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Provincial Policy Statement, 2005 

photo of affordable housing complex

The new Provincial Policy Statement (PPS) provides policy direction on matters relating to land use planning that are of provincial interest. It is issued under the authority of Section 3 of the Planning Act and applies to all applications, matters or proceedings commenced on or after March 1, 2005.

Housing represents an important part of the government’s commitment to build strong, healthy and sustainable communities. The government is committed to ensuring that the housing needs of all Ontarians are met.

Section 1.4 of the PPS, 2005 requires planning authorities to provide for an appropriate range of housing types and densities to meet projected requirements of current and future residents. These policies require the establishment of affordable housing targets and development standards that minimize the cost of housing and facilitate compact form, while maintaining appropriate levels of public health and safety.

What is Affordable Housing

The Government of Ontario recognizes the need for more affordable housing in our communities. Our changing demographic requires corresponding shifts in how we meet the demand for more affordable housing as well as for housing that is accessible and barrier-free to people with special needs.

The PPS, 2005 defines “affordable” as it relates to housing in Ontario.

Affordable means:

a) in the case of ownership housing, the least expensive of:

  1. housing for which the purchase price results in annual accommodation costs which do 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 purchase price of a resale unit in the regional market area;

b) in the case of rental housing, the least expensive of:

  1.  a unit for which the rent does not exceed 30 percent of gross annual household income for low and moderate income households; or
  2.  a unit for which the rent is at or below the average market rent of a unit in the regional market area.

Ontario is home to 4.21 million households

  • 1.35 million rental households
  • 2.86 million ownership households

Nearly 600,000 households have trouble accessing affordable, suitable and adequate housing.

Nearly 125,000 households cannot afford their own homes and are on active waiting lists for social housing.

Benefits of Affordable Housing

Affordable housing is one of the major factors in creating attractive, livable and competitive communities. Among other things, the availability of affordable housing makes it easier to attract and retain people to a community. For many communities, the need for affordable housing is a priority issue. Planning authorities are routinely challenged to find solutions for housing needs, especially as the population increases and ages, and as household size decreases.

Picture of cream coloured homes

A lack of affordable housing effectively limits economic growth and can lead to inferior housing or homelessness. This can place tremendous pressure on individuals and families, and on health and social services. Moreover, affordable housing and support services for those in need helps create stable living conditions, increased self-esteem and better financial stability. Affordable housing also costs less than accommodation in group homes and other institutions for homeless people, who are often in poor health.

Having a place to call home provides an important base and anchor in our lives. A home nurtures and supports individuals and families as they go about their daily lives, allowing them to contribute positively to the economy and society.

Affordable Housing Policies in the PPS, 2005

The government recognizes that communities across Ontario are diverse and unique.

The PPS, 2005 promotes the integrity of planning by requiring planning authorities to identify affordable housing needs for low and moderate income households within their communities. Ensuring an adequate supply and distribution of affordable housing represents an opportunity for communities to achieve more sustainable growth and improve living conditions. There are several policies in the PPS, 2005 that are directly and indirectly related to the provision of affordable housing.

Affordable Housing Targets red apartment building with balconies

The PPS, 2005 requires planning authorities to establish and implement minimum targets, based on local needs, for the provision of housing that is affordable to low and moderate income households. Affordable housing, which includes both ownership and rental housing, promotes development opportunities in built-up areas and supports densities for the efficient use of land and resources. In achieving affordable housing targets, planning authorities should consider not only the need for new housing, but also ways in which the existing stock might be better utilized to meet the needs of the community.

In situations where planning is conducted by an upper-tier municipality, the upper-tier municipality, in consultation with the lower-tier municipalities, may identify a higher target(s) than the lower-tier municipalities. Upper-tier municipalities are uniquely positioned to address broad, regionally-based issues and will continue to work with lower-tier municipalities to best address these issues.

Establishing targets helps provide a basis for planning authorities to develop performance measures and to evaluate the production of affordable housing. Building permits for affordable housing can be compared with targets to help determine whether objectives are being met. Results can then be taken into account in the review of site-specific development applications and comprehensive reviews.

10 and 3-Year Land / Unit Supply

Sustainable and efficient patterns of development help minimize the cost of development by using existing services and infrastructure.

The PPS, 2005 requires planning authorities to maintain the ability to accommodate residential growth for a minimum of 10 years. This shall be done through residential intensification and redevelopment and, where necessary, through the use of lands which are designated and available for residential development. Planning authorities are also required to maintain at all times, where new development is to occur, land with servicing capacity sufficient for at least a 3-year supply of residential units. This shall be available through lands suitably zoned to facilitate residential intensification and redevelopment, and land in draft approved and registered plans. This helps to avoid situations where there are insufficient opportunities to address housing needs. The policies manage growth by directing new housing development to areas with appropriate levels of infrastructure and public service facilities, and promote densities that support the use of alternative transportation modes and public transit.

