Welcome to another episode of Broker’s Playbook!
Tim Hudak, president of the Ontario Real Estate Association (OREA), will be providing a full and comprehensive explanation of Bill 23. This groundbreaking bill is set to have the single most impact in the housing market in Ontario ever – allowing regular people to convert single-family homes into duplexes, triplexes, or fourplexes. Tune in now for insight that no other real estate professional can offer so you can stay informed and ahead of this monumental change! Welcome, Tim Hudak, and don’t forget to like and subscribe.
Ep 64 – Decoding Bill 23 w/ Tim Hudak | Broker’s Playbook
Simeon Papailias: Good morning once again, coast to coast. This is Simeon and you’re in for a treat today. I am interviewing Tim Hudak, president of the Ontario Real Estate Association, on what is a full and comprehensive explanation of Bill 23. This bill is going to have the single most impact in the housing market in Ontario ever. It is going to allow the regular, everyday person to convert a single-family home in many areas of the province by right to duplex triplex or fourplex. It is single-handedly the most important bill for real estate professionals that has ever passed. Pay attention and stay tuned for another amazing episode of Broker’s Playbook. All right. And good morning and happy Monday to all my brothers and sisters, coast to coast and the real estate and the mortgage and the insurance business. Wherever you find yourself in the spectrum, things and legislation is happening every day. Our industry is changing every single day. And it is both our duty and our professional obligation to stay current. This morning I am honored to once again have someone who is becoming a regular on Broker’s Playbook, a good friend in an industry leader from the Ontario Real Estate Association. I have Mister Tim Hudak. Tim Hudak, welcome back to Brokers Playbook.
Tim Hudak: Hey Simeon, great to see you again. Thanks for the kind words and a pleasure to be back on the Broker’s Playbook.
Simeon Papailias: My man. As I said, I feel personally that we have a responsibility as agents to stay current. I think we have a responsibility to our clients and to our industry at large to make sure that when we walk into people’s living rooms and kitchens and we sit down to give advice, we are in tune with what is happening from both our leaders at the association, you for example, and in all the work that you do because it’s bringing change in the change that we are seeing right now in the last, let’s call it, few months, every single day people are looking at their homes, investors are looking at the market and they’re looking at things differently. And that’s because of this legislation we call Bill 23. The more homes built faster act. Can you please give me the absolute essence of the bill in a way that our brothers and sisters can bring this into people’s home with clarity.
Tim Hudak: Yeah, you bet. Simeon, First, let me say again, I think you’ve been an outstanding leader, a real estate professional, and I really like how you dive down what you said was beautiful, right? People are looking to work with the realtor who’s on top of what’s happening, where issues are going. You’re looking down the road and I think you do a great job in talking about what is happening in the public sphere and government legislation, and importantly, what that means to the realtor and the real estate investor and buyers and sellers on the street. So number one, thank you for that.
Simeon Papailias: Thank you for that. And the whole point is, I see so many of us in this industry sharing a link in a couple of photos of it that’s not covered. When we speak to our clients, it’s no different than doing a guest listed or a just sold. 99.9% of people don’t care or have the time to look at what you just sold. It just looks like you’re busy when you post Bill 23 passed. Well, what does that mean to me, the client, and what does it mean to you, the agent? This is where I want you to touch. So what does it mean for our industry? Because it’s going to create more homes faster. That’s great news. That’s more business for us. But how do we bring this into the living room to explain to the client what is happening out there and why?
Tim Hudak: Yeah, you bet. So two big developments recently for the Broker’s Playbook. Audience The Bill 23 More Homes Built Faster Act. The other one is called the Helping Homebuyers Protecting Tenants Act. So maybe we could talk about both. But off the top, when it comes to Bill 23, Simeon, I would say that this is the most pro-home ownership and pro-rental legislation that we have seen in our lifetimes. Where does it come from? Well, you may remember we talked about this on your show. Premier Ford put a panel of experts out there. I had the honor of sitting on that panel. How many homes do we need to get built and how?
