According to the Auditor-General report, the Ontario builder regulator has only rejected two new applications out of 3,115 in its five years of existence.Fred Lum/The Globe and Mail
An Auditor-General’s report on the Ontario Home Construction Regulatory Authority has raised serious questions about whether builders who do not meet the regulator’s standards of professional conduct and financial risk have been allowed to gain or retain a license to sell new homes.
“We found that HCRA automatically approved license renewal applications of licensees with a history of conduct issues, such as breach of contract and harassment or verbal abuse, with no staff review,” reads the first line of the AG’s “what we found” section of its special report on the HCRA. The report provides a detailed look at what critics call a startling lack of activity by the HCRA, which has only been in operation for five years.
According to the auditor, as of March 31, 2025, there were 7,232 licensed new home builders and vendors in the province, but in the HCRA’s entire history, it has only rejected two new applications (out of 3,115) and only rejected three license renewal applications while approving 25,965.
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In recent years, HCRA expanded a “fast-track” renewal process that relies on self-vetting by builders, in which the builder must declare not to be the subject of any investigations or disciplinary actions. Use of the self-vetting process increased from 8.4 per cent of renewals in 2021-22 to 39 per cent, or 2,658 renewals, in 2024-25. The AG warns that HCRA does not have any controls on the fast-track renewal system to check responses for truthfulness, and a review of the 2024-25 renewals found 134 cases of companies renewed while having open complaints against them, 33 of which were considered “high-risk” with claims of verbal abuse or harassment. Another 136 renewals had closed investigations on their record, including 25 of which were subject to further enforcement action. The report notes that those 134 open-complaint companies built 1,100 new homes in the same year.
The report provided the example of GC King Bond GP Inc., which received a fast-track renewal in July, 2024, despite having been under an open investigation for more than 550 days. Six days after it won renewal, HCRA issued more than $16-million in penalties for 76 contraventions of its code of ethics, based on a pattern of threatening the buyers in a townhouse project, saying the project would fail unless they agreed to pay more than they had contracted to, or sign a mutual release so the builder could resell the units. By June, 2025, GC King Bond GP Inc. was in receivership, though, according to HCRA’s home-builder directory, it is still able to sell new homes and retains its license despite an expiry date of Aug. 22, 2025.
“We see this as a scathing report – a totally unacceptable situation – but unfortunately not surprising,” said Karen Somerville, head of the consumer advocacy group Canadians for Properly Built Homes, which has been critical of the slow pace of change at the HCRA. “We deal with homeowners day in and day out who are really struggling because they’ve got a home that doesn’t meet building code, usually with numerous code violations,” she said. “It’s beyond heartbreaking to see the impact of this on families, on people in our communities.”
The report notes that HCRA does not review financial statements or check the financial health of the officers and directors of the builder companies.Fred Lum/The Globe and Mail
In addition to failing to check its own investigations and complaints data before renewing licences, the auditor also slammed the HCRA’s financial risk assessments, which it said rely primarily on a single indicator – a credit score from a Canadian credit agency – when assessing the financial health of companies. The auditor said HCRA does not review financial statements or check the financial health of the officers and directors of the builder companies.
Even when a builder fails the credit check – which happened in about 2,042 cases or 7 per cent of all the applications it received – more than 99 per cent (2,206) of those who failed the credit check were still approved without condition after a review by the assistant deputy registrar of licensing. Of the remaining 16 companies, all were still approved with conditions, only one of which was related to its finances. “This calls into question the value of the ADR review process in assessing applicant financial position,” the report reads.
Industry experts have also questioned HCRA’s sources for its credit information. Craig Macklin is president of Lumbermens Credit Reporting Group, one of the main credit agencies for the construction industry, used by most of the country’s largest construction management firms and developers, major building materials suppliers and individual tradesmen companies. He said his company hasn’t provided any reports to HCRA in the past three years. He said the difference between Lumbermens and the quality of credit data from even the largest retail credit agencies is in the details.
“We would have more stuff,” he said. “Instead of getting 10 data points, you get five, and if you’re basing your decision on that volume of data, your due diligence is half as good as it could be.” Mr. Macklin said he has faced pushback from developer clients when his credit reports reference data from HCRA’s builder directory, which many in the industry view as incomplete, out of date and unreliable. “They do not like the HCRA, they don’t trust them,” he said.
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The AG also faulted the regulator’s slow pace in dealing with complaints. “HCRA’s backlog of open complaints increased from 129 as of March 31, 2021, to 1,526 as of March 31, 2025. This is an increase of over 1,000 per cent.”
The HCRA accepted most of the report’s recommendations, though the provincial Ministry of Public and Business Service Delivery and Procurement pushed back in one instance, saying it could not accept a recommendation that it establish technical competency standards and mandatory education requirements for licensed builders, at least not until it can “assess the potential impact of this recommendation, including impacts on housing.”
According to Ms. Somerville, this attitude from the government and HCRA’s failure to uphold its own standards is a symptom of political pressure to treat consumer protection legislation as just another burdensome constraint on the industry.
“This has to be considered in light of the pressure from government to get homes built,” she said. “We’re in an environment where all levels of government are focused on building faster and removing red tape.”