Illegal Construction on the Rise in Canada Amid Housing Shortages

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Authorities across Canada are grappling with a surge in illegal construction, particularly in rapidly growing municipalities. This issue is exacerbated by a booming renovation sector and housing shortages, prompting cities to enhance enforcement measures.

Illegal construction is becoming an increasingly pressing issue for Canadian municipalities, particularly those experiencing rapid growth. This surge in unauthorized building activities is primarily driven by residential complaints, despite the strict regulations governing new construction through permits. The renovation sector, valued at $105 billion in Canada, has seen significant activity, fueled by housing shortages and soaring rental prices. "It certainly is an issue in renovations," noted Scott Fash, CEO of BILD Alberta, emphasizing that renovators lack the same licensing requirements as builders, thus facilitating the underground economy's expansion.
The challenge of illegal construction is anticipated to escalate, with BuildForce Canada projecting a growth rate for the renovation sector that exceeds inflation by two percent until 2033. This sector is expected to employ more workers than new home construction. Local authorities often depend on complaints to initiate investigations into illegal activities. However, innovative technology is emerging, with satellite imagery being utilized to monitor and compare construction over time. Tools such as Google Earth and Geographic Information Systems (GIS) are currently in use, alongside more advanced services like OnGeo Intelligence, which provides on-demand satellite imagery reports in Canada on a pay-as-you-go basis.
Municipalities like Edmonton and Surrey are taking proactive measures to combat illegal construction. Edmonton, which is undergoing an infill housing initiative, saw a dramatic increase in complaints, totaling 514 in 2025 compared to 196 the previous year. Mayor Andrew Knack has publicly stated that if contractors fail to adhere to regulations, the city will take stringent action against them. To enhance oversight, the city implemented the Construction Accountability Program in 2025, aimed at tracking contractors who violate regulations. The city has a range of enforcement options, including issuing violation notices, imposing fines, and seeking legal recourse.
In Surrey, the establishment of the Illegal Construction Enforcement Team (ICET) in 2022 has strengthened the city's resolve to tackle unpermitted and unsafe residential construction. Matt Rose, the building division director, reported that the city has registered over 2,000 construction complaints annually, and ICET has been instrumental in addressing these issues. Since July 2024, the team has targeted 17 properties with illegal alterations, including one barn converted into five living units. In efforts to simplify the permitting process, the city aims to encourage compliance, although in 2025, it issued three demolition notices for properties that could not be brought into compliance with the BC Building Code.
Calgary is also facing challenges with illegal construction, having laid 49 charges against a construction firm and its principals in 2022 for building two structures and a garage without the necessary permits. Darren Lockhart, the manager of building and development and inspections, emphasized the importance of obtaining permits to avoid costly mistakes that can arise from non-compliance. The city has maintained its permit fees for eight years in an effort to promote growth and ease development processes.
Vancouver's illegal construction case files peaked at 381 in 2023 but have since decreased to 292 in 2025. The city focuses on aligning developments with existing bylaws, utilizing a range of inspection tools to ensure compliance. In Winnipeg, illegal construction remains a significant issue, prompting the launch of permit and occupancy search webpages for residents to verify permits. Manitoba Hydro has implemented a policy where new constructions cannot receive electrical service without a formal inspection to ensure safety and compliance.
In Ontario, the Home Construction Regulatory Authority (HCRA) oversees the licensing and regulation of new home builders and sellers. Illegal builds represent a serious consumer protection concern, as evidenced by a 26 percent rise in complaints received by the HCRA from 2024 to 2025. During this period, a construction firm faced over $1 million in fines for illegally building 39 homes without proper registration in the province's warranty plan. The Ontario government has responded to this issue by significantly increasing administrative penalties for violations, doubling fines for repeat offenders to a maximum of $100,000 for individuals and $500,000 for corporations.
As municipalities across Canada grapple with the challenges posed by illegal construction, the need for effective enforcement and compliance strategies becomes increasingly critical in the face of ongoing housing shortages and escalating demand for residential renovations.

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