CAPTIJN: HCRA Fail: Ontario’s new home watchdog gets failing grade — and nothing’s changed

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Government agencies which oversee many powerful industries are called regulators. They sound like a pretty boring group, but they protect us in many aspects of our daily lives. Business leaders often balk at rules and regulations, but consumers need regulators. Here’s why.

Regulators govern many businesses we interact with daily, like food and drug companies, banks, and manufacturing industries. They make sure products are safe and meet certain quality standards before they’re sold to the public. This gives us confidence to buy these products and services.

When you buy a new car, you want to know it has met certain quality standards and passed safety inspections. Doctors, engineers, and lawyers are also regulated to make sure they meet education and professional standards before they serve the public. When you sign a contract to buy a new home, you want to know the builder has the financial stability to complete it and hires licensed and skilled tradespeople to build it properly. That’s the job of the industry regulatory body.

Health Canada and Transport Canada are two of the most commonly known regulatory bodies, overseeing health and transportation. No one wants to use medication which hasn’t been properly checked for safety standards, or fly in a plane which hasn’t passed safety checks.

If businesses were allowed to operate for profit only, with no independent oversight, they may take shortcuts to serve their interests, exposing consumers to health and safety risks.

Balancing playing field between industries, consumers

Regulators balance the playing field between powerful industries, which have influential lobby groups to promote their interests, and consumers who have less power, money and legal resources to get their interests heard and understood by policy-makers. It’s important that key positions at regulatory bodies not be dominated by the industries they’re supposed to regulate, since that’s the fox guarding the chicken coop.

If consumers trust industry regulators, that helps create a “fair, safe and informed marketplace” as the ministry in charge of consumer protection, the Ministry of Public and Business Service Delivery and Procurement, promises in their public communications.

We also need to trust regulators when we buy a new home. An effective regulator catches the bad actors before they harm consumers. No one wants to fall victim to missing deposits, builder bankruptcies, or homes with construction defects.

Many new home buyers are surprised to learn there was no dedicated regulator of the new home building industry before 2021. To look back a bit in history, the Chair of the provincial agency, Tarion, described its role in an article on Feb. 24, 1996, in The Toronto Star, as a “builder self-regulatory agency.” But self-regulation didn’t work; it didn’t gain consumer trust.

In 2021, after an extensive review, the Ontario government created the Home Construction Regulatory Authority (HCRA) to regulate new home builders and oversee licensing, conduct, and competence issues. Also, for the first time in Ontario’s history, a written Code of Conduct was created for new home builders. Prior to that, there were few written standards by which builders could be held to account.

Given this history, it’s no surprise that Ontario is still struggling with the problem of illegal building, which means builders building without a license or without enrolling homes with the warranty administrator. The lack of effective independent regulation has likely contributed to illegal building for the last four decades.

Buying from an illegal builder can expose consumers to risky construction or missing deposits.

HCRA fast-tracked license renewals, auditor found

Is anyone checking to see whether HCRA is an effective regulator? Part of this is the ministry’s role, and part is the role of the Auditor General of Ontario, who released a performance audit on HCRA on October 1, 2025. It didn’t sugarcoat its findings.

The report shows HCRA had been fast-tracking license renewals for some builders who failed to meet the basic financial requirements; there’s a backlog of over 1,500 unresolved complaints, many taking over a year to investigate. The number of complaints increased 1000% from 2021 to 2025, and of the 800 complaints received each year, 200 are for illegal building. HCRA had also not been cross-checking municipal building permits with their own data to try to stop illegal builders before they build. Astonishingly, HCRA did not review all of the financial information submitted by builders before renewing their licenses.

It’s hard to see this as anything other than a failing grade. The report hasn’t gotten a lot of mainstream media attention, while housing is a key government priority, and elected officials at all levels keep urging builders to build faster and incentivizing consumers to buy new builds.

This statement from the auditor should have been a wake-up call: “We found that HCRA’s processes, and policies to license and regulate new home builders and vendors were not consistently effective in protecting consumers when purchasing a new home.” The government’s oversight of HCRA was called “insufficient”, and warned it may put consumers at risk.

One year later, what’s been done?

Judging from HCRA’s recent annual meeting, held Sept. 10, 2026 via webcast, not much. There was the usual thanking of employees, board members, and the well-worn promises of protecting consumers, holding bad actors accountable, and maintaining public trust. The minister’s pre-recorded speech seemed out of touch with the serious concerns raised in the auditor’s report.

Of the twenty-four recommendations the auditor made, nineteen are still pending, and some have been pushed forward to 2027-2028. This leaves consumers possibly exposed to financially unstable or insufficiently trained builders,  or inadequately trained supervised builders. Add to this, the ministry itself was called out for not providing adequate oversight of HCRA.

When asked a question via the web-chat about why there are no consumer advocates on the HCRA board (there are three builders, a healthcare professional, a lawyer, and a former mayor), the board Chair answered that all board members “have consumer protection at their heart.”  If that were the case, it’s hard to imagine anyone who has consumer protection at heart would agree to fast-track builder licenses without the proper financial checks, or allow complaints to balloon to over 1,500 unresolved cases.

Lax regulation may benefit the “build-more-faster” political agenda in the short term, but in the long term no one benefits from reputational damage to the industry by rogue builders, builder bankruptcies, missing consumer deposits, or unfulfilled contracts.  The most effective regulators stop this before it happens; they’re proactive, not reactive.

Reputation takes years to build, motivates consumers to buy

A good reputation takes builders years to build; it’s the cornerstone of a good business. Trusting a builder’s reputation is part of what motivates consumers to buy.

There are some things the government could do right away to gain consumer trust, without having to change legislation. It could increase the ministry’s oversight of HCRA. It shouldn’t be left to the auditor to discover twenty-four failings years after consumers may already have been harmed. The Builder Directory, which HCRA’s CEO said she was “very proud of”, has drawn criticism from consumers for years as being incomplete and unhelpful as a research tool. It needs a major transparency overhaul. The increasing use of non-disclosure agreements (NDAs) to keep construction defects or price escalations off the record doesn’t increase consumer trust or confidence in the long run. Good builders don’t need to use NDAs.

Building new homes properly and protecting consumers shouldn’t be competing goals. From the consumer perspective, they go hand in hand. The government can, and should, fix this weak regulator. Weak consumer confidence won’t sell new homes.

— Barbara Captijn is a Consumer Advocate. Follow her @ReformTarion

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