Affordable Housing in Ontario

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Updated June 28, 2022

Housing is a basic need, a necessity, a human right, a social determinant of health. It is, of course, also necessary for survival.

No matter how you put it, adequate, clean and safe shelter is necessary for family stability and security. When people have the housing they need, they have better health, education and employment outcomes and helps ensure a reasonable quality of life.

The following is a comprehensive overview of what affordable housing means, how housing is funded in Ontario and what levels of government are responsible as well as what funding programs are currently available at each level of government.

What is affordable housing?

Income-based definition

In Canada, affordable housing is defined as shelter that costs less than 30% of gross (before-tax) household income for low-to-moderate income households.

Capping the cost of shelter at 30% of gross income ensures that the household has enough money left over for other necessary costs of living such as food and transportation and others. This way, housing expenses fit into a person’s budget regardless of what level of income they have and it takes up a similar percentage of their gross income compared to the average Canadian – ie. putting the affordable into ‘Affordable Housing’.

In practice, ‘shelter’ typically refers to the cost of the rent or mortgage payments and property taxes, but some definitions also include electricity, fuel, water and other municipal services.

For example, Statistics Canada’s “shelter cost to income ratio” metric is determined by dividing the average monthly shelter cost (includes condo fees, electricity, heat, water and other municipal services on top of rent/mortgage) by the average monthly total household income.

Affordable housing is an umbrella term that includes most government-subsidized rent-geared-to-income (RGI) community housing units where, but it also can be provided by the private and non-profit sectors – or partnerships between them – in the form of rental, ownership or cooperative ownership.

Market cost-based definition

An alternative definition of “affordable housing” is housing units where the rent is at or below the Average Market Rent (AMR) in the local area as determined by Canada Mortgage and Housing Corporation’s Rental Market Survey. Affordable housing programs typically require rent to be somewhere between 80% to 100% of the AMR in order to meet their definition of affordable.

While this certainly is cheaper/discounted housing, the average price is determined by increasing rental market prices rather than income and therefore does not necessarily make the rent affordable for all households – particularly those with the lowest incomes. This definition targets those who have just fallen out of the ability to afford market rental and homeownership rather than those looking to move on from social housing.

Provincial Policy Statement definition

In Ontario’s 2020 Provincial Policy Statement, affordable is defined as the least expensive of the income-based definition and a market cost-based definition:

  1. housing for which annual accommodation costs or rent does not exceed 30 percent of gross annual household income for low and moderate income households, or
  2. housing for which the purchase price is at least 10 percent below the average in the regional market area (ownership); housing for which the rent is at or below the average in the regional market area (renting).

Affordable housing is one component of a healthy housing stock

Affordable housing (rental and ownership) is one of the components that make up a healthy housing stock along with emergency shelters, transitional housing, social housing and market housing. It is for those who aren’t earning enough to afford market housing, but too much to be eligible for government assistance and the social housing waitlist.

Credit: CMHC

However, homeownership is not the ultimate goal for everyone as some households choose to rent due to their planned length of stay in an area, proximity to work, changes in household composition and other reasons. Communities need to include a broad range of housing options, forms and tenures, in order to meet residents’ diverse and changing socio-economic status at each stage of their lives.

Definitions in use

Federal programs

Affordable Housing Innovation Fund – uses the municipality’s criteria where the project is located. If no criteria exist, the provincial criteria is used. If no criteria exist, affordability is based on the Median Market Rent (MMR).

Rental Construction Financing Initiative (RCFI) – provides low-cost loans for construction of sustainable rental apartment projects, must have rents below 30% of the median total income of all families for the area for at least 20% of its units, and the total rental income from the project must be at least 10% below its gross achievable residential income.

National Housing Co-Investment Fund – provides low-cost repayable/forgivable loans to build new affordable and community housing, must have less than 80% of the Median Market Rent (MMR) for at least 20% of its units for a minimum of 20 years.

Municipality incentive programs

A number of municipalities have implemented programs to incentivize the development of affordable units. To be considered ‘affordable’ for the purpose of these programs, a unit’s rent in:

The City of Toronto must meet the income-based definition OR the market cost-based definition:

  1. 30% of the before-tax monthly income of renter households, or
  2. total monthly shelter cost (gross monthly rent, inclusive of utilities for heat, hydro, hot water and water) is at or below the lesser of one times the average City of Toronto rent, by dwelling unit type, as reported annually by the Canada Mortgage and Housing Corporation (CMHC)
Kitchener80% of AMR
GuelphGrants of up to $70,000 per unit (20 years)
Region of Peel135% of MMR
Region of Waterloo30% of income
Orillia80% of AMR (rental), 30% of income (ownership)

Barrie and Guelph use the Provincial Policy Statement’s definition.

