Real Estate: Zoning/Land Use 2026 Comparisons

Real property in Canada is primarily governed by provincial legislation. Provinces and territories enact statutes that regulate ownership, acquisition, financing and development of land. Québec is distinct in that its system is based on civil law and codified in the Civil Code of Québec, while other provinces in Canada follow common law principles supplemented by jurisprudence.

While land use planning is generally a provincial responsibility – except on federal lands (eg, airports, national parks and Indian reserves) and in respect of federal works and undertakings (eg, railways and aeronautics) – most planning and zoning functions are delegated by provinces to municipalities. Regulation occurs mainly through zoning by-laws and building by-laws, which are informed by provincial legislation and policies and municipal official plans and policies. These by-laws may designate land use districts/zones, prescribe allowable uses and regulate development standards, including establishing limits to density, building height and parcel size, and impose setbacks and parking requirements.

Municipal by-laws may also govern design, construction methods and building standards. Building permits are required for demolition, new construction and alterations, and municipalities generally adopt the national or provincial building code applicable in their jurisdiction, broadly creating uniformity in building regulations. Heritage restrictions (both provincial and municipal) and additional design approvals may apply in specialised areas and to certain buildings.

In Alberta, provincial legislation contemplates the enactment of a charter that may modify, replace or supplement provincial legislation as a means of enabling the “charter city” to address its evolving needs, responsibilities and capabilities in a manner that best meets the needs of its communities. In 2018, charters were enacted for Alberta’s two largest municipalities, Calgary and Edmonton, which made notable changes to the off-site levy regime.

Development projects can require approvals for subdivision, rezoning and development permits, with processes that vary by municipality. Public hearings and notice to affected parties are common, and certain projects may require consultation with Indigenous communities. Developments may often involve agreements with municipalities covering infrastructure, servicing, community benefits and financial obligations.

Enforcement of zoning and building restrictions occurs through the imposition of fines and penalties, as well as through direct municipal action, including injunctions, statutory orders, holds and withdrawal of permits, and enforcement of agreements with the municipality.

Appeals of municipal decisions vary by province – some jurisdictions provide specialised tribunals, while others limit review to procedural fairness grounds.

Development of lands located within Indigenous communities is generally subject to separate laws enacted by the governing community, and the applicability of federal and provincial law varies depending on the nature of land ownership held by the community (eg, treaty or federal reserve).

International law does not directly govern land use in Canada, although treaties may influence domestic legislation, and foreign court orders can be enforced under certain conditions.

Over the past 12 months, planning and zoning activity in Canada has been shaped by market conditions and government priorities. Municipalities continue to focus on intensification and mixed-use development, particularly in urban areas, while provincial and federal initiatives have emphasised affordable and attainable housing, including, in some jurisdictions, removing barriers to small-scale multiplex development of historically single-family urban areas. The industrial sector remains strong, driven by demand for logistics and distribution facilities, and retail properties with large anchor tenants have seen renewed interest. Redevelopment of underutilised spaces, such as excess parking at shopping centres, transit-oriented development and the repurposing of office developments, are current or emerging trends. In some jurisdictions, particularly Alberta, there is significant and increasing interest around the development of large-scale data centres.

Canada’s commercial real estate market showed resilience in 2025. Industrial real estate remains a key driver of major transactions, especially large logistics assets near urban centres. Retail activity has strengthened as consumer confidence improves. The office sector is evolving through adaptive reuse and a sustained flight to quality, with Calgary advancing office-to-residential conversions and Vancouver benefitting from stronger in-office work trends. Investment activity is gradually recovering, with value-focused and opportunistic buyers re-engaging across major markets. With demographic growth, evolving policy environments and ongoing infrastructure investment, the sector continues to adapt and position itself for long-term stability and growth.

Although the Bank of Canada lowered its policy rate to 2.25% in October 2025, interest rates remain high compared to recent years, constraining capital flows. Inflation, elevated construction costs and tighter lending conditions have slowed projects – especially office developments and those led by smaller builders – while many condo developers remain paused as markets rebalance. Commercial real estate investment also softened, reflecting reactions to the proposed capital gains inclusion rate increase, a stagnant rate environment through early 2025 and geopolitical uncertainty with the USA. The Bank of Canada’s September rate cut initiated a new easing cycle, but many investors continued to delay decisions or shift towards defensive, cash-flow-stable assets in more affordable regions. Consumer spending remained cautious throughout 2025 due to higher living costs, labour market softness and broader economic volatility.

