Wednesday, September 30, is the last day of a transition period that most Ontario rental developers have known about for ten months. It still deserves attention, because it changes how a new-build project earns some of the most valuable points in Canadian rental finance.

CMHC's Advice 268, released in November 2025, updated the energy-efficiency criteria for MLI Select new construction to reference the 2020 editions of the National Energy Code of Canada for Buildings (NECB) and the National Building Code (NBC). A transition period allowed applications to qualify under the old criteria until September 30, 2026.[1][2] After that, the new benchmarks are the only path.

What the new thresholds look like

Under the updated criteria, energy points for new construction are earned against Tier 1 of the 2020 codes:[1]

  • Larger buildings (NECB, Part 3): at least 25% better than NECB Tier 1 for 20 points, 50% better for 35 points, and 60% better for 50 points.
  • Low-rise buildings (NBC, Part 9): at least 20% better than NBC Tier 1 for 20 points, 40% better for 35 points, and 70% better for 50 points.

Criteria for existing properties are unchanged.[1]

The percentages may look familiar. The baseline is not. The 2020 codes already require better performance than the editions many Ontario pro formas were designed around, so a building that cleared a threshold against an older code may fall short against the new Tier 1, or need a different mechanical and envelope package to get there.

Why the points matter so much

MLI Select is a points system. Affordability, accessibility and energy efficiency each earn points, and higher totals unlock higher leverage, longer amortization and lower insurance premiums. For new construction, energy efficiency is often the most engineering-driven of the three. Affordability is a business decision with a rent cost. Accessibility is a design decision with a space cost. Energy performance is mostly a capital cost.

That's why the transition matters for lenders and equity partners as well as architects. If a project designed for 50 energy points ends up eligible for only 35 under the new baseline, the developer either makes up points elsewhere, usually through deeper or longer affordability commitments, or accepts less favourable loan terms. Either choice changes the return profile that investors were shown.

Other changes in Advice 268

The energy switch arrived alongside other changes that took effect immediately in November 2025 and are now part of normal underwriting:[1][3]

  • Rental achievement holdbacks. For new construction above 95% loan-to-value, CMHC can hold back proceeds until rents are achieved if coverage is thin. For standard rental housing with a debt coverage ratio below 1.20x, advances can be limited to 85% of cost or value, whichever is lower. Other shelter models below 1.30x are limited to 80%.
  • Completion take-out. Advancing on completion take-out loans must happen within six months of CMHC approval.
  • Documentation. Clearer minimum documentation at application, plus support for renovation costs on existing properties.

The holdback rule deserves the most attention in a softer leasing market. A project that relies on 95% leverage and thin initial coverage can now find part of its permanent financing deferred until lease-up proves the rents. That gap has to be filled by equity, mezzanine debt or a longer construction loan.

A checklist for projects in the pipeline

For Ontario developers, lenders and investors with rental projects at the design or application stage:

  1. Confirm which code your energy model uses. An energy model prepared against the older baseline needs to be rerun against 2020 NECB or NBC Tier 1.
  2. Re-check the points total. If energy points fall, decide early whether affordability or accessibility can make up the difference, and what that costs in rent.
  3. Stress-test the holdback. Model lease-up under today's concessions and see whether coverage at stabilization clears 1.20x. If not, plan for the bridge.
  4. Update investor materials. Projections that assumed the previous criteria should be restated, not quietly revised later.

None of this makes MLI Select less valuable. It remains one of the most efficient tools available for purpose-built rental. It does mean the program now rewards actual energy performance against a stricter baseline, and it requires thin-coverage deals to prove their rents before full proceeds are released. Projects designed with that in mind will be easier to finance.

General information only. Program terms are set by CMHC and approved lenders. Confirm current requirements before relying on them.

Sources

[1] Advice 268, CMHC lending program update, CMLS (Nov. 28, 2025): https://www.cmls.ca/cmhc-lending-program-update-nov

[2] CMHC Advice 268: CMHC MLI Select Changes, Peakhill Capital (Dec. 1, 2025): https://www.peakhillcapital.com/cmhc-advice-268-cmhc-mli-select-changes/

[3] MLI Select, CMHC: https://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/multi-unit-insurance/mliselect