The federal government has taken a significant financial step against the City of Toronto, withholding a substantial portion of housing funding due to a lack of progress on key density reforms. Ottawa has cut $10 million from Toronto's housing allocation because the city has not yet implemented a bylaw to permit six-unit residential buildings, commonly known as sixplexes, across all neighbourhoods.
The Funding Decision and Its Rationale
This decisive action was confirmed on January 16, 2026. The move directly ties federal financial support to municipal action on increasing housing supply. The policy requiring cities to allow multi-unit buildings like sixplexes as a condition for accessing certain federal housing funds has been a cornerstone of the national strategy to tackle the affordability crisis.
While Toronto has taken steps toward allowing more multi-tenant homes, it has not enacted the blanket, city-wide permission for sixplexes that the federal government demanded. This delay or reluctance has now resulted in a tangible financial penalty, signaling Ottawa's seriousness about enforcing its pro-density conditions.
Key Figures and Context
The announcement was made public in the afternoon of January 16th, with updates provided into the early evening. The decision falls under the purview of Minister of Housing and Infrastructure Gregor Robertson. Minister Robertson, pictured in the House of Commons in September 2025, is the federal official responsible for administering this housing accord and its attached conditions.
The $10 million cut represents a major leverage point in the ongoing negotiations between different levels of government over who bears responsibility for solving the housing shortage. It underscores a shift from purely incentive-based funding to a model with enforceable stipulations.
Implications for Toronto and Beyond
This funding reduction will have immediate consequences for Toronto's housing initiatives. The $10 million was earmarked for programs aimed at accelerating construction and improving affordability. Its loss may delay or cancel specific projects, putting further pressure on a market already struggling with high costs and low vacancy rates.
Furthermore, this action serves as a stark warning to other municipalities across Canada. The federal government is demonstrating it will withhold funds from any city, regardless of size, that does not align with its density targets. The move is likely to intensify debates at Toronto City Hall regarding the political and community trade-offs involved in widespread zoning reform.
The stalemate highlights the complex interplay between local control over land use and national housing objectives. As the affordability crisis continues, such conflicts between federal funding conditions and municipal policymaking are expected to become more frequent and financially significant.