Affordable housing need statistics

  • 1 in 10 Ontarians live in poverty. (2021 census data to be released in September 2022)
  • In 2018, 13.9% of households and 26% of renter households in Ontario were in core housing need according to the Canadian Household Survey.
  • 867,660 or 6.1% of Ontarians receive social assistance
    • 2.5% receive OW (up to $733 month)
    • 3.5% receive ODSP (up to $1169 a month)
  • 767,300 workers (9.5% of the workforce) earn at or below the proposed general minimum wage of $15 ($2250 per month for full time, 37.5 hours per week)
  • As of November 2021, 467,600 people (5.8%) were unemployed

Housing people is cheaper than the alternative

The cost of homelessness was examined in a 2014 national study conducted by the Mental Health Commission of Canada across five Canadian cities (Vancouver, Winnipeg, Toronto, Montreal and Moncton). 

The study found, for the highest needs people, providing housing and required support services to people who are homeless cost on average $19,600 per person, per year. 

However, this cost was offset by an average reduction of $42,500 in other services not utilized, including psychiatric hospital stays, emergency room visits and general hospital stays, visits to community-based health providers, incarceration and police contact. 

Similarly, a cost analysis by the City of Toronto using pre-COVID-19 shelter costs, estimated that it could save $60 million per year by providing permanent housing (supportive housing units and affordable rental units) to 3,000 individuals using emergency shelters.

And yet, finding affordable housing can be especially challenging for those who are working at minimum wage jobs, trying to find employment or on social assistance. It’s not a small number of people, either:

Housing recognized as a human right

The right to housing was recognized in the 1948 Universal Declaration of Human Rights. Canada formally agreed to comply with the right to housing under international human rights law in 1976 when it ratified the International Covenant on Economic, Social and Cultural Rights.

Canada legally committed to the right to housing in its 2017 National Housing Strategy Act, recognizing that:

the right to adequate housing is a fundamental human right affirmed in international law (recognizing that all people have the “right to live somewhere in security, peace and dignity,” according to the United Nations.)

This requires the right to housing to be ensured not only through policies and programs but also through independent monitoring and access to hearings and effective remedies.

Who is responsible for affordable housing in Ontario?

According to Ontario’s Provincial Policy Statement, 2020 under the Planning Act:

1.4.3 Planning authorities shall provide for an appropriate range and mix of housing options and densities to meet projected market based and affordable housing needs of current and future residents of the regional market area by establishing and implementing minimum targets for the provision of housing which is affordable to low and moderate income households and which aligns with applicable housing and homelessness plans

Municipalities implement the PPS through their official plans, zoning by-laws and decisions on planning applications.

Who is responsible for social housing in Ontario?

Municipalities are primarily responsible for social housing in Ontario.

The units were developed through federal or provincial government programs from the 1950s through 1995.

In 1999, the Canada-Ontario Social Housing Agreement (SHA) signed by the Canada Mortgage and Housing Corporation (CMHC) and Ontario transferred responsibility for social housing from the federal government to the province, with the exception of federal housing co-operatives.

The federal government provides funding through the SHA, with funding declining each year as original program arrangements come to an end. The Agreement provided the province with the flexibility to devolve (download) administration of the programs to municipalities.

In 2000, the Ontario government in turn transferred ownership, administration and operation responsibility of most projects to municipalities and counties: Consolidated Municipal Service Managers (CMSMs) and District Social Services Administration Boards (DSSABs) through the Social Housing Reform Act.

In 2011, the Housing Services Act made service managers responsible for administering and funding social housing and maintaining service level standards. Interestingly, Ontario seems to be the only province to have passed on the responsibility for funding and administering the programs to municipalities.

Federal Government’s role

The federal government provides funding through a legacy Social Housing Agreement, with funding declining each year as original program arrangements come to an end.

Since 2017, the federal and provincial governments have partnered in a series of federal-provincial cost-sharing agreements as part of the National Housing Strategy (NHS).

In April 2018, Ontario and the federal government signed a bilateral agreement, agreeing on how the two levels of government will work together – and with municipal governments – deliver federal investments in Ontario.

Canada’s National Housing Strategy funding programs

In 2017, the federal government released the National Housing Strategy through the Act (progress reports here) which committed to funding $72+ billion in grants, funds and loans over 10 years until 2027 to repair and create affordable and community housing units with the goals of stabilizing the system, reducing homelessness and advancing the right to housing.

Affordable Housing Innovation Fund

  • September 30, 2016 to 2021 – $208.3 million – create up to 4,000 new affordable units
  • 2021-22 to 2028-29 – $600 million (Budget 2021) – support the creation of up to 12,700 more units

National Housing Co-Investment Fund

Long term, low-interest, and forgivable loans for the construction of 60,000 new housing units and the repair or renewal of 240,000 housing units.