Simeon Papailias: And that was the task force, if I remember it was the housing.
Tim Hudak: Affordability Task force. The goal, how many homes we need to build, how do we build them to make sure that affordability gets closer to hand for average working Canadians? So we put a number of ideas on the table to 1.5 million homes over the next ten years that will help meet, you know, growth from millennials, new Canadians, and also play catch up. The 20 years back here where we didn’t build enough homes. So what does Bill 23 do towards that end? It’s going to intensify in urban areas. It can build higher, particularly along subway and transit lines. That’s a big thing OREA has been asking for. Number two will allow people to have more homes on an individual property. So you picture that sort of rundown wartime bungalow. You could have up to three different residences on that property. Under this bill, it takes on finally some of the NIMBY forces that slow down projects the point that the investor just says, I’m not going to bother and walks away leaving that family that could afford that home stranded and also makes sure that we hold municipalities accountable, setting targets. You know this for running your business. You got to set a target and measure it. The one thing that I think they need to add is rewards, the carrot and the stick approach if municipalities don’t hit those targets.
Simeon Papailias: So. So let me ask you a question. We talked about the NIMBY forces. And by implementing a change that becomes as of. Right. I want to explain that because people need to understand that. So the process before. So let’s talk about Etobicoke, which is Toronto West. It’s inside the city limits of Toronto. It’s a tobacco and it’s absolutely plastered in wartime bungalow, same as Scarborough, Same as North York. Yep. Properties up for sale. Let’s just use a million bucks. It’s a million bucks. I buy it. As of right now, this second and it’s May the 8th, Monday, May the 8th. Has this legislation passed and can I build today a triplex on this property that will bring three smaller units that are more affordable than a single million-dollar property. Providing more housing to the city. Is that now as of right, or do I have to go find out somewhere?
Tim Hudak: So the legislation has passed, but it has not been, I think, proclaimed so not quite yet. So I can’t say yes for May 8th, but hopefully in the months ahead. So right now, if you try to knock down that wartime bungalow and put something else there or, you know, have a secondary suite and a garden suite in the back, man, you would have to go through sometimes an official plan amendment, but usually through the local adjustment committee. And then the NIMBYs come in, the lawyers get involved, they go on this carousel of approvals and then the investor, the homeowner eventually, after a year with lots of costs, they just walk away. And that means that those three families or individuals could not get a place. So this is trying to fix it up. So we’re happy the our government has done this. It’s not yet implemented by municipalities. They need to get moving forward. I got to tell you, Simeon, this approach, which will take on exclusionary zoning that would allow rentals, for example, in every neighborhood in our province, it would be the single biggest difference for affordable home ownership and quality rentals in our urban areas that you could imagine.
Simeon Papailias: I could not agree more. It’s actually the only way to fix it. And what I mean by fixing it when we’re talking about being a million and a half homes behind of what we need, how can anyone ever expect to see this madness of price growth? Because people think price growth is a good thing. We’re all getting richer. No, you’re not. You’re you’re not allowing the everyday Canadian to achieve home ownership. You’re making it an elitist commodity. And that is the wrong thing to do. From a general perspective, you can always create wealth in real estate because you can buy more of it. But creating an asset class where a single door is worth 1.3, 1.4, 1.5. That is not a market that I want to live in. It’s that should be a neighborhood. Sure, it should be two neighborhoods by all means, but not an entire city where in any other market the home would be worth three 400,000 based on regular forces or replacement cost or whatever the case may be. We’re talking about an arbitrarily put on value because of supply constraints. And it’s not normal. It’s just not so.
Tim Hudak: Yeah, and it’s not been our history. And that’s why, you know, through all of Canada’s history, we’ve seen an upward slope on the number of people who are homeowners, a percentage of adults who own a home. We got as high as 72% in the province of Ontario up until about 2012. I think it was. I mean, that was something to be proud of. Each generation had a better shot of a place of their own, a great investment where you raise your family. And then we started heading downhill around then. Now we’re about 67. We need to turn that around. So Bill 23 will help us do that. Let me get back to the I.
