GTA building delays create an expensive ripple

The residential construction industry was granted essential workplace status under Ontario’s emergency orders during the COVID-19 pandemic.

The industry was able to finish homes that were near completion and work on important infrastructure projects — such as hospitals.

Nevertheless, overall development and building projects across the GTA were delayed. These delays will have far-reaching impacts on housing supply in an already tight market and will have negative financial impacts on government coffers.

You might be thinking: If the industry was permitted to work, why are there delays? The response is a bit complicated. Some municipalities had to adjust to working remotely, which slowed or stopped processing of planning and building applications that stalled developments and construction projects. Work sites had to adjust to COVID-19 protocols as social distancing rules negatively affected productivity.

To get a better understanding of the pandemic’s impact on the building industry, BILD surveyed is members.

The survey found that there were 498 active projects in the GTA, representing 156,000 units at various stages of the development process. In Toronto alone, 276 projects were affected.

The survey also found that 65 per cent of active pre-construction projects reported delays of three to six months and 32 per cent were delayed greater than six months. Eighty-three per cent of not-yet above-grade projects reported delays of three to six months and 11 per cent reported delays of greater than six months. Eighty-five per cent of projects under construction permitted for above-grade reported a delay of three to six months and five per cent are greater than six months.

The Altus group examined this survey data and concluded that these delays will result in the loss of about 9,000 housing starts over the course of the next 18 months. This will delay occupancy of over 8,000 units by the end of 2021, potentially exacerbating an already existing shortage of housing in the City of Toronto, reduce construction activity and see the loss of 10,000 jobs per year.

Federal, provincial and municipal government revenues will be detrimentally affected by the loss of housing starts throughout 2020 and 2021. Lost revenues include $340 million in lost development charges, $13.5 million in lost education development charges (TCDSB), $26 million in property taxes, $364 million HST, $53.8 million in provincial land transfer tax and $52.5 million in lost municipal land transfer tax.

Now more than ever, all levels of government must work together to make sure that proper measures are in place to remove barriers to unlock consumer and industry construction investments that will help kick-start the economy.