Rapid Housing Initiative (RHI)

Support the creation of new permanent affordable housing units. Cover the construction of new rental housing units, as well as the acquisition of land, and the conversion/rehabilitation of existing buildings to affordable housing.

  • October 27, 2020 to March 31, 2021 – $1 billion
  • June 30, 2021 – March 31, 2022 – $1.5 billion

Federal Lands Initiative

Transfer surplus federal property to eligible proponents at discounted to no cost to be developed or renovated for use as affordable housing.

  • $200 million

Rental Construction Financing Initiative

Funding to eligible borrowers during rental apartment development to create 71,000 new rental housing units across Canada

  • April 20, 2017 to April 2028 – $25.75 billion

Government of Ontario’s role

The province sets the policy direction for housing and homelessness in Ontario and provides the legislative authority for community housing. They are the primary funder of supportive housing and homelessness services.

Community housing

Also also known as social housing, community housing is owned and operated by non-profit housing corporations, housing co-operatives and municipal governments or district social services administration boards. These providers offer subsidized or low-end-of market rents.

Over 250,000 households live in community housing in Ontario. About 185,000 (74%) pay rent-geared-to-income (RGI), where the occupant pays 30% of their gross monthly income on rent and the rest is paid for (“topped up”) by the government in the form of a subsidy and the rest pay a moderate market rent.


Ontario’s Ministry of Municipal Affairs and Housing provides funding to 47 local service managers across the province to deliver housing and homelessness services. Some service managers use this funding to assist clients experiencing or at-risk of homelessness with obtaining supportive housing.

Supportive housing

Programs that combine subsidized housing and support services such as counselling, life skills training, activities of daily living to enable people to live as independently as possible in the community. These include long-term care homes, retirement homes and home and community care. 

These programs are funded by the Government of Ontario through the Ministry of Health, Ministry of Children, Community, and Social Services, and the Ministry of Municipal Affairs and Housing.

Ontario’s approach to affordable housing

Community Housing Renewal Strategy

Announced in spring 2019, it reaffirms the National Housing Strategy and sets out how Ontario will work in partnership to stabilize and grow the community housing sector for low-income households:

  • repairing and increasing the supply and mix of well-maintained housing that meets people’s needs
  • providing opportunity for people to live in housing that meets their needs and supporting them to participate in the economy and their community
  • increasing efficiency in the system by removing red-tape, improving coordination and helping providers offer sustainable housing

Additional proposals:

  • Give community housing providers the authority to refuse to re-house a tenant based on a previous eviction for a serious criminal offence.
  • Requiring individuals on the list to prioritize their choice and accept the first unit they are offered, while allowing Service Managers flexibility to make exceptions in extenuating circumstances. 
  • Require Service Managers to set an appropriate local asset limit for people to be eligible for rent-geared-to-income assistance.

Housing Supply Action Plan

A result of an online consultation to gather ideas on creating more affordable and good‐quality places to live. Over 85% of the more than 2,000 submissions received through the consultation came from the general public. More than half said their top criteria when looking for a home were affordability, followed by transit, schools and services located nearby.

Changes include:

  • Selling unused government-owned properties
  • Exempting new rental units from rent control
  • Removing the requirement that all new homes include the infrastructure for an electric vehicle charging station
  • Allowing only modest increases in education development charges to help make housing more affordable
  • Reducing employers’ training costs and unnecessary paperwork

Funding through the CMHC-Ontario Bilateral Agreement

Under the CMHC-Ontario Bilateral Agreement (April 1, 2018 to March 31, 2028) and the Canada-Ontario Housing Benefit (COHB) (April 1, 2020 to March 31, 2029), federal funds for the NHS will be cost-matched and delivered by Ontario through 3 initiatives:

Ontario Priorities Housing Initiative (OPHI)

Allows Service Managers and the two Indigenous Program Administrators to determine which program components they participate in based on local needs and priorities of housing supply and affordability, including:

  • capital for new affordable rental construction
  • community housing repair
  • rent supplements
  • homeownership assistance

Replaces the Investment in Affordable Housing (IAH) program that ended in 2019-20 and includes $378 million of federal spending that must be matched by $378 million of provincial spending for a total of $756 million of combined funding.

Canada-Ontario Community Housing Initiative (COCHI)

Provides funding to Service Managers to:

  • maintain community housing
  • protect affordability support for tenants
  • ensure no net loss of the community housing stock
  • help community housing providers become more sustainable

Replaces the scheduled expiration of funding from the federal government under the SHA.


Source:  FAO analysis of information provided by MMAH
  • $38 million between April 1, 2018 and March 31, 2020 for operating agreements that had ended between April 1, 2016 and February 28, 2020
  • $462 million between September 1, 2020 to March 31, 2028 for operating agreements that had ended between April 1, 2016 and March 31, 2027
  • $118.2 million between 2021 and 2028 for operating agreements expiring prior to April 1, 2016 

Municipalities’ role

Municipalities are the primary funders of the cost of community (social) housing in Ontario, with support from the federal government (under the SHA) and the province:

Cost-sharing is prevalent for these services, and therefore lines of accountability are most opaque and questions about local input and autonomy most pronounced.