Developers and investors continue to use alternative financing approaches, including private debt, equity capital and debt funds, while established players with strong lender relationships remain best positioned to secure bank financing. Canada Mortgage and Housing Corporation (CMHC) programmes are still supporting affordable housing activity, and refinancing strategies remain common amid higher borrowing costs.

Based on Q3 2025 data, the hard-hit Canadian office sector is beginning to show meaningful signs of recovery, even with an estimated 30% decline in values since COVID-19. Investor confidence is gradually returning, with liquidity improving and increased bidding activity for higher-quality assets. Leasing momentum has strengthened, with year-to-date transactions through Q3 surpassing 2023 levels, driven by financial services, renewed tech demand and expanding return to office mandates – including five-day-a-week policies from major banks and the Ontario government.

Market performance, however, remains uneven across the country: Toronto’s AAA vacancies have fallen below 2%, pushing demand into other Class A space, while Vancouver’s constrained supply and strong tenant activity (including a strong interest from US technology companies) are trending towards a landlord-favourable environment.

Calgary continues to advance initiatives to revitalise its downtown, including office-to-residential conversions through its municipal incentive programme, whereas Edmonton faces elevated vacancies and limited absorption due to the absence of similar support. Suburban Ontario is also showing modest improvement, with landlords offering competitive terms to capture tenants amid a continued flight to quality.

Federal Initiatives

At the federal level, several policies are significantly influencing real estate development. The Prohibition on the Purchase of Residential Property by Non-Canadians Act, originally set to expire in January 2025, has been extended until January 2027, continuing restrictions on foreign ownership of residential property in major urban areas. The federal government also maintains a strong mandate to increase affordable housing, with the CMHC offering favourable financing rates for residential projects, which has spurred activity in this segment.

Another significant federal initiative shaping real estate development is the launch of Build Canada Homes, a national housing agency established in September 2025 to rapidly expand affordable and non-market housing. The agency aims to accelerate construction by providing public land, flexible financing and incentives, and by partnering with provinces, municipalities, Indigenous communities and private developers. Build Canada Homes is also advancing modern construction methods – such as factory-built, modular and mass timber systems – under a new Buy Canadian policy that prioritises domestic materials and supply chains. Early programmes include large-scale factory-built housing on federal sites, a rental preservation fund, and substantial new investment in transitional and supportive housing. Collectively, these measures are poised to reshape development economics, streamline delivery timelines and stimulate a new wave of housing construction across the country.

Another major federal initiative influencing development activity is the Housing Accelerator Fund (HAF), a CAD4.4 billion programme launched in 2023 to incentivise municipalities to expand housing supply by reforming zoning, accelerating permitting and enabling greater density. Through agreements with 230 sub-national governments, the HAF commits over CAD4.37 billion to support local action plans that collectively aim to deliver at least 112,000 new homes by 2028 – and are estimated to unlock more than 119,000 incremental units beyond baseline activity. Recent agreements, including those with 23 Ontario municipalities announced in early 2025, provide targeted funding to eliminate regulatory barriers and speed construction. As part of Canada’s broader National Housing Strategy, the HAF is designed to fast-track development, encourage bold local reforms and catalyse long-term housing capacity across communities nationwide. At the provincial level in British Columbia, the government has introduced an “Attainable Housing Initiative”, aimed at providing approximately 2,600 leasehold homes to middle-income British Columbia residents at an initial 40% below market value.

Climate policy is another major factor. Canada remains committed to the Paris Accord and its 2030 Emissions Reduction Plan, with a national carbon pricing system and sector-specific regulations aimed at decarbonisation. While the consumer-facing carbon tax was eliminated in March 2025, federal efforts now focus on industrial emissions and clean fuel regulations. These initiatives, along with proposed methane reduction rules and energy-efficiency standards under the National Energy Code of Canada for Buildings, are expected to influence construction practices and costs over time.

