October 5, 2017

A novel approach to affordable housing in Canada

Inclusionary housing practices seek to encourage private developers to provide affordable housing in their otherwise market housing developments. “Inclusionary zoning” (IZ) is a type of inclusionary housing policy widely used in the U.S. that differs from practices used in Canada.

This year, CMHC published a report that examines IZ and other inclusionary housing practices in the U.S., England, Australia and Canada. Among other things, the report:

  • highlights the main similarities and differences of the emerging practices in each country
  • summarizes some of the key lessons for Canada
  • discusses the potential of IZ in Canada as a way to increase access to affordable housing

How is inclusionary zoning different from inclusionary housing practices in Canada?

As mentioned before, inclusionary zoning, or IZ, refers to uniquely American policies used widely across the U.S. These policies adhere to a common set of rules and procedures that are distinctly different from inclusionary practices in Canada. Two notable differences are listed below:

  • IZ requires virtually all developments — not just those selectively getting a rezoning — to provide affordable housing. This is the most fundamental difference between inclusionary practices in Canada and IZ in the US.
  • In the US, IZ (typically mandatory) is especially notable for integrating affordable housing into market housing.

With respect to the first point, Canadian municipalities have used a variety of inclusionary housing practices. However, they all rely on rezonings — and, particularly, density increases granted under these rezonings — to secure the voluntary contribution of affordable housing from developers.

Regarding the second point, Canadian municipalities have generally lacked the authority to oblige, rather than encourage, private developers to include affordable housing in their market housing developments.

Implications for the Canadian housing sector

Three Canadian provinces recently changed their planning acts to authorize inclusionary zoning (IZ). This move could mark a big change for inclusionary housing practices in Canada. Experience from the U.S. shows that mandatory approaches, like those used in IZ, have created hundreds of thousands of affordable housing units. As housing becomes increasingly expensive in Canadian urban centers, IZ could prove an important tool for increasing housing choices and social inclusion.

Read more about inclusionary zoning (PDF)

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