Special Needs Housing

The PPS, 2005 requires planning authorities to permit and facilitate all forms of housing to meet the social, health and well-being requirements of current and future residents, including those with special needs. Based on local circumstances, planning authorities must determine the range of needs and establish policies to address them, including affordability. Ensuring adequate distribution and supply of affordable housing helps provide options for special needs housing that reflect local circumstances.

Special needs housing includes dedicated facilities, in whole or in part, required for daily living by people who have specific needs, such as mobility or support functions. Examples of special needs housing include housing for persons with disabilities such as physical, sensory or mental health disabilities, and the elderly.

Strong, safe and healthy communities make it easier for people to live, work and make use of services. By offering an appropriate mix of housing types – both built form (i.e., stacked townhouses, low-rise multi-unit building, high-rise multi-unit building) and tenure (ownership, rental) - they are inclusive of all persons and income levels. Such communities meet the housing needs of all residents, including the need for affordable housing and those with special needs.

Sample 2005 Affordable House Prices and Rents

Ownership Housing

The lesser of:

1. Housing costs do not exceed 30% of gross annual household income for low and moderate income households

Affordable House Prices at 50th Income Percentile
   District of Thunder Bay City of Ottawa  Regional Municipality of Waterloo 
 Total Household Income  






 Affordable House Price  







or 2. Purchase price which is at least 10 percent below average resale price in the regional market area

Average Resale Prices


District of Thunder Bay

City of Ottawa

Regional Municipality of Waterloo

Average Resale Price




10% Below




Rental Housing

The lesser of:

1. Unit rents do not exceed 30% of gross annual household income for low and moderate income households

Affordable Rents at 50th Income Percentile


District of Thunder Bay

City of Ottawa

Regional Municipality of Waterloo

Renter Household Income




Affordable Rent





or 2. Unit rents which are at or below the average market rent in the regional market area

Average Rents for a Two Bedroom Unit


District of Thunder Bay

City of Ottawa

Regional Municipality of Waterloo

Average Rent  (2-bedroom unit)





2004 data

How Communities can Facilitate Affordable Housing

Planning authorities are responsible for implementing the policies of the PPS, 2005 including policies related to affordable housing, through their decisions and official plans. Under the Planning Act, all decisions affecting land use planning matters “shall be consistent with” the PPS, 2005. While the PPS, 2005 provides minimum standards for decision-making, it also recognizes matters of regional and local significance. Planning authorities may build upon the policies in the PPS, 2005 to incorporate local issues in their planning documents and decisions, as long as these documents or decisions do not conflict with any provincial policies.

Currently, the government is building stronger communities by creating more affordable housing through a comprehensive Affordable Housing Strategy. Ontario’s strategy is based on a commitment to work with municipalities and the federal government to increase the supply of affordable housing through the Affordable Housing Program, with a focus on the working poor, persons with mental illness and victims of domestic violence.

Companion Tools to Help Implement Affordable Housing

There are a number of tools that may be used by municipalities and groups interested in building affordable housing:

  • The Affordable Housing Program is a federal-provincial cost-shared initiative, which will commit funds for affordable housing until March 31, 2009. The program has three components:
    • Community Rental – funding to reduce the capital costs for newly constructed, or acquired and rehabilitated rental buildings, making it economically feasible for landlords to charge affordable rents
    • Homeownership – funding to ease the demand for rental housing by assisting rental households to purchase affordable homes
    • Remote Program – funding to create, acquire or rehabilitate, through renovation, affordable rental or ownership housing in remote areas (Northern Ontario).
  • The Housing Allowance Program is a five (5) year program that will provide immediate relief for   up to 5,000 low-income households across the province. Funding commitments must be made on or before March 31, 2008.
  • Municipalities may be able to provide property tax exemptions and other incentives such as loans, grants and development charge waivers to encourage affordable housing construction (under the Municipal Act, 2001 regulation (O. Reg. 46/94 as amended by O. Reg. 189/01)).
  • Municipalities can reduce the property tax rate on multi-residential rental housing (apartments) to near or equal to the tax rate for owner-occupied condominiums or single-family homes, making it more economical to develop affordable housing (under the Fair Municipal Finance Act, 1997).
  • Changes to the Ontario Building Code encourage new, single-room occupancy rental units. Additional changes, effective July 1, 2005, encourage the use of more innovative or cost-effective building design and materials.

This InfoSheet was developed to assist participants in the land use planning process to understand the PPS, 2005. The information in the InfoSheet should not be relied upon as a substitute for specialized legal or professional advice in connection with any particular matter. It is recommended that independent legal or professional advice be obtained when determining the effect of the PPS, 2005.

For more information contact:

  • Ministry of Municipal Affairs and Housing
    Provincial Planning Policy Branch
    (416) 585-6014
  • Ministry of Municipal Affairs and Housing
    Housing Policy Branch
    (416) 585-7544
  • Ministry Regional Offices

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