Provincial Reforms

Provincial reforms are largely driven by housing affordability and ownership transparency. Ontario and Quebec impose transfer taxes on beneficial transfers of land, and British Columbia (which currently imposes transfer taxes on legal transfers of land) is considering similar measures. Transparency requirements are increasing, with British Columbia and Ontario implementing registries and disclosure obligations for beneficial ownership, and British Columbia introducing a developer register of assignments of condominium purchase agreements. Quebec has also introduced stricter rules for agricultural land acquisitions, limiting non-resident and institutional ownership.

Taxation Reforms

Taxation reforms continue to impact development economics. British Columbia and Ontario have foreign-buyer taxes, and Toronto introduced an additional municipal tax in January 2025. Vacancy taxes targeting underused residential properties are in effect in British Columbia and major Ontario cities, alongside the federal Underused Housing Tax Act. In Alberta, the Town of Canmore has adopted the Livability Tax Program, intended in part to address similar concerns. British Columbia has also introduced a home flipping tax to discourage short-term holding of residential property for profit.

Residential/Zoning Reforms

Recent planning and zoning reforms have generally focused on streamlining development processes to improve housing affordability, including legislative changes to reduce red tape and regulatory burdens in planning approvals and updates to development charges aimed at lowering (or otherwise standardising) or deferring costs for builders. At the same time, certain municipalities have increasingly used planning tools to require affordable housing within new developments.

Toronto’s inclusionary zoning regime came into force in 2025 for designated areas, marking a significant step toward integrating affordable units into market projects. However, provincial caps on inclusionary zoning requirements highlight an underlying tension between encouraging housing supply and imposing affordability obligations as a sort of levy on development. In British Columbia, the provincial government has introduced a number of legislative changes targeted at increasing housing supply, including:

• requiring municipalities to permit small-scale (3–6) unit development on lots zoned for single-family or duplex use, depending on lot size and distance from public transit, removing the requirement (and ability) for a municipality to hold a public hearing for certain residential focused developments;
• requiring municipalities to prepare housing needs reports and update their community planning accordingly;
• introducing additional financing tools aimed at standardising amenity contribution costs;
• introducing new inclusionary zoning tools for affordable and special needs housing; and
• amending payment requirements for development cost charges to further allow portions of these fees to be paid in instalments.

Planning Reforms

More broadly, planning reforms emphasise intensification and mixed-use development, with cities like Toronto and Montreal leveraging zoning changes to promote residential projects on underutilised commercial sites, such as excess parking at shopping centres. Montreal’s recent decision to soften affordable housing obligations after developer backlash signals a shift towards more flexible requirements. In British Columbia, the provincial government has implemented changes to legislation restricting municipalities’ ability to deny minimum building heights and density for residential developments in transit-oriented areas (ie, near public transit).

In Alberta, so-called blanket rezoning, which was intended to increase the supply of affordable housing, continues to be controversial. The newly elected Calgary city council took steps in the fall of 2025 towards the repeal of the amendments made to Calgary’s land use by-law in 2024, and Edmonton continues to consider modifications to amendments made to its zoning by-law in 2023.

Role of Housing Affordability and Climate Change in Development Policy

Political priorities around housing affordability and climate change continue to shape development policy. All levels of government are under pressure to deliver affordable and attainable housing, which has led to incentives and regulatory changes. Environmental commitments under the Paris Accord and related climate policies are influencing building codes and energy standards. Additionally, recent amendments to the Competition Act targeting restrictive covenants in commercial real estate have introduced uncertainty for developers and landlords. Rising interest rates and inflation remain overarching economic challenges, affecting capital flows and project viability.

In Canada, most development and redevelopment projects require formal municipal approvals. Common entitlements include subdivision approval, rezoning and development permits, each subject to specific eligibility criteria and procedural steps that vary by municipality. These processes often involve submitting detailed plans, paying fees and attending meetings with municipal committees or public hearings, where neighbouring property owners may have the right to participate. For certain projects, consultation with Indigenous communities is required under constitutional law, and while this duty rests with the Crown, developers are frequently tasked with carrying out the procedural aspects.

Large-scale developments typically involve negotiated agreements with municipalities that set out obligations related to infrastructure, land dedication, servicing, community and financial contributions. Building permits are mandatory for new construction, demolition and alterations, with fees generally calculated based on the size or value of the proposed work and its intended use. Timelines for approvals vary widely depending on the approval and the jurisdiction: in certain jurisdictions, building permits may be processed in days or weeks (or in stages over the course of a development), while zoning amendments or policy changes often take several months, and in complex cases or in certain jurisdictions, may take years.