Simeon Papailias: Believe so, too.
Tim Hudak: Yeah, good. Like I said, it’s the biggest step we’ve seen in our generation for sure. Here’s the difference that it makes you ask about as of right. So typically right now you have to go and ask for an exception. You have to go through a committee of people and councillors and everybody can say no and put pressure at you don’t have the right to do that. So the fundamental change this brings in is as of right, which means you’ve got the green light and it’s up to them to point out a reason to say no. So now the weight is on the homeowner or the investor. You’ve got the law on your side because it is as of right, you got hit fire code. Of course, you have to fit in all those health and safety rules for sure. But it’s no longer you have to go hand and knee cap in hand begging for permission. You’ll have the right to do so.
Simeon Papailias: Yeah, So so I think the big takeaway here is because I have gone through this process, I’ve built a number of homes in my career for the purposes of development and for the purposes of profit. So so I’ve gone through the home building process, the planning process. And the reason I stopped doing it around 2018 is because it got to the point where it was so ridiculous, where the profit was simply not worth the amount of aggravation. And when you’re speaking to the committees, we are speaking about the Committee of Adjustment, which has to accept your application and see your changes, which then it shocks to the entire neighborhood where the NIMBY forces come out. So if everybody who has never gone through this before, NIMBYism is not in my backyard, means that you go to Humber Valley in Etobicoke, for example, gorgeous neighborhood, and you propose to build a triplex. There is going to be every single neighbor on that street that’s going to object to it because they love their single-family homes and their quiet little beautiful street. And I don’t blame them. But it’s simply not the future of a major urban city in a country where we have a million people coming in last year. It is not fair to the families coming in and to the. Trying to make a living in this city, which is why this legislation can single-handedly three x the existing density of an entire city. This is where, for me, this is the biggest blessing for this city. There’s no doubt.
Tim Hudak: And the other thing is, as you know, from your experience investing and the advice that you give to your followers, if you can have a secondary suite in your home, you can pay that mortgage down, what, seven, 20 to 25% faster than when you don’t. That’s good for investments. But it also means that tenants, they’ll be able to find a nice place, a good quality rental in every neighborhood, instead of being confined to big apartment buildings. That’s fine for some, but others want to live in a neighborhood and choose a school or go to. This will enable that.
Simeon Papailias: It will enable that. And when you say 2,025% for everybody wondering if that is a big number or not. If the average mortgage term or actual length of the mortgage is 20 or 25 years, we’re talking about 5 to 7 years faster. Imagine your life being mortgage-free, 5 to 7 years faster. Those are the same years you could be getting an extra income into your golden years or those are the like, it’s your time and it’s massive to have that while you’re helping create housing and affordability. It’s just such a huge gain for everyone. I just absolutely am excited about it. You got.
Tim Hudak: It. A great match of those two principles. Here’s another one in Bill 23 that we’ve been asking for on behalf of Ontario realtors. Development charges have gotten out of hand and in some municipalities. And as you know, in fact, York region is one of those areas. It costs $125,000 in fees and development charges before you put a spade in the ground to start building a home. That’s nuts. And that gets passed on to the homeowner with a higher cost when they try to buy the home. So this bill starts taking a bite out of that by basically saying if the development is for non for profit affordable housing, those areas where there’s the most desperate need, the development charges can be waived or significantly reduced. Similarly for multi-residential, particularly those with multiple bedrooms. So let’s say we’ve got a real need in this area. Let’s actually give a break on the development charges so these homes can actually get built.
