Toronto city council has approved a plan to incentivize the construction of 20,000 multi-family rental-housing units.

Councillors passed the plan with a vote of 23 to 1. It offers financial incentives to private developers, including deferral of development charges, property tax reductions, and forgone taxes and fees for affordable rental units.

“We need to build more rental homes now,” Mayor Olivia Chow told reporters. “We can’t afford to have the housing pipeline dry up because of the difficult market conditions. We need to see these rental homes built, and we will work with the industry to make it happen.”

The plan is structured in two phases. The first will see the city fund the construction of 7,000 rental homes through its own resources. The suites will include 5,600 purpose-built rental units and 1,400 affordable rental units.

For this phase, the city will immediately call for applications from developers.

The second phase will rely on funding from the provincial and federal governments to support the construction of an additional 13,000 rental homes.

In a news release, the city outlined the financial incentives available to developers:

• Development charge deferrals: Estimated at $37,636 per unit for purpose-built rental housing, with no time limit as long as the units remain rentals.
• Property tax reductions: A 15 per cent reduction for 35 years, amounting to $20,396 per unit.
• Full financial incentives for affordable rental units: Covering foregone taxes and fees, estimated at $97,264 per unit.

To qualify, projects must designate at least 20% of units as affordable rentals, adhering to the city’s income-based definition of affordability for at least 40 years and up to 99 years. Construction must also begin by the end of 2026.

Staff will report back to council in December with a list of projects approved for funding.