Ownership changes generally do not trigger planning or zoning approvals, although disclosure requirements apply in some provinces, and transfers of legal or beneficial interests, depending on the jurisdiction, may attract land transfer tax.

Many approvals, such as rezoning and development permits, are discretionary, meaning municipal councils or committees have authority to approve or deny applications based on planning policies, community input and negotiated benefits. These municipal decisions may be subject to appeal rights and judicial review depending upon the jurisdiction.

Expropriation or compulsory purchase of land for development projects is governed by both federal and provincial legislation in Canada. The federal government has the authority under the Expropriation Act (Canada) to expropriate interests in land for public works or other public purposes. Provincial governments and certain other entities (municipalities, utility companies, Crown corporations, etc) also have authority to expropriate interests in land consistent with their purposes. The process is subject to specific procedural requirements, including prescribed notice periods that must be followed by the expropriating authority. When land is expropriated, compensation to the landowner is generally determined based on the fair market value of the property and may also include reasonable costs and damages.

Land use authorities assess the external impacts of proposed developments through municipal planning processes. Official community and development plans guide long-term municipal development and involve extensive public consultation. Depending on the jurisdiction and nature of the application, applications for subdivision, rezoning or development permits typically involve public hearings, where neighbouring property owners and other stakeholders may raise concerns regarding traffic, density and compatibility with surrounding uses.

Certain projects may require consultation with Indigenous communities, as mandated by constitutional law, with procedural aspects often delegated to the proponent. Environmental considerations are addressed through federal and provincial legislation, and projects involving contamination or sensitive lands may trigger additional reviews. In British Columbia, the remediation of contaminated land is integrated into, and addressed as part of, the development approval process. Requirements for formal community impact assessments vary by municipality and province.

For large-scale or multi-phase projects where future details are uncertain, municipalities typically require development agreements that set out obligations related to infrastructure, servicing, land dedication, community and financial contributions. These agreements provide a framework for implementing conditions tied to zoning, subdivision or other approvals, and help ensure that infrastructure and community needs are met while giving developers certainty to proceed. The specific approach to approvals and phasing varies by municipality and is determined by local and provincial planning policies and procedures.

Municipalities often impose conditions on land use approvals through development agreements authorised by provincial legislation or negotiated as part of a discretionary approval process. These conditions can include land dedications, construction of public facilities, servicing obligations and financial contributions. Monetary or land-based commitments are permissible and commonly required, and community benefits agreements may also be negotiated, particularly where additional density or other incentives are granted.

The right to appeal a municipal decision on development approvals varies by province. In jurisdictions such as Ontario and Alberta, applicants can appeal to specialised tribunals, which review the merits of the decision. In other provinces, including British Columbia, there is no tribunal process, and municipal decisions are generally not subject to review on their merits, although they may be challenged in court on procedural grounds such as lack of jurisdiction or breach of natural justice. Where appeals are permitted, strict timelines apply, and appellants must file within the period prescribed by provincial legislation, which is typically short to ensure timely resolution.

Third parties, particularly neighbouring property owners, often have opportunities to participate in the planning and zoning process. This starts with the creation and updating of official development or community plans by a municipality, which guide long-term development of municipalities and involve extensive public engagement. Depending on the jurisdiction and nature of the application, municipalities typically provide notice of applications for subdivision, rezoning or development permits and allow public hearings where third parties can express support or objections. In some cases, Indigenous communities must also be consulted, as required by constitutional law. The influence of third-party input varies depending on the nature of the project and local policies.

The right to appeal a decision depends on provincial legislation. In some provinces, such as Ontario and Alberta, certain third parties may have standing to appeal municipal decisions to specialised tribunals. In other provinces, such as British Columbia, appeals on the merits are not available, but judicial review may be possible on procedural grounds such as lack of jurisdiction or procedural fairness. Requests for community benefits agreements are considered at the municipal level and may be addressed through negotiated development agreements for large-scale projects.

