City governments across Canada are promoting what planners call “soft density.” The idea is simple: replace single-family homes with two-family homes, three-family homes, four-family homes and, in the case of Edmonton, eight-family homes to increase housing supply without dramatically changing the character of the neighborhood.
In principle, gentle compaction is a sensible policy. In practice, however, the unintended consequences are proving harmful to some residents.
A recent report in the Edmonton Journal expressed concerns that many residents had quietly feared. Certain properties approved and constructed as multiplexes are not used exclusively for long-term rental purposes. Instead, they now serve as guest rooms or short-term rentals, effectively acting as boutique hotels nestled in residential neighborhoods.
This result deviates significantly from the original planning goals. Proponents of higher density argued that expanding the availability of smaller units in established neighborhoods would attract new residents, including nuclear families, students, and workers seeking long-term housing that would benefit from the community’s existing resources and infrastructure, such as transportation systems, roads, and sewer networks.
If these units are converted into short-term rentals or dormitories, the policy objective will be compromised. The neighborhood is achieving the density but not the residential stability that originally justified the measure.
This mismatch between intent and outcome requires regulatory adjustments rather than abandoning the soft density concept altogether. In Edmonton, the city is reviewing multiplex regulations, including reducing the maximum number of units on residential streets from eight to six. However, strict enforcement is required to ensure compliant use.
Local governments must update their short-term rental regulations to ensure that new multiplexes do not become commercial lodging establishments operating in residential neighborhoods. A practical and frequently implemented solution is to require that short-term rentals be permitted only in owner-occupied primary residences. If the owner lives on-site, neighbors have a clear point of contact and are responsible if guests cause noise, parking issues or other nuisances.
Without such safeguards, multiplex zoning can inadvertently lead to unregulated clusters of temporary housing. This was also the case in Toronto before the city imposed restrictions ensuring that certain types of properties could not be used for short-term rentals.
There are other legitimate concerns about negative externalities, a concept well understood in urban economics. When properties operate as de facto hotels, with guests arriving and departing daily, surrounding residents experience impacts that were never part of the social contract of residential zoning. Increased noise, parking pressure and unfamiliar pedestrians can affect the perceived stability of a road.
In economic terms, these are negative externalities that are exerted on neighboring properties.
If such impacts reduce property values or reduce neighborhood desirability, municipalities should at least measure and monitor these outcomes. Cities routinely regulate land use to protect public welfare; They should equally be willing to monitor whether some policy changes inadvertently erode neighborhood value. If demonstrable damage occurs, municipalities must be prepared to reconsider the legal framework or take appropriate remedial measures.
Transparency and enforcement are also essential steps.
Cities should maintain public registries of short-term rental properties and residence halls so that residents can see which properties in their area are licensed for such uses. This information allows communities to report illegal or unregistered operations.
Enforcement must also be credible. Even if the penalties for violations are insignificant compared to the profits from illegal short-term rentals, compliance will continue to be difficult to achieve.
Meaningful enforcement requires penalties that are high enough to actually act as a deterrent.
Ultimately, urban planning is not just about maximizing density. The goal is to create and protect values – certainly economic values, but also cultural and community values.
Neighborhoods derive their identity from a delicate balance between stability, familiarity and social cohesion. When residents know their neighbors and share their sense of place, these neighborhoods become desirable places to live. This attractiveness in turn creates added value for the entire city.
Soft densification remains an important tool for addressing Canada’s housing shortage. However, their success depends on aligning policymaking with policy outcomes. If multiplex zones increasingly create short-term rental properties instead of long-term rental apartments, cities have solved the wrong problem.
Good planning requires not only bold reforms, but also careful guardrails.
Cities must ensure that soft densification delivers on its promise: more housing for residents, stronger neighborhoods, and growth that strengthens, not undermines, the character of the communities people call home.
Murtaza Haider is executive director of the Cities Institute at the University of Alberta and Radhe Krishna Gupta Executive Chair for Cities and Communities at the Alberta School of Business. Stephen Moranis is a former president of the Toronto Real Estate Board and an industry veteran who provides strategic market insights.