Many developers and homebuyers are unaware of the true impact the Green Belt is having on the development and home buying processes in Ontario. The truth is, the act is affecting local supply, demand, pricing, and availability each passing year, and it’s impact is felt by almost everyone. Keep on reading to discover how the act has affected land development in Toronto and it’s surrounding areas.

What is the Green Belt?

The Green Belt is an extension of the Places to Grow Act, which was enforced in Ontario back in 2005. The purpose of the act was to make sure that land development achieves the ideal balance between economy and environment priorities. Put simply, it puts a strategic restriction on where a developer can and cannot build, and what they can build in certain areas.

As a large aspect of the Places to Grow act, the Green Belt acts as an invisible border surrounding selected areas preventing land development, usually for environmental or economical reasons.

Ontario’s Green Belt stretches along areas in Niagara, Barrie, Aurora, Pickering, Ajax, and more. Of the total 7,200km2 in land, much of the Green Belt is located in the GTA, affecting local land developers and home buyers in many ways.

 Scarcity of land

As the GTA continues to develop, land becomes increasingly scarce. Naturally, this causes supply to shift to the left, increasing demand for properties of all kinds in the area. Unfortunately, the Green Belt enforcement limits the amount of land that developers can use to balance out any existing or future supply and demand inequities. In a booming location like the GTA, demand is likely continue to increase, as supply slowly dwindles. This forces land developers to change their approaches, as we will discuss further below.

Intensification of density & the need to build up

We all know that downtown Toronto is dense. Very dense. With high-rise buildings popping up left and right, the population per square Kilometre in Toronto reached 4,000 in 2013. The reality is that there is a high demand for very little land, forcing developers to build up instead of out. This leads to an intensification of density, which has it’s pros and cons. Unfortunately, there’s potential for problems like limited employment, high congestion, and a lack of housing options.

Increasing prices for developers and homebuyers

The prices of housing in the GTA is growing astronomically every year, increasing by over 16% from years 2015-2016. What many people don’t know is that a large part of this rapid increase has to do with the annually increasing Development Charges, brought forth by the Development Charges Act.

This act, overhauled in 1977, has started a long upwards trend in housing prices, due to it’s impact on increasing the costs of building a house. An 18-24 month lag between regulatory change and real impact on purchaser price expectations. The Development Charges work similarly to a bylaw, as they’re imposed by local and regional municipalities, and contain different rules and restrictions based on the location. Unfortunately for developers, it’s their responsibility to front the cost.

This means that at such a high investment price, the builders are willing to produce less. In order to produce the desired quantity of houses, selling prices must increase. Development Charges increase every year, providing an impetus for prices to increase each year for homebuyers as well.

Time is money

 A site plan approval back in 2007 might have needed comments from 5 or so departments. However, due to the added steps required of the Green Belt and Places to Grow Acts, now most communities need comments from over 25 departments. The challenge here is that detailed background studies including hydrological, or a traffic study, have become standard requirements for every project, even small scale subdivisions. This means lots of added time – and more time makes for more money coming out of a developer’s pocket.

As you can see, the Green Belt act has made a serious impact on land development taking place in the GTA. In order to make the best decisions, and remain informed on the requirements of the Green Belt, you’ll want an experienced team on your side. Contact Marshall Zehr today to get the support your development project needs.