In November of 2021, Toronto City Council voted to pass an inclusionary zoning (IZ) bylaw. IZ is a tool for the creation of affordable housing: new residential developments that meet specific criteria are required to include a portion of affordable ownership or rental housing as part of the development. These affordable housing requirements were set to take effect on September 18, 2022, pending provincial approval.
Yet the Ontario Ministry of Municipal Affairs and Housing only approved geographic areas where IZ will be permitted in the City of Toronto on August 15, 2025, leaving the policy inactive for nearly three years without a single unit of affordable housing built under IZ.
How Will Inclusionary Zoning Be Applied In Toronto?
Areas subject to IZ are located near major transit stations, including Subway, LRT, and GO Train stations. At present, the Minister of Municipal Affairs and Housing has provided approvals for 89 transit station areas subject to IZ. However, the Minister withheld approvals on some areas where the City plans to implement IZ, remarking that these are “areas where the province is actively working to deliver Transit-Oriented Community (TOC) projects” or areas with “land use compatibility issues” that need to be resolved.
In addition, residential developments in Little Jamaica, located along Eglinton Avenue West between Marlee Avenue and Keele Street, continue to be excluded from IZ. Little Jamaica was excluded in the IZ bylaw passed by City Council in 2021, despite strong community calls for its inclusion. Significant residential development was expected as a result of the opening of four Eglinton Crosstown LRT stations in the neighbourhood. Residents concerned with the gentrifying impact of the LRT wanted to ensure that new housing developments would be required to include affordable housing. At present, condo developments in the area are not subject to IZ.
How Did The Province Respond to Toronto’s IZ Requirements?
With these important exceptions, IZ is finally in effect in Toronto. However, recent changes imposed by the Province have significantly eroded the affordable housing requirements endorsed by Toronto City Council. Failing to recognize the significant and long-term need for affordable housing, the provincial government capped affordable housing requirements at 5% of total units or total residential gross floor area and reduced affordability requirements to just 25 years.
In comparison, Toronto City Council’s IZ bylaw, passed in 2021, set initial affordable housing requirements at 5-7% of gross floor area for affordable rental housing and 7-10% for affordable ownership housing for condo developments subject to IZ. Rates varied according to three IZ market areas, with the highest affordable housing requirements in downtown Toronto. The City’s bylaw also included a plan to gradually increase rates between 2022 and 2030, to a high of 8-16% for affordable rental housing and 11-22% for affordable ownership housing on applicable developments. Toronto’s IZ bylaw required units to be maintained as affordable for 99 years. The Province’s 5% cap and reduction in affordability period to 25 years overrides these decisions of Toronto City Council.
The City’s IZ bylaw also planned for modest affordable housing requirements of 3% and 5% of gross floor area in applicable purpose-built rental housing developments in designated areas (Inclusionary Zoning Market Areas 1 and 2, per the map) , beginning in 2026. At present, the City of Toronto has exempted purpose-built rental housing developments from affordable housing requirements.
Especially relevant to tenants, the provincial changes may undermine the creation of affordable rental housing. Under the Planning Act, developers can choose whether to build affordable rental or ownership housing to meet affordability requirements. It is assumed that most will opt for affordable ownership rather than rental housing. The City’s IZ bylaw was structured to produce a mix of affordable rental and ownership housing by setting lower requirements for affordable rental than affordable ownership housing. The Province’s 5% cap applies to both types of affordable housing, removing the incentive to build affordable rental housing.
What’s Next for Inclusionary Zoning in Toronto?
For many years, housing activists, community groups, and tenants have advocated for a strong IZ bylaw for Toronto. In 2021, community organizations including the Parkdale People’s Economy, Acorn Toronto, and Progress Toronto (in partnership with SPT) called for 20% and 30% affordable housing requirements—consistent with the City’s IZ feasibility studies. Toronto City Council adopted a more modest plan with gradual increases to affordable housing requirements scheduled over time. Provincial changes weakened the bylaw further.
Despite its weakened state, the long-awaited implementation of IZ is a victory for communities that pushed hard for this essential tool for the creation of affordable housing. However, there is more work ahead.
At present, the City’s IZ bylaw may not produce much affordable housing as a result of the provincial cap combined with the significant slowdown in the construction of new condo projects. Market conditions fluctuate and will improve at some point. A strong IZ policy needs to be in place to maximize the creation of permanent, affordable housing as conditions improve. The policy should also be expanded to include Little Jamaica, following community calls from those justifiably concerned about displacement brought on by redevelopment surrounding the Eglinton Crosstown LRT. Further, the City of Toronto—Canada’s 6th largest government—should be empowered to make its own decisions, informed by meaningful community engagement, regarding local policies. Respect for local democracy and a strong IZ policy are both long overdue.
Read our report Opportunity Knocks: Toronto City Council's Chance to Create Tens of Thousands of Affordable Homes, published in 2021 in collaboration with The Change Lab and the Affordable Housing Challenge Project.