What is a New Home?

Sep 18th, 2023

The Home Construction Regulatory Authority (HCRA) regulates and licenses the people and companies who build and sell new homes in Ontario. What do we mean by "new home"?

The HCRA has a technical definition, but in simple terms, if the home meets the following characteristics it is considered to be a "new home":

  • Must be a new dwelling
  • Has not been previously occupied
  • Must be self-contained (meaning the occupant has their own private access to kitchen, bathroom and living areas)
  • Must be constructed as a family dwelling to be used for residential purposes
  • Is affixed to a permanent foundation
  • Can be occupied on a year-round basis

Examples of new home:

  • Detached homes
  • Townhomes
  • Condominiums
  • Tiny homes, all season cottages and coach houses (should they meet the characteristics above)

Anyone building or selling a dwelling that meets the definition of a new home must be licensed by the HCRA. The HCRA has the authority to look into consumer concerns about the builder’s conduct and competency and take enforcement action where necessary.

What is not a new home?

As important as it is to understand when the definition of a new home applies, it’s also helpful to know what is not considered to be a new home:

  • Hotels and motels, including residential dwellings in a hotel condominium
  • Rental dwellings
  • Dormitories and post-secondary education residences
  • Care facilities
  • Detention facilities
  • A residential dwelling with fractional ownership or time-share interest
  • Seasonal homes – i.e., residential dwellings not capable of year-round occupancy
  • A life lease of residential dwelling unit

Builders of these dwellings would not be required to be licensed by the HCRA and arenot regulated by the HCRA.

Illegal Building

Curtailing the practice of illegal building is a top priority for the HCRA. Illegal building is when an unlicensed person or company builds and/or sells a new home that has not been previously occupied, or builds/sells a new home that has not been enrolled with Tarion for warranty protection.

The only exception to this rule is what’s known as an "Owner-Builder" – a builder planning to build their own home. In this situation, they may not need to be licensed as a builder, as long as they do not sell the home once they have completed construction. This is different than hiring a builder to build a home on land you own – this is known as a contract home, which does require licensing from the HCRA.

Before working with any builder, the HCRA always encourages consumers to consult the Ontario Builder Directory to confirm that the builder is in fact licensed.

If the builder is not licensed, there could be grim consequences for the home buyer. Working with an illegal builder can put a home buyer’s safety and financial investment at risk. Licensed builders are regulated by the HCRA and must meet high conduct and competency standards. Unlicensed builders face no such scrutiny – and have not demonstrated they meet any sort of technical and competency skills to safely build new homes; they may not even be financially capable to carry out the projects and are clearly not adhering to the law!

See Illegal Building? Report It!

You do not have to be personally affected by illegal building to report it to the HCRA. If you believe a person or company is building illegally in Ontario, you can get in touch with the HCRA directly by filling out an Illegal Building Complaint Form.

Many Canadians dream of owning or building a new home. The HCRA encourages following that dream – while also following the rules in place for everyone’s protection.