Toronto's Multiplex Playbook for 2026: What You Can Build, What It Costs, and How It Gets Financed

Three years ago, putting four rental units on a Toronto residential lot meant a rezoning application, a neighbourhood fight, and a timeline measured in years. Today it is a building permit.

That change — the city-wide multiplex by-law, the nine-ward sixplex permission, and a development charge exemption that quietly removed roughly half a million dollars from the cost of a six-unit project — has opened the most accessible development opportunity Toronto has offered in a generation. It is also the least understood.

This is the overview guide. Each section links to a deeper piece in our Multiplex & Small-Scale Development series.

The one-page version

Question	2026 answer
How many units can I build as-of-right?	Four anywhere in a low-rise residential zone city-wide. Six on a detached lot in nine of Toronto's 25 wards.
Plus a garden suite?	Yes — in addition to those units, not counted within them. One per property, under separate rules. Six plus a garden suite is seven doors.
How much parking is required?	None. Minimum parking requirements were removed in February 2022.
Development charges?	Zero on units two through six, plus a parkland exemption, since July 2025 — with no sunset date in the adopted by-law.
What does it cost to build?	Roughly $210–$330 per square foot in hard costs for wood-frame low-rise, before land, soft costs and financing.
Can I get CMHC financing?	At five units or more, yes — MLI Select goes up to 95% loan-to-cost and 50-year amortization. A fourplex plus a garden suite gets you there.
Is there an HST rebate?	Yes — a 100% federal rebate on new purpose-built rental of four or more self-contained units, plus the Ontario portion. Owner-occupying a unit disqualifies it.

1. What the zoning actually allows

Toronto's multiplex by-law took effect on May 12, 2023. It permits two, three and four units as-of-right in RD, RS and RT zones within areas designated Neighbourhoods — which is to say, most of the residential city.

The envelope is more generous than most owners expect:

The as-of-right envelope

Standard	What applies
Height	A minimum of 10 m is permitted, even where the height overlay shows less. In the nine sixplex wards, 10.5 m.
Storeys	Multiplexes are exempt from storey-count limits. Height in metres governs.
Floor space index	Exempt from maximum FSI, unless a site-specific exception applies.
Building depth	17.0 m maximum (19.0 m under specified lot conditions).
Parking	None required. Optional parking must meet zoning standards if provided.
Bedrooms	Since June 2025: three bedrooms per unit in a three-or-more-unit building. Twelve for a fourplex, eighteen for a sixplex.

That bedroom cap is the one 2025 change that catches people out. It was introduced in response to a small number of extreme applications — City Planning reviewed 222 multiplex applications from 2023–24 and found only about 2.25% exceeded the new formula — but it is now the rule, and it shapes unit mix from day one.

Read the full zoning guide, including the nine wards and the development charge exemption →

2. The unit count that changes the economics

There is a hard line in Toronto multiplex development, and it does not fall where most people assume. It is not between three units and four. It is between four units and five.

CMHC's MLI Select program — the financing that makes small purpose-built rental work — has a minimum project size of five units. At four, you are financing with conventional commercial debt. At five, a different set of terms opens up.

Maximum loan-to-cost on new construction
Four units — conventional commercial debt
	typically 65–75%
Five or more — CMHC MLI Select
	up to 95%
MLI Select maximum per CMHC program documentation, 2026. Conventional range reflects typical Toronto small-project terms and varies by lender and sponsor.

Amortization follows the same cliff: 40 years at 50 points, 45 years at 70, and 50 years with limited recourse at 100 points. Stretching amortization from 25 years to 50 roughly halves the annual debt service on the same principal — which is the difference between a project that carries and one that does not.

The garden suite is how most lots get there

Here is the part that changes the map for anyone outside the nine sixplex wards.

In our experience, a garden suite counts toward the unit total CMHC uses for valuation and financing purposes. A fourplex plus a garden suite is five doors — the MLI Select threshold — on a lot where the main building is capped at four units.

Both permissions are as-of-right. Four units city-wide, and a garden suite in addition to them wherever the rear yard supports one. So on a lot with the depth for a rear-yard building, CMHC eligibility is reachable with no Committee of Adjustment application, no rezoning, and no need to be in one of the nine wards.