It is common for developers to enter into agreements with municipalities or other authorities to facilitate a development project. These agreements are authorised under provincial legislation that delegates planning and zoning powers to municipalities. They typically address matters such as land dedication, construction of public facilities, delivery of affordable and rental housing, servicing and utility commitments, and financial contributions. Development agreements provide a framework for implementing conditions tied to zoning, subdivision or other approvals and help ensure that infrastructure and community needs are met while giving developers certainty to proceed.

In certain provinces, like Ontario and British Columbia, it can be typical for a developer to enter into and record against title to a property numerous covenants and rights in favour of municipalities to secure the delivery of commitments made by the developer in connection with the development (eg, delivery of affordable and rental housing, delivery of public facilities and servicing).

In many provinces, land use approvals generally run with the land rather than the applicant, meaning they are associated with the property itself and not the entity seeking the approval. At the official plan or zoning level, these approvals typically do not expire, although more detailed approvals – such as site plan control, development permits or building permits – may require the project to proceed within specified timeframes. If a land use application is denied, there is usually no strict prohibition against re-applying, immediately or after a specified period of time depending on the jurisdiction. Land use approvals generally come into effect following issuance of the approval by the relevant authority, subject to any applicable appeal or review periods.

The deadlines for challenging land use decisions are set out in statute and are typically short to ensure timely resolution.

Standards of review for land use decisions in Canada depend on the jurisdiction and the forum. In provinces such as Ontario and Alberta, municipal decisions can be appealed to specialised tribunals, which review the merits of the decision against certain statutory tests and principles of good planning. In other provinces, including British Columbia, there is no tribunal process, and municipal decisions are generally not subject to review on their merits. Instead, judicial review is the appropriate recourse and is limited to procedural grounds such as lack of jurisdiction, failure to comply with public notice requirements, breach of procedural fairness or failure to comply with natural justice. If a development approval decision has been made by a delegated authority rather than the municipal council, it may be possible to have the matter referred directly to council for reconsideration.

When a land use approval is challenged, developers, lenders and investors may seek to maintain project momentum by ensuring the approval is capable of withstanding judicial scrutiny. At the federal level, for example, permits and approvals can be challenged through judicial review in the federal courts, where the court examines whether the decision-making process was fair, the outcome was reasonable and the required Indigenous consultation was properly carried out. If these standards are not met, a court may set aside the approval and require parts of the regulatory process to be repeated. To reduce this risk, proponents may take steps during the approval process to create a clear and well-documented record, address procedural requirements and prepare for potential review. A robust approval record supports project continuity during ongoing challenges.

Developers may use a range of procedural and engagement measures that can reduce the likelihood of litigation from project opponents. This includes preparing complete subdivision, rezoning and development permit applications, meeting municipal notice and public hearing requirements, and addressing issues raised through established consultation processes and adaptive project design. Where Indigenous consultation is required, developers may carry out delegated procedural steps and maintain clear documentation to support the Crown’s obligations. For larger projects, developers typically enter into agreements with municipalities that set out land dedications, servicing obligations and financial terms, which helps clarify expectations and limit areas of potential dispute.

Municipalities may offer development incentives in the form of exemptions, reductions or deferrals for development charges, application fees, parkland dedication, community benefit charges and property taxes. These incentives are generally tied to local revitalisation objectives and specific planning objectives, such as the introduction of affordable housing. In Alberta, a number of municipalities have implemented community revitalisation levies (analogous to tax incentive financing in the USA) in recent years to fund public infrastructure and encourage private investment in areas identified as requiring renewal.

Government authorities apply specific underwriting standards and evaluation criteria when reviewing requests for development incentives. These standards help ensure that public funds are used effectively and that projects align with the community’s economic, social and other policy goals.

Underwriting and evaluation of development proposals typically assess how a project aligns with a jurisdiction’s stated economic development criteria, including consistency with policy objectives and the expected balance between public sector costs and anticipated benefits. Reviews may include an assessment of projected impacts on the tax base for both the approving jurisdiction and neighbouring jurisdictions, as well as the effect on existing businesses to ensure the project creates new economic activity rather than simply reallocating it. Jurisdictions might also consider whether a project would proceed without public support and may require applicants to provide detailed documentation for review by designated officials.

