The Ontario government announced it intends to put a pause on inclusionary zoning (IZ) requirements in Toronto, Mississauga, and Kitchener until July 1, 2027. IZ, a planning tool that allows municipalities to mandate affordable units within new residential projects, has long been positioned as one way to support mixed‑income communities. While the tool can function effectively in high‑growth, high‑demand markets, the government says the development landscape is dramatically different now than it was in 2022, with rising interest rates and escalating construction costs impacting project feasibility.

“The residential development market continues to be strained and many municipalities considering IZ are finding that is not viable under present economic conditions,” the government wrote in an update posted January 12.

IZ is currently only in effect in the cities of Toronto, Kitchener, and Mississauga, while several other municipalities have been undertaking initial work to establish the  frameworks. Ontario’s Ministry of Housing said it has heard from stakeholders expressing concerns that implementing IZ at this juncture could have a negative impact on overall housing supply, and could result in the cancellation or pause of new projects.

As such, it is proposing to amend the IZ regulation (O. Reg. 232/18) to pause IZ so that proposed developments with a complete application for a zoning by-law amendment, site plan approval, or a building permit on or before July 1, 2027, would not be subject to IZ by-law requirements in the cities of Kitchener, Mississauga, and Toronto.

The pause would apply to any developments or redevelopments that have not been issued a building permit prior to the IZ exemption in this regulatory amendment being filed.

For more on this proposal, visit: Proposed amendment to Ontario Regulation