Simeon Papailias: It just makes so much sense and people fail to. And when I say people, I mean the consumer especially has no clue. They always think that the prices that are out of control on new homes, etcetera, 20 to 25% of what they’re paying is going to development charges. Parkland charges, educational levies and all these things that are baked in to to the agreement of purchase and sale as a new home. As a matter of fact, I just had one of my previous guests two weeks ago, uh, to from Greenbrook developments, Greenbrook Realty Partners. Excuse me. Explain that on the average unit condominium in the city of Toronto, a $650,000 purchase price, almost 191. The first $191,000, which is almost 30% of the purchase price. Is not going to the developer. It’s rather going to service different taxes, development charges and levies where when the government wants to talk and mean all levels of government because it’s municipal, federal and provincial, we want to talk about affordability. But they keep gouging and increasing the charges. They’re the most necessary asset class is getting absolutely decimated by these charges and into affordability. Instead of looking at other things that we can contribute into. What are your thoughts on that?
Tim Hudak: It’s very, very true. It’s a very competitive industry. And every realtor, every builder wants to make sure that they their homes get sold, that they actually hit the market demand. And if we tax them and give them the runaround, you know, those investments will simply go to other provinces or states and will fall further behind. This Bill 23, is responding to a lot of what I put on the table for your viewers. Area.com. You can see all the ideas we put on the table. I want to say this one to it actually for the top 30 municipalities in Ontario gives them targets. That’s something you’ve got to actually hit the target. So your Mississauga or Saint Catharines or, you know, Vaughan, this is your target to get to that 1.5 million homes. You know that if you don’t actually set targets and measure things, you’re just practicing. So I like this idea. We do have a suggestion for an improvement, though. The government should actually reward municipalities that hit it and punish those that don’t. So as you know, every budget municipality has got a big project, right? It’s a new arena or a new bridge transit. So if you hit your target, you get on the list and you get your funding. But if your target, then you get to the bottom of the list until you play ball.
Simeon Papailias: And imagine if the public were to hear that their current municipal government could have had an arena, but they chose to ignore housing as a priority. So so it gives everybody the motivation. If you want to stay running this city. Mr. Mayor, of any given town, Mrs. Mayor, of any given town, Mrs. Councillor of any given town, you better put the priorities where they need to be and that’s creating affordability. I love that, Tim. I love it.
Tim Hudak: Let me give you one more story. We heard about this. What behavior need to change? So there was a project that passed all the municipal rules fit with the plan was going to create a lot of new units, people that could afford to live in a community. And somebody that went to council and the mayor thought, okay, this is going to go through. It checks all the boxes. It went down and the council went out for beer. After the council meeting, the mayor said, So why did you guys vote against it? And they said, Oh, you know, Pete from down the street, he didn’t like it, and Pete’s a good guy, so I had to vote against it. Right? Like, that is just the wrong kind of behavior. Unfortunately, it’s happening in big cities and small towns, so you need to make sure that you have the right incentives to get out of that mindset. And if you’re stuck saying no to young people to building up your community, well then you don’t get that arena and pay a price.
Simeon Papailias: And you’re going to feel it and you’re going to feel it as a result. And your community and your constituents are going to are going to be in turn absolutely able to make their own decision the next time they have to vote for you. So so choose wisely to all our governance and all our elected officials that are in charge. Housing is the number one priority for Canadians right now and has been for a decade. So please, our message is an industry to you is pay attention and make it right. So that’s that’s very good. Um, Tim, I know that you’re very, very short on time today. You have a big day and a big week ahead. Take me through to the other legislation, um, helping homebuyers, protecting tenants.
