10-day cooling-off period under the Condominium Act. Bill 23 did not change this. However, the act did introduce changes to the Tarion warranty program? Actually, Bill 23 did not directly alter Tarion, but it's always wise to verify your warranty coverage. Tarion provides protection for new homes, including pre-construction, but coverage details can change—check tarion.com for the latest.

What Bill 23 Means for Different GTA Cities

Bill 23's impact will vary across the GTA. Here's a snapshot:

• Toronto: With its high development charges and complex approvals, Toronto could see more projects move forward, especially rentals. But the city has pushed back on some Bill 23 changes, so outcomes may vary.
• Mississauga: Mississauga is growing rapidly, and Bill 23 could accelerate approvals for new communities. Pre-construction homes in Mississauga may become more available.
• Vaughan: Vaughan has seen a surge in pre-construction condos. Reduced DCs for rentals could spur more purpose-built rental projects.
• Brampton, Markham, Richmond Hill: These suburbs are already hotbeds for pre-construction. Bill 23 could streamline approvals for new subdivisions.
• Oakville, Burlington, Milton: In Halton Region, Bill 23 could affect how quickly new developments are approved, potentially increasing supply.
• Hamilton: As a more affordable alternative, Hamilton could see more pre-construction activity if approvals speed up.

Keep in mind that municipalities are still adapting to Bill 23, and some have challenged aspects of it. The full impact may not be felt for several years.

Criticisms and Controversies Surrounding Bill 23

Bill 23 isn't without its critics. Here are some of the main concerns:

• Municipal Revenue Loss: Municipalities argue that reduced DCs will leave them short of funds for infrastructure, potentially leading to higher property taxes or reduced services.
• Environmental Impact: Conservation authorities and environmental groups worry that weakened oversight could lead to development in flood-prone or ecologically sensitive areas.
• Affordability: Some experts question whether Bill 23 will actually make homes more affordable, as savings may not be passed on to buyers.
• Heritage Loss: The act limits heritage designations, which could lead to the demolition of historic buildings.

As a buyer, it's important to stay informed and consider these factors when evaluating a pre-construction project. For example, if a project is in an area with environmental sensitivities, do your due diligence.

Practical Tips for Pre-Construction Buyers in Light of Bill 23

Whether Bill 23 leads to more supply or not, buying pre-construction requires careful planning. Here are some tips:

1. Work with a licensed realtor: They can help you navigate the market, negotiate, and understand contract terms. Ensure they are registered with RECO.
2. Review the purchase agreement with a lawyer: Pre-construction contracts are complex. A real estate lawyer can explain clauses about deposits, assignment, delays, and closing costs.
3. Understand the deposit structure: Typically, deposits are paid in installments (e.g., $5,000 on signing, then 5% in 30 days, etc.). Make sure you can meet the schedule.
4. Budget for closing costs: Besides land transfer tax, expect legal fees, title insurance, and adjustments. Use our mortgage calculator to estimate monthly payments.
5. Check Tarion warranty coverage: Tarion protects against defects and delays. Understand what's covered and for how long.
6. Consider assignment clauses: If you might need to sell before closing, check if assignment is allowed and what fees apply.
7. Stay informed about Bill 23: Follow news from TRREB, CMHC, and the Ontario government. Rules may change—verify with official sources.

Tip: Use our investment calculator to crunch numbers on potential rental income and appreciation. But remember, past performance doesn't guarantee future results.

Frequently Asked Questions About Bill 23 and Pre-Construction

We've compiled answers to some of the most common questions. Remember, this is general information, not legal or financial advice. Always consult a professional for your specific situation.

1. Does Bill 23 make pre-construction homes cheaper?

Not directly. Bill 23 reduces development charges for certain types of housing, which could lower costs for builders. However, whether those savings are passed on to buyers depends on market conditions. In high-demand areas, prices may remain high. It's best to consult a real estate professional for current pricing trends.

2. Will Bill 23 increase the number of pre-construction projects in the GTA?

It's possible. By streamlining approvals and reducing fees, Bill 23 aims to encourage more construction. However, the impact will vary by municipality and may take time. Some cities have pushed back on certain provisions, so the actual increase in projects is uncertain.

3. How does Bill 23 affect inclusionary zoning in Toronto?

Bill 23 limits how inclusionary zoning can be applied, including capping the percentage of affordable units and reducing the duration of affordability. This could affect the mix of units in new pre-construction buildings in Toronto. For specifics, check the City of Toronto's planning department or consult a lawyer.

4. Are development charges still charged on pre-construction condos?

Yes, but Bill 23 reduces or exempts DCs for certain types of housing, such as purpose-built rentals and affordable units. For market-rate condos, DCs may still apply, though the rates may be lower. Municipalities set their own DC rates, so check with the local city hall.

5. What is the cooling-off period for pre-construction condos in Ontario?

Under the Condominium Act, buyers of pre-construction condos in Ontario have a 10-day cooling-off period to cancel the purchase agreement without penalty. This applies to condos, not freehold homes. Always review the agreement with a lawyer during this period.

6. Can I assign my pre-construction purchase under Bill 23?

Assignment is governed by your purchase agreement, not Bill 23. Some developers allow it with conditions and fees; others prohibit it. Check your contract and consult a real estate lawyer before attempting an assignment.

7. How does Bill 23 affect the mortgage stress test?

Bill 23 does not change the mortgage stress test, which is set by the Office of the Superintendent of Financial Institutions (OSFI). The stress test requires buyers to qualify at a higher interest rate. For current rates, check with your lender or mortgage broker, and verify at bankofcanada.ca.

8. Will Bill 23 lead to more affordable housing in the GTA?

Bill 23 includes measures to encourage affordable housing, such as DC exemptions for affordable units. However, experts debate whether these measures are sufficient. It's too early to tell the full impact. Stay informed through CMHC and provincial updates.

9. What should I look for in a pre-construction contract under Bill 23?

Key items include deposit structure, closing costs, assignment clauses, delay provisions, and Tarion warranty coverage. Bill 23 doesn't change contract requirements, but it may influence market conditions. Always have a lawyer review the contract before signing.

10. Where can I find pre-construction projects in the GTA?

You can browse our listings for pre-construction condos in Toronto, pre-construction homes in Mississauga, and other GTA cities. We also offer VIP access to new projects. Sign up to get early notifications and incentives.

Final Thoughts: Bill 23 and the Future of Pre-Construction

Bill 23 is a complex piece of legislation with far-reaching implications for Ontario's housing market. For pre-construction buyers, it could mean more supply, potentially lower costs, and faster approvals—but also uncertainty and controversy. As the province continues to implement and refine the act, staying informed is key.

Whether you're eyeing a pre-construction condo in Toronto, a new townhome in Vaughan, or a detached home in Milton, do your due diligence. Work with professionals, read the fine print, and use our tools to plan your finances. And remember, rules may change—verify with official sources like the Ontario government, CMHC, and Tarion.

Ready to explore pre-construction opportunities? Browse our projects or sign up for VIP access to get the latest listings and incentives. Your dream home could be just a click away.

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