Read the full comparison: fourplex vs. fiveplex vs. sixplex →

3. What it costs

Per the Altus Group 2026 Canadian Cost Guide, Toronto wood-framed residential up to six storeys runs $210 to $330 per square foot in hard costs. That is construction only — no land, no soft costs, no financing, no development charges.

The useful news for 2026 is that costs are falling. Altus reports Toronto residential construction pricing has been declining steadily and now sits at or near the most affordable levels in three to five years, driven by competitive trade bidding as fewer projects start.

A real seven-suite budget

Here is the actual cost stack from a seven-suite Toronto project currently in planning with one of our vetted general contractors — a six-unit main building plus a garden suite on a 55' × 132' lot. Figures are the contractor's, under a fixed-price build contract.

Line	Amount	Note
Lot acquisition	$1,325,000	Including closing costs and land transfer tax
Hard costs	$2,350,000	Approx. 8,800 sq ft including the garden suite
Soft costs	$250,000	Architectural, studies, reports, office operations
Financing costs	$175,000	Construction line interest and fees
Total build cost	$4,100,000	Approx. $466 per sq ft all-in

Note what is not on that list: development charges. On a six-unit building, units two through six now attract zero. Using the City's published residential rate for multiples with two or more bedrooms, that is somewhere in the order of half a million dollars that would have been payable before July 2025.

Read the full cost breakdown, line by line →

4. How the money comes back

The same seven-suite project, carried through to stabilization:

Stabilized position	Amount
Annual gross rental income	$318,400
Operating expenses (20% of gross, including vacancy allowance)	$63,700
Net operating income	$254,700
Stabilized valuation at a 4.7% cap rate	$5,420,000
Equity created	$1,320,000

A 4.7% cap is conservative against CBRE's Q2 2026 Toronto range of 4.00%–4.75% for new-construction multifamily. The equity is the spread between what it cost to build and what a stabilized, income-producing asset is worth — and it is created on the day the last tenant signs, not ten years later.

Then the capital comes back out

At stabilization the project refinances onto a CMHC term takeout. On this budget, that returns roughly 83% of the initial capital while leaving the asset intact and cash-flowing — a debt service coverage ratio of 1.245 against CMHC's 1.10 minimum, on a 40-year amortization.

That is the mechanic that makes multiplex development repeatable rather than one-off: the same equity can fund the next project.

5. The rebate most house-hackers lose

The federal purpose-built rental housing rebate gives back 100% of the GST — and, in Ontario, some or all of the provincial portion of the HST — on new rental construction. A building qualifies with four or more units, at least four of which have a private kitchen, bath and living area. Fourplexes and sixplexes qualify. Duplexes and triplexes do not.

There is a trap. At least 90% of the units must be held for eligible long-term residential leasing. CRA's own published example: an owner who occupies one unit of a fourplex has 75% leased to others, falls below the threshold, and loses the rebate entirely. The same arithmetic disqualifies an owner-occupier of a sixplex at 83%.

If you intend to live in one of the units, that decision needs to be priced before the budget is set, not after. Construction must have begun after September 13, 2023 and before 2031, and be substantially complete before 2036.

6. How VIP Condos Toronto helps close the gap

We are not the builder and we are not the general partner. We are the brokerage that has done the vetting, and that is the value we bring to this.

Our bench of contractors and consultants is pre-vetted for the thing that actually matters: whether they build multiplexes as their core business, repeatedly, with standing crews and common plans — or whether yours would be their first. One GP corporation we work with is operated by a principal with more than thirty years of construction and development management experience, whose related entities have delivered over three million square feet and more than $5 billion of development value, and which is now structured as a vertically integrated operation dedicated to multiplex projects: planning, development, financing, construction, lease-up, stabilization, operation and sale.

We do not publish our partners' corporate names here. If you are weighing a project and want to know exactly who you would be building with — the principals, the completed projects and the references — contact Frank Merigliano directly at 416-885-0172 or frank@vipcondostoronto.net and we will make the introduction.

We introduce clients into that bench either as 100% owners with a turnkey fixed-price contract, or as limited partners in a GP/LP structure. We will tell you honestly which one fits your situation, including when the answer is that neither does yet.

Related reading: 100% Ownership or GP/LP Partner?.

The timing argument

Four things line up in 2026 that have not lined up before, and will not necessarily stay lined up.