Tim Hudak: Exactly. This is a new one that is really focused on the landlord tenant relationship. And I know a lot of the folks that have you podcast here are investors. It really is focused on a big issue that we’ve rattled the cage about, and that’s how long the delays are are at the landlord and tenant board to the point that some of them, Simeon, are, you know, up to a year in length and that helps nobody. It doesn’t help, you know, the mom and pop investor who are trying to get a return for their retirement or to put bread on the table. And it doesn’t help the tenants that are jammed up in the system either. And this is two things, right? I remember when I was an MPP, I regularly had mom and pop landlords who would come in to see me, and they’ve got some professional tenant who’s not paying the rent, knows how to work the system, and they can’t get them out. And that’s very unfair to that mom and pop family who count on it. But it’s also unfair to that single mom and her kid who’s trying to get a quality rental but can’t get in because you got a rule breaker in there who’s taking advantage of the system. And on the other side, we do have landlords that don’t follow the rules that take advantage of tenants and they’ve got them abusing tenants and the hearing doesn’t happen for some time. So it’s actually increases the fines. It’s going to put more resources, almost $7 million into speeding things up, hiring more adjudicators. And I hope Simeon restoring that balance between landlords and tenants so we get more homes built, more quality and choice and rentals protect the tenants who follow the rules, but those who don’t follow the rules, they cannot jam up a space and take it away from somebody who deserves it and needs it.
Simeon Papailias: I absolutely love where you’re going with this, and you’re also kind of giving that two sides of the coin, the professional tenant, because sometimes when we put these these, these content pieces out, people truly have a tough time because they either resonate with one side or the other, not trying to understand the balance in both. And I’ll tell you why that’s a mistake. Because what you said, I’m going to just bring that out a little bit further. That professional tenant that absolutely destroys the mom and pop investor. Is also destroying the tenant. Tenants sometimes are like, Yeah, take that landlord, but it’s not true. When that professional tenant is taking advantage of the mom and pop, two things are. Going to happen a that that professional tenant and we call it professional tenant that. It should be criminal first and foremost as far as I’m concerned, because when rents are $3,000 a month at this point, if you take me for a ride for a year, we’re talking about 36 grand. Somebody who steals a chocolate bar gets a bigger charge than you ripping me off. 36 grand. So I feel two ways about that as a landlord. But from the tenant perspective, because you said it and I just don’t know if it had enough impact, that unit is now being held off market for a year until this person decides to leave and or the law kicks them out in due course. So you don’t have a place to live as a real tenant, as a good human being that’s looking to live somewhere.
Simeon Papailias: And then at the end of the day, you’re taking a risk that this landlord is now so turned off that they might sell it. And if they sell it, it’s yet another rental property off the market, which further perpetuates the increases in rental rates and all the other things we need to work together as a housing industry, as a rental, as a tenant, as a landlord. Everybody needs to understand the benefits of good, clean business. Landlords have to be professional. We and it’s our job as realtors to educate our clients what it means to bring a bottle of wine at Christmas to your people, to stop by at a birthday to bring them a pumpkin during Thanksgiving. Why? Because you create a better relationship and better relationships have better people, and the whole thing just works at a much higher level. The tenant does appreciate these things because I am an investor, I am a housing provider and we implement these exercises both as realtors reminding our investors every year why they bought the property and what’s how that’s helping their lives and of course dropping off to the tenants in their properties. We do as agents just to remind them that they are living their best life where they want to be. So it just creates a much better environment. Um, Tim, lastly, what do we anticipate that $7 million, the addition of adjudicators, when do we see that coming into play and making a difference or has it already?
Tim Hudak: No. Well, it does take a while to train the adjudicators, right? They need to become familiar with the landlord tenant board and the rules of procedure and the legislation and the Protection Act. So you can’t just, you know, march them off the street and put them there. But I’d expect in the months ahead, I know the government is serious about them. We’ve talked to them about this because they see they want to have further investment for more choice and quality rentals and they want to make sure, as you just spoke very eloquently about me and, you know, that tenant who could be out on the streets or the student who’s stuck in mom and dad’s basement, they should have a chance to access that housing that’s being held hostage by somebody who refuses to play by the rules. There’s also procedural changes they need to make to speed things up and restore some balance. By way of example, you won’t believe this only until recently you actually had to fax things in. So I don’t know where they got the fax. They went to the doctor’s office to borrow the fax. I guess to do that 1984 called.
