Ottawa bets $2.7 billion on 18 stalled Toronto housing projects to ease the city's rental crisis
Prime Minister Mark Carney on Wednesday pledged $2.7 billion over three years to build more than 5,600 rental homes across Toronto, targeting 18 projects that had been approved but remained idle for lack of financing.
The August 5 announcement, made jointly with Toronto Mayor Olivia Chow and Minister of Housing and Infrastructure Gregor Robertson, marks one of the largest single-city housing commitments in Canadian history, with roughly 4,500 units, or 80% of the total, expected to break ground before year's end.
"All of these projects had been approved in the past … all of them were stalled for want of financing, until today," Carney said.
The investment adds to a federal policy stack that already includes expanded HST relief on new homes and, most recently, Toronto's decision to cut development charges by up to 60% under a $1.5-billion city deal.
Alex McFadyen of Flow Mortgage Co. says easing stress test rules and reintroducing targeted downpayment assistance could help more Canadians overcome today's biggest homeownership barriers.https://t.co/SJmENdNsDT
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 4, 2026
A rental market still strained despite cooling
The federal commitment arrives against a rental market that has softened on the surface but remains deeply unaffordable in practice. The national average asking rent in May fell 4.7% year-over-year to $2,029, marking the 20th consecutive month of annual decline, according to a joint analysis from Rentals.ca and Urbanation.
Yet the same data tells a more complex story: around 70% of renters identified high rent prices as their single biggest obstacle in their housing search. Nationally, purpose-built apartments averaged $2,034 in June, while condominium apartments dropped to $2,058 — the lowest June figures in four years, according to Rentals.ca and Urbanation.
Moreover, Building Industry and Land Development Association (BILD) revealed that 273 condominium apartment units changed hands in June. While that represents a modest gain from June 2025's historic low, condo sales remain 85% below the 10-year average of approximately 1,792 units for the month.
Meanwhile, Canada's national apartment vacancy rate fell 40 basis points to 4.7% in Q2 2026, ending nine consecutive quarters of increases, according to the Yardi Canadian National Multifamily Report for Q3 2026, which tracked more than 533,000 private rental units.
"Too many Torontonians have been struggling to afford their rent," Carney said. "Today's announcement is part of changing that."
Two channels, two markets
The funding flows through two distinct streams. The first is non-market, non-profit housing delivered through Build Canada Homes (BCH), a federal agency created to finance and catalyse affordable supply.
The agency's mandate spans non-market housing, prefabricated construction, and public-land development. Under this channel, more than $310 million will advance nine projects on city-owned land, producing approximately 1,900 homes, over 700 of which will be affordable, defined as rent not exceeding 30% of household income.
The second channel covers market-rate housing backed by low-cost federal financing. More than $1.8 billion, drawn from the Canada Mortgage and Housing Corporation's (CMHC) Apartment Construction Loan Program (ACLP), will support nine private-sector projects producing 3,700 homes, with more than 1,000 designated as affordable.
Of the 5,600 rental homes in total, 1,800 will be deeply affordable, supportive, or rent-controlled. The City of Toronto is contributing $530 million, including 99-year exemptions from municipal and school property taxes.
Dave Wilkes, president and chief executive officer of the Building Industry and Land Development Association (BILD), welcomed the package. "We really do believe this is a way to get the market working again," he said.
Advocates cautious on rent control
Not all observers are satisfied. Nichola Taylor, a national board member with tenant advocacy group ACORN, called the funding "a reasonably good start" but said the inclusion of units not subject to rent control was "concerning."
Under Ontario law, new rental units first occupied after November 2018 are rent-control-exempt and portions of this portfolio fall into that category.
"Trying to find a home that they can afford is getting increasingly more difficult," Taylor said.
Conservative MP Scott Aitchison, the party's housing critic, was pointed, dismissing the announcement as "just another repackaging of projects already announced or already under construction, and will do nothing to build the millions of homes needed to restore the promise of homeownership for future generations."
Standout projects include an Indigenous-led 100-unit development at 15 Denison Avenue, a low-carbon building at 1113–1125 Dundas Street W. using timber and geothermal energy, and the redevelopment of the former Greyhound bus terminal in downtown Toronto.
Carney said all construction will use Canadian steel and lumber.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
