North America is grappling with an escalating affordable housing crisis driven in large part by persistent supply shortages. While macroeconomic forces like inflation and population growth contribute to this shortage, local regulatory barriers are often a more immediate and fixable obstacle to housing development—particularly for purpose-built rental apartments. Civic governments play a crucial role in land use, zoning, permitting, and taxation policies, and their decisions directly affect whether and how new rental housing gets built.
To address these issues meaningfully, municipalities across the continent can focus on eliminating disincentives to rental housing development. This includes loosening zoning restrictions, waiving or deferring development charges for affordable and purpose-built rentals, aligning property tax rates across housing types, and modernizing permitting and planning systems. Each of these strategies, if applied thoughtfully, can help stimulate the construction of new rental stock and contribute to a more stable, affordable housing market.
Development charges (DCs) are fees municipalities levy on new construction projects to help fund infrastructure and public services like roads, parks, and transit. While these fees are important, they can also significantly increase the cost of development—often pushing rental apartment projects into unfeasibility, especially when compared to more lucrative condo projects.
Municipal strategies to mitigate this issue include:
These financial adjustments make rental projects more competitive with for-sale developments, which tend to generate quicker returns and are therefore more attractive under the current system.
Zoning regulations determine where and what type of housing can be built. Across North America, restrictive zoning policies—especially those that prioritize single-family housing—have made it difficult to build diverse, higher-density rental housing. In many jurisdictions, apartment buildings are only permitted in small, narrowly defined zones, effectively preventing the market from responding to growing demand.
Reforms municipal governments can implement include:
By creating zoning environments that enable more types of housing and streamline approvals, cities can remove one of the most significant barriers to rental housing development.
Another major disincentive facing rental apartment development is the disparity in property tax rates. In many jurisdictions, purpose-built rental buildings are taxed at higher rates than condominiums or low-rise homes, despite often housing lower-income tenants and providing longer-term rental stability.
This discrepancy creates a structural imbalance that discourages rental construction, especially for mid- and high-rise apartments. Addressing this inequality is key to supporting the financial sustainability of rental housing.
Potential reforms include:
Aligning tax policy with housing goals ensures that rental housing is not disproportionately burdened and that investors are not deterred from building or maintaining rental stock.
In addition to zoning and taxation reforms, municipalities can make significant strides by upgrading the systems they use to manage development applications. Lengthy and opaque permitting processes are among the most common complaints from developers, particularly for complex rental projects that require multiple layers of review.
Adopting better permitting and planning software can lead to several key improvements:
By leveraging modern technology, municipalities can reduce the administrative friction that currently slows or deters housing development. Digital permitting systems can also help ensure consistency in approvals, reduce opportunities for political interference, and support faster delivery of housing.
Addressing the affordable housing crisis in North America requires more than just acknowledging the problem—it demands decisive action by municipal governments to remove systemic barriers and create an environment conducive to rental housing development. From rezoning and financial incentives to streamlined permitting systems and tax fairness, local governments have the tools needed to turn policy into progress.
However, these measures must be implemented holistically. Waiving development charges alone will not solve the crisis if zoning remains restrictive or permitting takes years. Similarly, zoning reform is necessary but insufficient if developers face punitive tax rates or unpredictable approval processes. What’s needed is a coordinated effort that tackles the problem on all fronts, with municipalities leading the charge through smart governance, innovative tools, and a commitment to equitable growth.
By reducing disincentives and creating an ecosystem that supports the construction of purpose-built rental housing, civic governments can not only expand the supply of affordable homes but also ensure that their communities remain inclusive, economically vibrant, and resilient in the face of growing housing demand.