Simeon Papailias: They want their fax Émile transmission back.
Tim Hudak: It’s so true. Right? And you know, if something’s not contested, there should be a way to dismiss it out of the system and to, you know, find greater mediation. There’s got to be additional procedural ways with these new adjudicators coming on board just to speed things up, solve the problems and free up more units for people who want it. And then the signal to other investors watching Broker’s Playbook to say, you know what, this is a good thing for us to do as our family. We’re going to actually think about our future and our retirement, but we’re going to provide good quality housing for a fellow Canadian. That’s a really nice marriage right there.
Simeon Papailias: You bet. Have you heard anything at all from a perspective of starting those? I’ve seen a few companies that are starting to log data for tenants, and that’s kind of they’re not like a credit score, rather like a housing history. I don’t know much about it. Has this rang at all through the ranks of the official industry paths? Have you heard anything of this?
Tim Hudak: So I do hear that from time to time and certainly see that in the States. But simply nobody’s come, you know, knocked on our door virtually or in person about that. But, you know, more information, I think, whether it’s tenants or landlords, to make sure that you incent the right behaviour, landlords investing in their properties, looking out for their tenants and then tenants making sure that they follow their responsibilities as well, that.
Simeon Papailias: It was a two-way thing that I heard of. So the tenant grades in and reviews the landlord and the landlord grades and reviews the tenant, you see, it’s a two-way street. I like it. I know there’s with all these things, there’s always emotions and some abuse. So I don’t know how they’re going to safeguard the platforms for it. But I am all for a credit history type housing service because again, rents are no longer 850 a month. There are thousands of dollars per month in protecting yourself and your investment. And of course, protecting the integrity of the process is a big part of it. So I’ll be following that one and I’ll bring you up to speed if I hear anything from the street.
Tim Hudak: Yeah, and great last point there too, in terms of the pressures on rentals, why is that happening? We’re not building enough homes, so people who would normally be in the start-up home, right. Are taking up rentals. It drives up prices. And if people are jammed up in the landlord tenant board or new investments, not happening, well, that’s going to drive up prices because you’ve got limited supply. It’s all supply and demand. If we want to get rentals under control in terms of affordability, we need to make. These reforms, these two bills. We talked about big steps in the right direction. Simeon.
Simeon Papailias: Mr. Tim Hudak, I want to thank you so much for making the time this morning to share your insight. And this is all factually a huge part of your actual workload. This is what you do. You help put these things through and you’re an advocate for the industry and for both the industry and the client, as far as I’m concerned, because that’s who is the ultimate benefactor. We’re the conduit to it as an industry, but the actual people winning is the consumer. So I want to thank you for all your hard work that you do for us. I’m a huge fan of your leadership at OREA and of course, I can’t wait to have you back as these things develop. My man, I appreciate you.
Tim Hudak: Look forward to it. Simeon, Ditto. Right back to you. Thank you for your leadership. You’re clear-headed advice to realtors, fans of real estate and investors, and I’ll look forward to coming back. And I know I’ll see you out and about at our events and yours.
Simeon Papailias: You bet. To our audience, to our brothers and sisters, once again, take this insight seriously. Take it, interpret it yourself. And if there is one thing that I ask every single one of you for is create a small video with a snippet. I am going to tag this video with a few links of the source information. So the OREA statement on both bills, the details, you will have everything. Again, it is your duty to educate and create value to your audience, which is the clients. It is the clients. If clients in normal humans, and non-realtors are listening to this message, understand this legislation because it is meant to protect you and to help you and seek advice from realtors who take the time to learn and be able to implement the everyone big Love. I hope you all the best in the market out there and I look forward to seeing you again. On Brokers Playbook. See you soon. Thank you so very much for spending your time with us here at Brokers Playbook. This is a growing community. If you found value in this video, please invite others to subscribe and of course, share the videos with them. Thanks again to Tim Hudak for joining us. We’ll see you soon.