Ontario Government Ousts Tarion as Builder Regulator

Ontario’s new build watchdog, which has been in place for 40 years, has had its regulatory status rescinded by the province, revealed in a surprise announcement Tuesday.

Tarion New Home Warranty Corporation will no longer have the power to create rules and oversee the new build and development industry; the Toronto Star reports provincial Consumer Services Minister Tracy MacCharles revealed the move in a speech made to the Empire Club of Canada, citing potential conflict of interest. In addition to being the regulator, the agency also acts as adjudicator between developers and unit owners, and administers the warranty on new homes built in Ontario.

“Tarion’s multiple roles and responsibilities can give rise to a perception of conflict of interest, and could result in an actual conflict or conflicts of interest. The new home building sector is an important driver of Ontario’s economy and, quite frankly, I believe it deserves a stand-alone regulator,” MacCharles stated.

Related Read: How do RECO and Tarion Protect Homebuyers? 

The Need for Outside Governance

The fact that roughly half of Tarion’s board is made up of developers, and its unique ability to self-govern its own industry, are grounds for improved consumer protections, says the government, which will now assume all rule-making and regulation responsibilities, and will create a new regulator. MacCharles also revealed that new warranty additions, such as an increase to the current deposit protection amounts for new homes ($20,000 and $40,000 for condos and houses, respectively) and the inclusion of upgrades and amenities, will be implemented as of January 1, 2018, following consultations.

There have been calls to better govern Tarion as well as its New Home Warranties Act, following consumer complaints of negligence and slow response times to reported issues and defects. In addition to an investigation by The Star, the province has also received recommendations following an independent review conducted by former associate chief justice J. Douglas Cunningham.

Said MacCharles, “Tarion is too far removed from government. We believe that consumers can be better protected by giving government the lead in making rules and setting standards.”

Train will continue to handle and fulfil new home warranty claims.

Better Protections for Consumers

The need to strong consumer protections has increased alongside rapidly heating prices in the Ontario market – and particularly in GTA real estate. The demand for newly-built homes has grown along with Ontario’s hot real estate market, and is coming off a record year – 47,161 new homes were sold in 2016, the second-highest ever, reports BILD.

Not surprisingly, condos are seeing the greatest boom, accounting for 62% of all brand-new home sales. And, while purchasing a home on-concept or pre-construction has historically offered cost savings, prices have surged; the average condo price per square feet rose to $614 last year, up from $584 in 2015. And, like detached homes on the resale market, newly-built stand-alone houses have bypassed the one-million mark, going for an average of $1,264,604.

About Penelope Graham

Penelope Graham is the Managing Editor at Zoocasa. A born-and-bred Torontonian and quintessential millennial, she has over a decade of experience covering real estate, lifestyle and personal finance topics. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods. Find her on Twitter at @pjeg14.

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