In 2018, municipalities funded 77% of social housing services, while provincial funds contributed 14% and federal 9%:

There are 47 municipal Service Managers (municipalities and district social services administration boards) in Ontario that fund and administer this housing.

For example, Hastings Local Housing Corporation (HLHC) oversees the administration and provision of housing services for the City of Belleville, Quinte West (Trenton and Frankford Wards), Marmora, Tweed, Bancroft, Deseronto, Madoc, Stirling, Coe Hill, Tyendinaga and other neighbouring areas.

Municipalities across the province pay for different shares of social housing costs, without any direct tie to social or financial need, and with important impacts on some municipalities’ fiscal situation.

The City of Toronto spends $933 million, or $315 per person, on social housing. Of this total, the provincial government contributes just $333,250, or $0.11 per person – a share of just 0.04%.

Compare this to municipalities in the rest of the province, which together spend $1.9 billion on social housing, an average of $182 per person. In these municipalities, the Province contributes a total $405 million, or an average of $38 per person – a 21% share of all operating and capital costs.

There is certainly a discussion to be had about whether or not passing this responsibility on to municipalities was reasonable of the province and to what extent the province should be contributing to the funding and operation of the programs.

Municipalities’ primary source of funding is property tax, which is not as progressive as income tax and thus not as effective at funding redistributive services such as social housing, because it is less directly linked to the incomes of those being taxed (ie. a high-income person may live in a modest house that does not reflect their wealth).

However, as it stands, municipalities are the lead partner in the planning, coordination and delivery of housing and homelessness services.

Municipalities’ approaches to increasing affordable housing

The following are examples of incentive programs offered by select municipalities and regions, including how many years the unit must be kept affordable (ie. how long the incentive lasts), and the minimum requirement (maximum rent) to still be considered affordable and therefore eligible. Most municipalities give preference to projects that provide lower affordability thresholds (eg. 80% of AMR instead of AMR).

BarrieResidential unit incentive ($20,000 per unit or $10 per sqft)
Grants for:
-Application and development charges
-Building permit fees
-Tax increment based funding (5 years)
Provincial Policy
BellevilleDevelopment charge rebate
Building permit fee rebate
Tax increment equivalent rebate (10 years)
Second units (new $2,500, existing $500-$2500)
CambridgePlanning application and building permit fee exemption
Development charge deferral (20 years)
Tax increment grant (20 years)
GuelphGrants of up to $70,000 per unit (20 years)Provincial Policy
KitchenerFor non-profit corporations:
Development application fee exemption
Building permit fee exemption
Development charge deferral
80% of AMR
OrilliaGrants (20 years) for:
-Development charges
-Purchase price of land
-Planning application, building permit and review fees (up to $25,000)
80% of AMR (rental), 30% of income (ownership)
PeterboroughTax increment grant (10 years)
Exemption for:
-Development charges (20 years)
-Planning fees (20 years)
-Property tax (10 years) (90% of AMR)
Region of WaterlooCapital grants (25 years)
Development charge grant
Lower multi-residential property tax
rent + utilities < AMR
SudburyResidential unit incentive ($20,000 per unit or $10 per sqft)
Development charge reduction/exemption
Building permit fee rebate (up to $5,000)
Tax increment equivalent grant (5 years)
Second unit incentive (50% up to $50,000)

York Region allocated 6% of their 2021 capital budget to support their housing corporation’s strategic plan. 74% of that portion will go towards constructing 500 new affordable housing units by 2025 with funding from senior levels of government, Regional reserves, debt that is repaid from Housing York Inc. revenues (mainly rent), and development charges.

Improving the development approvals process

While these programs are part of the solution, it is important to ensure that their requirements do not slow down an already slow development approval system that has complex and outdated zoning bylaws, restrictive land-use requirements and under-resourced municipal departments.

These delays add extra costs to the home development process – over $100,000 in some Ontario municipalities – and addressing them is the focus of the federal government’s $4 billion Housing Accelerator Fund and Ontario’s More Homes for Everyone Act, which would provide funding for, incentivize and and reward municipalities who build more homes, faster.


Over to you

What is your municipality or local housing doing to address housing affordability? Have they seen results? Let us know by leaving a comment below!

About the author

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Alex Wideman
Alex Wideman is a consumer rights advocate, serial entrepreneur and the editor-in-chief of Cansumer. He has a bachelor's degree in electrical engineering from Queen's University. He is passionate about helping others save time and money and has been creating consumer-focused online resources for over 10 years. More about Cansumer Read more

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