Many policies incorporate performance standards that set measurable outcomes or objective benchmarks and outline remedies, including potential claw-backs, if those standards are not met. Ongoing monitoring and compliance processes are commonly used to track project performance and inform future policy adjustments. Some programmes, such as the CMHC’s Affordable Housing Innovation Fund, apply additional criteria relating to affordability duration, innovative design or financing approaches, financial sustainability, knowledge transfer commitments, accessibility, environmental performance and readiness for implementation, with priority given to proposals that demonstrably satisfy these requirements and provide supporting documentation.

There are several tax and financial considerations developers may evaluate when receiving development incentives. Municipal property taxes remain payable and are generally passed through to tenants, although some municipalities provide exemptions, reduced rates or rebates for certain non-profit projects or for developments in designated incentive areas.

Federal and provincial tax measures also influence project economics. The proposed accelerated capital cost allowance for eligible new purpose-built rental housing increases the allowable depreciation rate from 4% to 10%, provided the project meets the prescribed unit and long-term rental requirements, construction occurs within the required timelines and the rental units become available for use prior to 2036. This allows deductions to be made sooner but does not change the total amount that may be claimed over the life of the asset. In Ontario, beginning in 2026, municipalities may reduce property tax rates on eligible affordable rental units by up to 35%, which may affect long-term operating assumptions. A further consideration is the federal goods and services tax (GST) or federal portion (and, in some provinces, the provincial portion) of harmonised sales tax (HST) rebate for qualifying purpose-built rental housing, which provides a 100% rebate on GST/HST paid for eligible new construction, additions or certain conversions.

Restrictions on development and designated use are enforced under provincial legislation, which provides for fines and penalties for contravention of zoning and building by-laws. Municipalities may take direct enforcement action against offenders and can pursue injunctions and court orders to compel compliance. Environmental contamination is regulated at both federal and provincial levels, with enforcement primarily by provinces. Liability for contamination can extend to subsequent owners and occupiers, even if they did not cause the issue. The Competition Bureau has also engaged in enforcement actions and obtained settlements in respect of restrictive covenants in commercial real estate that are considered anti-competitive. Generally, third parties do not have a private cause of action against a municipality for failing to enforce compliance with permitted uses.

Remedies available to government authorities to compel compliance with land use regulations include imposing fines and penalties for violations of zoning and building by-laws, as provided under provincial legislation. Municipalities have the authority to take direct enforcement action against offenders, which can involve pursuing injunctions and court orders to require compliance, as well as prosecution. Municipalities also have the authority to withhold permits (including building and occupancy permits) for new developments that are non-compliant with land use regulations. Regulatory liability cannot be avoided through private agreements, and liability for environmental contamination can be significant, sometimes extending beyond the party that caused the issue. For larger developments, compliance is often managed through agreements with municipalities that govern construction approvals, subdivision or changes to land-use by-laws.

Depending on the type of activity undertaken, federal and provincial regulations impose requirements on parties seeking land use approvals, particularly in relation to lobbying public office holders beyond the standard development application review process. Both federal and provincial levels of government maintain lobbying frameworks that include registration obligations, disclosure rules and codes of conduct for interactions with public office holders. In addition, certain municipalities have adopted their own lobbyist registration by-laws and maintain public registries to ensure transparency in local decision-making. While these rules primarily govern lobbying, they can apply to applicants or their representatives when engaging with public officials on planning and zoning matters. Political considerations may also arise through campaign finance laws and related restrictions, which are designed to prevent undue influence in the approval process.

Campaign finance and political consideration rules can also apply when applicants are seeking land use approvals, as contributions to political actors are regulated separately at the federal, provincial and municipal levels. These regulations aim to mitigate undue influence and conflicts of interest and can include measures such as limits or restrictions on campaign contributions.

Government authorities at both the federal and provincial level are generally subject to freedom of information (FOI) legislation, which governs public access to records. Documents submitted as part of land use applications typically fall within the scope of these FOI regimes, meaning that they may be subject to disclosure upon request. While certain exemptions exist – such as those for solicitor-client privilege, confidential business information, trade secrets, etc – whether a document qualifies for exemption and/or redaction depends on meeting certain statutory criteria. The decision to apply an exemption rests with the relevant personnel at the institution in question, and any disputes can be reviewed or appealed to the relevant adjudicating body, such as the Information and Privacy Commissioner. These frameworks aim to balance transparency with the protection of sensitive information.