This past June, new Toronto Sixplex Rules passed which represent a significant change to its residential zoning framework. As-of-right sixplex construction is now permitted in nine designated wards. This now includes much of the old City of Toronto, East York, and parts of Scarborough.
This means that developers and property owners can now build up to six residential units on most lots zoned for detached, semi-detached, and row houses, without the need for costly rezoning or Committee of Adjustment hearings. Development charges have also been waived for the first six units on a property, including laneway or garden suites. These reforms are part of Toronto’s broader effort to expand ‘missing middle’ housing—multi-unit, low-rise options that fit between single-family homes and high-rise towers. Sixplexes bring density into existing neighbourhoods without dramatically changing their built form.
However, this “missing middle” reform does not mean a free-for-all. Construction projects must still comply with strict design and zoning standards: setbacks, lot coverage, height limits (typically 10.5 metres), maximum bedroom counts, and more. The City of Toronto has introduced these permissions in a controlled rollout, with expansion across other wards potentially following in late 2025 or 2026.
“For builder-developers, especially those who self-manage projects or own land with untapped density potential. This change creates opportunity,” says Partner and VP Construction, Mike Di Pinto. But as interest in six-unit developments rises, one new and non-negotiable requirement is often overlooked: surety bonding.
CMHC and MLI Select: The Financing Link Builders Can’t Ignore
When a residential build reaches five or more units, it becomes eligible for CMHC’s MLI Select mortgage loan insurance program, a tool designed to support multi-unit rental construction. Many developers use MLI Select to access:
- Lower interest rates from participating lenders
- Longer amortization periods (up to 50 years)
- High loan-to-cost or loan-to-value ratios (up to 95%)
- Reduced premiums for projects meeting affordability, energy efficiency, or accessibility targets
As a financing mechanism, it’s powerful. But with it comes a mandatory bonding requirement—one that many first-time multi-unit builders haven’t planned for.
Toronto Sixplex Bonding Requirements: What the Rules Say (and Don’t Say)
Director of Surety, Kari Davis explains “effective 2024, CMHC requires all MLI Select projects to carry contract surety bonding. Specifically:
- Performance Bond covering 50% of the contract value
- Labour & Material Payment Bond covering 50% of the contract value
- These two bonds combined must equal at least 10% of the project’s hard construction costs
- Bonding must be secured before CMHC will authorize any construction draws”
This means there are no waivers and no exceptions. No exceptions. The project must be bonded, even if the developer is acting as their own general contractor or building on personally held land.
So, What Exactly Is a Surety Bond?
A performance bond is a financial guarantee that the project will be completed according to the terms of the contract. If the builder defaults or fails to deliver the project, the surety (the company issuing the bond) steps in either by hiring a replacement contractor or compensating for the completion costs.
A labour and material payment bond ensures that tradespeople, subcontractors, and suppliers will be paid. This reduces the risk of construction liens or work stoppages due to non-payment, giving both CMHC and lenders peace of mind that the project won’t be derailed midway.
Unlike insurance, which assumes some level of expected loss, bonding functions more like a form of credit. Surety companies underwrite the builder’s financial strength, track record, and management capacity before issuing the bond.
Toronto Sixplex Rules: Why This is a Big Shift for Small-to-Midsize Developers
Most traditional bonding programs are geared toward established general contractors working on public-sector or large-scale commercial projects. In contrast, the new sixplex landscape in Toronto is attracting a different builder profile:
- Real estate investors branching into development
- Landowners exploring densification
- Owner-operators managing design/build in-house
- Small builders scaling up from duplexes and triplexes
For these groups, bonding can be a completely foreign process. If you do not plan ahead, it often results in a time-consuming and expensive surprise.
A common challenge: financials. Many developer-builders hold real estate in separate holding companies or as joint ventures. Unless consolidated and clearly presented, these structures can make it difficult to demonstrate bonding capacity.
Real-World Example of Toronto Sixplex: Hazelview and the CMHC Playbook
In May 2025, Hazelview Investments announced it had secured one of the largest-ever CMHC-insured loans for a rental project: funding the construction of 856 purpose-built rental units at Bloor & Dufferin.
The project exceeded CMHC’s benchmarks on energy and accessibility. But what didn’t make headlines was the degree of preparation behind the scenes: including comprehensive bonding coverage, integrated into the financing and risk management process from the start.
Hazelview’s success wasn’t a matter of luck but rather, it was execution. For smaller developers, the same logic still applies. Whether you build building 6 units or 600, the rules, and bonding thresholds, are the same.
What to Do Now: Planning Ahead for Your Toronto Sixplex Bond
“If you’re exploring a sixplex development and plan to apply for MLI Select funding, you should begin preparing for bonding immediately” warns Kari Davis. This includes:
- Gathering audited or professionally compiled financials (personal and corporate)
- Creating a detailed construction budget and draw schedule
- Engaging a broker with experience in contract surety for real estate developments
- Start the bonding application early, ideally before submitting your CMHC loan application.
“Delaying the bonding process often results in financing delays, particularly if underwriters request additional financial documentation or impose limits on coverage” she adds. “And since no funds can be released until the bond is in place, this can stall your start date by weeks or more.”
New Toronto Sixplex reform opens the door to more density, more rental housing, and more infill development opportunities. But new rules also bring new requirements—and surety bonding is one of them.
In our next article, we’ll break down how to secure bonding as a developer, how to structure your application, and how to integrate bond costs into your project pro forma from day one.
[Read Part Two: Securing a Surety Bond for Your Sixplex Project]