On August 5, the Prime Minister and the Mayor of Toronto announced what they called a new partnership to get stalled rental projects into the ground. The headline numbers: more than $2.7 billion over three years, more than 18 projects and more than 5,600 rental homes, with construction to start on more than 4,500 of them before the end of 2026.[1]
The total is less interesting than the structure. Every home in the portfolio is a rental, but the money flows through two very different channels, and each one puts risk in a different place.
Channel one: non-market, on public land
The first channel runs through Build Canada Homes, the federal agency launched last year to build at scale. It will provide more than $310 million for nine projects on City-owned land, delivering nearly 1,900 homes. More than 700 of those will be supportive or affordable, and more than 1,100 will be rent-controlled homes run by the non-market sector.[1]
The City's contribution is substantial. It will provide land at nominal value and more than $530 million in capital funding and incentives, including property-tax exemptions of up to 99 years.[1]
In this model, the public sector takes the land risk and most of the subsidy cost. Non-profits and co-ops take the operating risk. Rents are set to meet affordability goals, not market returns, so the long-term question is whether operators can cover maintenance and capital repairs over decades on controlled revenue. The long tax exemptions are clearly aimed at that problem.
Channel two: market rental, on federal credit
The second channel is CMHC's Apartment Construction Loan Program (ACLP). Here the government provides over $1.8 billion in low-cost financing for nine projects built by private developers, delivering more than 3,700 homes, over 1,000 of them affordable. A further $600 million is set aside for Toronto projects that become ready later.[1]
The risk split is reversed. The developer owns the land, takes construction and lease-up risk, and earns market rents on most units. The government's role is as a lender offering cheaper, longer-term debt than banks usually do for rental construction. In exchange, projects commit to an affordable share and other program conditions.
The federal release calls market housing "the largest source of new supply," and the numbers bear that out: the ACLP channel delivers roughly two-thirds of the portfolio's homes. The bigger difference is the type of money. ACLP dollars are loans that are expected to be repaid, while much of the non-market channel is grants, land and forgone tax revenue.[1]
Why combine them
Putting both channels in one announcement is a deliberate signal. Toronto has thousands of approved units that the release says lack the financing to start.[1] Different projects are stalled for different reasons:
- Some are on public land and need capital subsidy to work at below-market rents.
- Some are privately owned and viable at market rents, but can't get conventional construction debt at terms that make the numbers work.
A single program can't solve both problems. Pairing them lets each project use the tool that matches its gap.
Construction methods are part of the test
Two projects are meant to showcase newer building methods: a mass-timber, low-carbon build at 1113–1125 Dundas Street West, and a volumetric-modular development at 805 Wellington. The government says these methods build faster, cut waste and can reduce emissions by up to 22%.[1] Whether they also cut cost and schedule risk at Toronto scale is something the industry will watch closely, since these are still newer methods for large urban rental projects.
The partnership also leans on earlier measures: $1.5 billion to the City through the Canada-Ontario Partnership to Build to cut residential development charges by 40% to 60%, and the removal of the full 13% HST on eligible new homes in Ontario.[1]
What to watch
The commitment to start more than 4,500 homes before year-end is the near-term test. It's an ambitious target for projects that, by the government's own description, were stuck for lack of financing.[1] The indicators to watch over the next few months:
- Start dates on the nine ACLP projects. CMHC loan closings and construction starts will be public over time.
- Uptake of the $600 million reserve. That would show whether more of Toronto's approved pipeline can use the program.
- Operating budgets for the non-market sites. The supportive units in particular will need ongoing service funding that capital grants don't cover.
For private developers and lenders, the main lesson is that federal capital is now flowing through two routes with different terms. Knowing which one fits a site, and what conditions come with it, is becoming part of underwriting in Toronto.
Sources
[1] Government of Canada and City of Toronto partner to build thousands of new rental homes, Prime Minister of Canada (Aug. 5, 2026): https://www.pm.gc.ca/en/news/news-releases/2026/08/05/government-canada-and-city-toronto-build-thousands-new-rental-homes