• Construction costs are at a multi-year low. Fewer project starts means competitive bidding from trades and suppliers.

• Development charges on units two through six are zero. The adopted by-law carries no sunset, but no exemption is permanent by nature.

• The condo pipeline has shut off. The GTHA saw 246 new condo sales in Q1 2026, down 54% year over year and 94% below the ten-year average, with zero new project launches. The investor-condo channel that supplied most of Toronto's new rental units is closing.

• Purpose-built rental starts rose 50% year over year in H1 2026 and Urbanation reports demand now outpacing supply as condo completions recede.

Rents are soft right now — new GTHA purpose-built rental is discounting roughly $377 a month off face rent to fill units, and any pro forma built on asking rents overstates revenue by about 12%. That is a reason to underwrite carefully, not a reason to wait. Buildings started in 2026 lease into a 2027–28 market with a supply pipeline that has already been emptied.

Frequently Asked Questions

Can I build a multiplex on any Toronto lot?

Four units as-of-right applies in RD, RS and RT zones within Neighbourhoods-designated areas, which covers most low-rise residential land in the city. Site-specific exceptions, heritage designations, ravine and conservation authority regulation, and the Tree Protection By-law can all constrain a particular lot. A zoning review is the first step on any site.

Do I have to live in the building?

No. There is no owner-occupancy requirement anywhere in the City's multiplex framework. Units may be rented. But see the rebate point above — living in one unit has a significant tax cost.

Does a garden suite count toward the four- or six-unit cap?

No. Garden suites are governed by separate regulations and are permitted in addition to the units in the main building. The City's multiplex guidance confirms an accessory dwelling unit such as a garden or laneway suite can sit on the same property as a multiplex, and Council's July 2025 development charge decision expressly contemplates "up to six residential units, or up to seven where there is a garden or laneway suite." What decides whether yours is buildable is lot depth, tree protection and rear-yard landscaping — not the unit cap.

So can a fourplex get CMHC financing?

Not on four units alone — but add a garden suite and the project is at five, which is the MLI Select threshold. In our experience the suite counts toward the unit total CMHC uses for valuation and financing purposes. Both permissions are as-of-right, so no variance is needed. Confirm the treatment with your lender at design stage.

How long does a build take?

On the seven-suite project above, the contractor forecasts 10 to 12 months from lot closing to stabilization, with the Committee of Adjustment variance application running in parallel with construction rather than ahead of it. Timelines vary considerably with site conditions and whether variances are needed.

What is the minimum I need to participate?

For 100% ownership, you need the land and the equity behind a construction loan — on the budget above, that is meaningful capital. LP participation is sized to the raise and is the accessible entry point for most investors. Both routes start with the same conversation.

This guide is for general informational purposes and does not constitute legal, financial, or tax advice. Every situation is different — always consult a licensed real estate professional, lawyer, and tax advisor before making any decisions. Project figures shown are a contractor's forecast for one specific site and are illustrative only; they are not a projection of returns on any other project and are not an offer to sell securities.

Ready to Take the Next Step?

Create your free, secure account at www.VIPCondosToronto.net for full MLS access, real-time sold data, and VIP pre-construction pricing and floor plans — the same tools our team uses every day.

For personalized advice on your specific Toronto buying or selling situation, contact Frank Merigliano and the VIP Condos Toronto team directly:

• Phone: 416-885-0172

• Email: frank@vipcondostoronto.net

• Web: www.VIPCondosToronto.net

Frank Merigliano, Team Leader / Sales Representative, VIP Condos Toronto, RE/MAX PREMIER INTERNATIONAL INC., Brokerage — licensed since 1993, with RE/MAX since 1995, and a Top 50 RE/MAX team in Canada since 2015.

Sources: City of Toronto, Multiplex Study (2–4 units); City of Toronto, Considerations When Building Multiplexes; Toronto City Council item 2025.MM32.5 (development charge and parkland exemption); Toronto City Council item 2025.PH22.3 (multiplex amendments, bedroom caps); CMHC, MLI Select; Canada Revenue Agency, Purpose-Built Rental Housing Rebate; Altus Group, 2026 Canadian Cost Guide commentary; CBRE, Canadian Cap Rates & Investment Insights Q2 2026; Urbanation, GTHA Rental Market Q2 2026; CP24 / Urbanation, GTHA new condo sales Q1 2026.