Pushing for greater density is a central part of the federal government’s strategy to encourage more affordable housing. Economists have found that government overregulation through zoning power is a key factor contributing to the housing shortage. Most zoning regulation happens at the local level, and generally, the more localized the zoning authority, the more restrictive it tends to be.
Local governments often adopt restrictive home-building policies to boost the value of existing homes. While it might be true that homeowners are rent-seeking and trying to influence local policies for their own benefit, a more significant reason for restrictive zoning is that homeowners have a large proportion of their wealth and retirement savings locked up in their homes. They view nearby change of any kind as a potential threat to that value. Restrictive zoning helps mitigate the risk of a decline in property value.
Access to the federal $4 billion Housing Accelerator Fund has been tied to zoning changes that would allow for more mixed and middle housing options to be built. This carrot-and-stick approach assumes municipalities need to be coerced into making changes.
While most municipalities have been willing to accept these changes to secure federal funding, it has sometimes caused tension between citizens and their elected officials. In Calgary, for instance, a proposed blanket zoning change led to significant public pushback and the city’s longest-ever public hearing, which lasted over three weeks. Roughly 70% of speakers opposed the change, citing concerns about its impact on neighbourhood character, infrastructure and property values, as well as the loss of opportunities to submit public feedback. The city received a record 5,500 written submissions from residents.
Faced with a cookie cutter approach to housing policy, homeowners in some jurisdictions are likely to turn to other solutions to limit blanket rezoning. In several communities, restrictive covenants have been developed and registered on property titles. These binding legal agreements limit what property owners can do with their land and may also impose additional obligations on them.
Before municipal governments took on land-use zoning powers, restrictive covenants were a primary tool to organize towns and cities. These covenants could impose restrictions on the building size and appearance, as well as on the types of activities allowed.
In Alberta and BC, these covenants are generally enduring unless they come with a specific expiry date. In Ontario, if no expiry date is stipulated, the covenant expires in 40 years. Courts can discharge covenants on a variety of legal grounds, and the likelihood of a court agreeing to lift a covenant depends on its exact wording and current context.
This issue is not unique to Calgary. In BC, the government has acknowledged that housing legislation permitting additional units on single-family lots does not override old land-title covenants that may restrict multi-unit construction on a property. These covenants were often registered when the properties were sold by the builders, and since many of these builders are no longer operating, removing these covenants has been challenging.
This highlights that CMHC’s housing supply targets are aspirational at best.
Independent Opinion
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