Ontario’s Home Construction Regulatory Authority (HCRA) fast-tracked builder licences despite red flags, audit found
Ontario’s Home Construction Regulatory Authority (HCRA) has come under fire in a new report from the province’s auditor general, which found the agency’s licensing and oversight systems have left new homebuyers exposed to risk from poorly vetted builders and vendors.
Auditor General Shelley Spence found that the HCRA approved over 99% of licence applications without conditions, even when applicants failed to meet financial thresholds or had a history of conduct issues. HCRA has been tasked with enforcing the New Home Construction Licensing Act since 2021.
“HCRA’s assessment process is insufficient to form an opinion on whether the applicant can reasonably be expected to be financially responsible in the conduct of business,” Spence said in a special report.
Fast-track renewals bypassed staff review
The report revealed that in 2024/25 alone, 134 licensees with open complaints, including 33 classified as high-risk, were renewed through this process. “Had the HCRA data been considered, those licensees would not have been eligible for fast-track renewal,” Spence said.
One builder received a fast-tracked renewal just days before being hit with $16 million in penalties for 76 breaches of the Code of Ethics. The builder later entered receivership, yet continued to hold an active licence.
“By automatically renewing licensees without evaluating its own licensee complaints and inspections data, HCRA is potentially putting new homebuyers at risk,” Spence said.
Financial checks found lacking
The audit also found HCRA relied almost exclusively on credit scores to assess financial responsibility, approving over 99% of applicants who failed to meet its own credit threshold, typically without conditions.
The regulator did not consistently review insolvency history, updated financial statements, or other red flags—even as Tarion, Ontario’s home warranty provider, reported a surge in deposit protection claims and builder insolvencies. In 2024, Tarion paid out $76.9 million in deposit claims, more than the previous three years combined.
Oversight reactive, not preventative
HCRA’s oversight and enforcement were found to be largely reactive, triggered by complaints rather than proactive risk monitoring. The backlog of open complaints soared from 129 in 2021 to over 1,500 by March 2025, with the average complaint taking 419 days to close.
The agency also failed to use municipal building permit data to identify illegal builders, missing opportunities to prevent unlicensed activity.
The findings raise concerns about the reliability of builder licensing and the potential for increased risk exposure when financing new home purchases. As the average price of a new Ontario home topped $790,000 in 2024, and nearly 60,000 new homes changed hands, stable regulatory oversight is critical to protecting both buyers and lenders.
As Spence put it, “Buying a home is one of the largest investments a person makes in their lifetime. When they sign a contract with a builder or vendor there is an expectation that the builder/vendor is reliable.”
HCRA and ministry responses
HCRA agreed to all 10 of the auditor’s recommendations, promising to strengthen controls, review financial assessment practices, and improve complaint handling.
The Ministry of Public and Business Service Delivery and Procurement accepted most recommendations, but hesitated on calls for mandatory continuing education and technical competency standards, citing possible impacts on housing supply.
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