Canada’s housing affordability crisis is no longer just a land cost issue, a financing issue, or an approvals issue. Increasingly, it is also becoming a building code issue.

My colleague Jay Chadha recently posted about the cumulative impact of housing policy decisions on project viability. He was referring to the numerous fees, taxes and new requirements from all levels of government that have broken the camel’s back of buyers and renters, as the industry cannot build new housing at a cost they can afford.

A key component of these cost pressures is the ever-increasing array of Building Code and policy requirements.

UDI will be releasing an Altus study this month that looks at construction cost increases between 2014 and 2025.

Spoiler alert: for the three building types (a Burnaby high-rise condo, a Vancouver concrete rental building and a Surrey wood-frame rental building), construction costs more than doubled.

Yes, labour and material costs increased substantially over the 11 years. However, Altus also noted that Building Code requirements have also contributed to these rising costs.

The Costs Keep Coming

Changes to seismic standards alone increased costs for sites with poorer soils 10% to 25% in the Lower Mainland. It’s even worse in Victoria.

The impact of the Code’s seismic standards is not even limited to our coastal areas. CHBA BC stated in a recent letter to the Premier:

“BC’s early adoption of the 2025 National Model Code lateral load provisions ...,” has led to “... estimated incremental costs of approximately $10,500 to $25,000 or more per single-family home in lower-risk regions.” 

In addition to driving up construction costs, the seismic standards can reduce the net saleable/rental area of buildings, which also negatively impacts project proformas.

This is particularly striking in Victoria, where developers are losing numerous units in a building solely to fit the necessary additional structure to meet the new requirements.

This is just the impact of one area of the Building Code.

Altus looked at others, including energy efficiency, the Zero Carbon Step Code, cooling requirements, and mandated accessible units, which also led to reduced saleable/rental areas.

Not only are governments looking at increasing these standards in the future, but they are also looking at new requirements for issues such as embodied carbon reductions and passive design.

The cumulative impact is reshaping the economics of housing delivery.

The Industry Can’t Keep Up 

Some will rightly point out that when a new requirement is introduced, construction costs initially increase because of industry unfamiliarity, but the costs will temper over time as builders gain more experience.

The problem is that the changes keep coming, and builders cannot keep up.

Just as they become familiar with a new Building Code provision, the rug is pulled out from under them because a new set of requirements arrives at their doorstep.

Further, the government mandates they face do not always align with each other.

The problems are even worse for non-profit housing providers who do not have the same resources to access design consultants, and in many cases may only build one project, such as an affordable housing building in a church parking lot.

When Regulations Clash 

A good example of the capacity issues and policy conflicts the housing sector is encountering can be found in Victoria, where poor soil conditions are prevalent across much of the Capital Region.

One of the consultants for the Province’s report on the cost and space impacts of seismic Building Code requirements noted on a UDI webinar last year that “Conventional Buildings will not be possible for … (Victoria); we are entering new territory.”

The challenge is that new seismic standards can require substantially more structure, including more concrete, which can reduce net saleable or rental area and make projects harder to deliver.

At the same time, the City of Victoria and the federal government are considering new embodied carbon requirements.

How are builders going to reduce embodied carbon when concrete typically represents 40-60% of total embodied carbon in most building projects, and they must use more of it to meet seismic standards?

Builders also have to navigate the conflict between reducing embodied carbon and achieving the higher steps of the Provincial Energy Step Code. The Energy Step Code leads to more insulation and multi-paned windows at a diminishing return on operational energy savings, while also adding to embodied emissions.

One policy objective is increasingly undermining another.

This is not sustainable.

The Building Code is leading to a cost structure that is not allowing many younger Canadians to buy or even rent their own home.

The Building Code Needs a Different Approach

When you’re in a hole, stop digging, so I agree with Canadian Home Builders’ Association of BC that the Province needs to:

“... more broadly pause the adoption of the 2025 code cycle ... to coordinate a targeted review that enables cost-neutral updates, technical corrections, and stabilizing amendments to proceed, while reassessing more complex or costly measures in light of their full impact on housing affordability.” 

If there are measures in the 2025 National Building Code that save time and money, we should quickly proceed with them.

However, I would be very wary of any measures that will add costs at this time – unless there is a demonstrable health and safety need.

UDI has also called for a pause in the implementation of the step codes by:

• Maintaining Part 3 buildings at Step 2 and Part 9 buildings at Step 3 under the Energy Step Code
• Limiting the Zero Carbon Step Code to Emissions Level 2
• Restricting municipalities from imposing requirements beyond the BC Building Code

There also seem to be numerous committees under the National Research Council and the Canadian Board for Harmonized Construction Codes that are tasked for each code cycle to add requirements to the Building Code.

In most cases, these new requirements cost far more than the benefits they provide homebuyers and renters.

We also need to refocus the Code on core safety and health priorities.

Better Building Code Policy Is Possible 

We are also adding to the Building Code – without looking at what can be removed. This has led to the massive increase and complexity of it.

We need to assess which provisions in the NBC can be relaxed without compromising health and safety risks, with a focus on those that can provide substantial cost savings.

For example, BC Housing has noted that the costs of smoke dampers for sprinklered buildings add $100,000 to the cost of their six-storey buildings.

We also need to improve the transparency of cost-benefit analyses for new requirements by utilizing independent third parties to complete and/or review the work moving forward. The analysis of the cost impacts of the new seismic standards woefully underestimated them.

Related to this, the analyses also need to ensure that potential unintended consequences of new provisions are adequately reviewed.

For example, the smoke damper requirement was originally estimated to cost only $4,000 per building because energy-efficiency requirements that demanded different-sized ducts were not taken into account.

To keep the costs down, it would also help if we had a better and faster process to approve alternative solutions. This includes assessing where Building Code provisions could benefit from added clarity in the Code objectives to provide options for more economic design.

Once alternative solutions become frequently repeated, we need to ensure the cost-effective ones are incorporated into the Building Code as soon as possible. Decisions made by the BC Building Code Appeals Board should be considered as guidance for other projects, not just the ones that are evaluated.

On a positive note, the new Federal Spring Economic Update will provide $41.9 million of funding for “streamlining rules and modernizing building codes.”

Several of the proposed measures align with priorities UDI has been advocating for, including:

• Improving consistency in how National Building Code requirements are interpreted
• Strengthening analysis of proposed code and standards changes to better assess cumulative cost impacts on housing affordability
• Improving pathways for modular and panelized construction, including faster review and approval of innovative construction products

The Ministry of Housing and Municipal Affairs, which is responsible for the BC Building Code, have also been identifying these issues as priorities.

We are making some progress on the Building Code front, but much more needs to be done to provide more attainable housing for Canadians.

This is an important time for reform because the National Building Code development process is changing to give Provinces and Territories more of a say as part of the efforts to harmonize building codes across the country.

If affordability is the goal, cumulative cost impact must become part of how every new code requirement is evaluated.

Jeff Fisher is Vice President & Senior Policy Advisor at the Urban Development Institute.