On September 16, the Ontario government announced a formal consultation process to implement pay-on-demand surety bonds as an alternative to Letters of Credit (LOCs) for home builders.

The Ontario Home Builders’ Association (OHBA) recognizes this is a significant and progressive step forward for the housing industry and notes its appreciation for the efforts and commitment of Minister Calandra and the Ministry of Municipal Affairs and Housing to modernize how new housing approvals are administered.

‘Precisely the type of innovative regulatory updates we need to effectively increase our housing supply’

OHBA has advocated for this financial security tool to help home builders access capital for new housing projects for years, as it will streamline the construction of more homes in Ontario. In a release, the organization says it’s proud that its efforts were able to highlight the benefits of surety bonds as an effective tool, and it’s eager to collaborate with municipalities to facilitate its adoption.

“This is a great step forward for Ontario’s housing industry and the issue of housing affordability,” OHBA CEO Scott Andison, who played a significant role in moving the initiative forward and worked closely with Minister Calandra and Municipal staff, says.

“Allowing builders to access capital held up in LOCs and reinvest it into new projects is precisely the type of innovative regulatory updates we need to effectively increase our housing supply.”

What’s next

A key focus for the organization during this consultation will be to ensure that builders currently using LOCs can easily transition to surety bonds, freeing up essential capital for new projects.

As part of the legislative framework established under Bill 109 and Bill 185, the government is exploring regulations to authorize using surety bonds for securing municipal obligations tied to land-use planning approvals.

The consultation is open for 30 days, concluding on October 16, and OHBA will be submitting feedback on behalf of its industry and the 28 local associations across Ontario.