Ontario Regulation 73/25, enacted under the Assessment Act and amending Ontario Regulation 282/98, introduces changes related to property tax classification, specifically targeting affordable rental housing within the multi-residential and new multi-residential property classes. These changes, which apply beginning in the 2026 taxation year, are intended to enable municipalities to create tax subclasses for affordable rental housing as part of broader affordability and housing policy goals.

The regulation begins by amending subsection 22.1(3) of Ontario Regulation 282/98, adding a clarifying phrase to ensure that the subsection is subject to the provisions that follow. It revokes the former subsections 22.1(4) and (5), replacing them with new language that refines the applicability of tax subclasses. Notably, if a municipality chooses to apply the affordable rental housing subclass for the new multi-residential class, then land within that subclass is explicitly excluded from the original subclass mentioned in subsection (1). This prevents overlap in tax classification and ensures clarity in property assessment practices. Additionally, if a municipal council opts to discontinue the original subclass, this decision will not affect land already approved for development through a building permit issued prior to the by-law’s enactment.

A new section, 22.1.1, is introduced to formally establish the affordable rental housing subclass for both the multi-residential and new multi-residential property classes. However, this subclass will only apply within a municipality if the local or upper-tier council passes a by-law affirmatively opting into the subclass system. To be effective for the 2026 taxation year, such by-laws must be passed by September 30, 2025. This requirement creates a clear deadline for municipalities to determine whether to participate and signals to developers and housing providers the conditions for qualifying for tax relief under this new framework.

The regulation outlines specific criteria that properties must meet to qualify under the affordable rental housing subclass. First, the land must contain a self-contained residential unit. Second, that unit must meet the affordability standards as defined under subsection 4.1(2) of the Development Charges Act, 1997. Third, the housing provider—either the property owner or the building operator—must be legally obligated to provide affordable rental housing. This obligation must stem either from legislation or from a formal agreement with a governmental or quasi-governmental entity, including federal and provincial governments, their agencies, municipalities, or service managers under the Housing Services Act, 2011.

In summary, Ontario Regulation 73/25 equips municipalities with a legislative tool to promote and incentivize affordable rental housing by creating a defined subclass within existing residential property classes. It ensures that only housing meeting specific affordability criteria qualifies, enables municipalities to opt in or out through local by-laws, and includes safeguards to protect both tax classification integrity and the intent behind affordability initiatives.

Ontario (73/2025) June 11, 2025
Disclaimer: Insights are for informational purposes only and do not reflect RRI’s official position or constitute legal opinion.