CMHC Secondary Suite Update

 

 

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With a dwindling supply of affordable rental housing available in Canada’s rental stock, secondary suites can be a lifesaver for not only low and moderate income households, but also for cash strapped first time homebuyers in high-cost areas. They also afford older households the security of aging in their family home while earning some additional income while they do so.

Whether you know it as a secondary suite; second unit, accessory apartment, granny flat, in-law suite, or basement apartment, these dwellings are important supplies of rental housing in many Canadian cities. Current statistics from 2014 show approximately 26,600 secondary units in Vancouver or a fifth of the rental stock. In Edmonton, a fifth of the rental stock is also in secondary suites and accessory dwellings.

What is a secondary suite?

A secondary suite is defined as any living space located in the basement, on a floor, or in the attic that is designed to accommodate a single family. It has its own bathroom, kitchen, living, and sleeping areas but shares the common area (i.e. yard, parking area, laundry and storage space, and sometimes a hallway). In some markets, builders construct houses with apartments included at the outset or houses that can be easily converted. Basements are the most popular choice for placement as it affords the tenant the greatest degree of privacy and separation.

Secondary suites are created through internal alterations, with the exceptions of those that are built as additions to the main house. The size of the finished suite is dependent on the size and design of the house as well as the configuration of the lot.

Do they require a permit?

A building permit is required to add any secondary suite, however, many municipalities do not permit secondary suites, or if they do, it’s only in selected neighborhoods. This restriction leads to many homeowners creating illegal secondary suites that do not conform to local and provincial building, fire and safety standards. They also avoid paying income taxes on their net rental revenue.

To remedy this, and entice homeowners to participate in secondary suite compliance, many Canadian cities are creating specific assistance programs. For example, the City of Saskatoon, Saskatchewan, will waive municipal building and plumbing permit fees for property owners. In Burnaby, BC, property owners are given the option of a complimentary suite feasibility inspection and report.

How are they regulated?

The compliance of secondary suites is regulated on a provincial, territorial, and municipal level, in regards to zoning, building code, unit size, parking, and inspections and licensing.

Zoning

Most municipalities allow secondary suites in a limited number of areas but some have expanded the areas and building types permitted:

  • City of Vancouver: “As of right” within the RS (one-family dwelling); RM (multiple-family dwelling); RT (two-family dwelling); multi-unit dwellings (apartments); mixed-use developments
  • City of Edmonton: “As of right” within all low-density residential zones; one secondary suite allowance per single detached dwelling; three on-site parking spaces (tandem parking permitted)
  • Quebec (select municipalities): suites can only be occupied by family members

At the provincial level, the following applies:

  • Ontario: The province’s 2011 Planning Act has made it mandatory for municipalities to allow for secondary suites within single detached, semi-detached and townhouse dwellings as well as ancillary structures (i.e. detached garages). The Act is designed to improve access to adequate, suitable and affordable housing and is enforced through each municipality’s five-year review of their planning documents.
  • Quebec and BC: The legislation of both provinces includes provisions granting municipalities the authority to regulate intergenerational dwellings and secondary suites, although they are not mandated.
    • In Quebec, under section of the Act respecting land use planning and developments, municipalities have the authority to limit the occupancy of an additional dwelling to a relative, a dependent, or persons who are, or were, related to the owner or occupant of the principal dwelling.
  • Saskatchewan, Manitoba, and Nova Scotia: These provinces provide financial assistance to property owners to construct or renovate secondary suites.

Building Code

In Canada, the design and construction of new secondary suites as well as any upgrading of existing suites, is governed by certain provincial and territorial codes: a) the National Model Construction Codes including National Building Code (NBC) of Canada and b) the National Fire Code of Canada. The NBC includes: specific floor area maximums, ceiling height minimums, and window dimensions and smoke alarm installations.

British Columbia, Alberta, Ontario, and Quebec have adopted building codes based on the National Model Construction Codes which requires the following of secondary suites:

  1. A separate entry door (which may open to a vestibule shared with the rest of the house or lead directly outside)
  2. Adequate fire and sound resistance throughout each wall, floor, and ceiling separating the suite from the rest of the house
  3. Working smoke alarms, carbon monoxide detectors, and a fire exit
  4. Compliance with height, moisture, and natural lighting requirements

Unit Size

This varies from unit to unit and from municipality to municipality. Some municipalities also like to ensure that the secondary suite is in fact “an accessory”, meaning it’s smaller in size than the main unit.

Parking

The minimum number of parking spaces required by municipalities is normally two, but they can vary, especially in areas well served by public transit. In the City of Toronto, for example, one parking space would be considered sufficient for the main unit plus a secondary apartment. However, in Nanaimo, which requires two off-street parking for a single-detached dwelling, three would need to be provided to cover the secondary suite.

Inspections and Licensing

Whether or not municipal officials are able to inspect secondary suites depends on their respective provincial legislation. Even then, officials are only able to inspect suites if the dwelling is considered a threat to health and safety. Sometimes licensing requirements are used as a way to provide for inspections, but often officials are reluctant to enter into licensing arrangements because of the bureaucracy around it.

Financing

Usually the creation of a secondary suite requires the homeowner to take out a loan and/or secondary mortgage in the amount of $20,000 to $30,000, on average. In most cases, the rent will usually exceed the cost of repaying the loan. The suite also lowers the monthly carrying costs for a homeowner and also reduces the required annual qualifying income for a mortgage (see below).

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© 2015 CMHC-SCHL “Permitting Secondary Suites”

Governments have had programs that are designed to make the conversion financially attractive. The programs provide interest free loans and forgivable grants through programs that usually had a high take-up rate.

Impact of Secondary Suites

For those municipalities allowing secondary suites there will always be opposition. Communities often cite worries that the densification will lead to:

  • The overcrowding of schools and neighborhoods
  • Increased parking problems
  • Higher use of water, sewer, and garbage collection services

CMHC research has shown this not to be true. In a study regarding the impact of municipal user fees on secondary suites, the addition of a suite was shown to not have an overall negative community impact. This is attributed to a trend towards smaller household size (suite does not put an additional burden on municipal infrastructure) and the ability of secondary suites to absorb underutilized capacity and allow for more effective use of resources.

In terms of infrastructure, secondary suites also serve to offset the decline in school population. The impact on parking was found to be negligible since suite occupants tend to owner fewer cars in comparison to those living in single-detached homes.

Secondary Suites in Canada

A CMHC study using information on local secondary suite policies from 650 Canadian municipalities in census metropolitan areas (CMAs) and census agglomerations (CAs) was completed in 2014. It showed that overall, 77 percent of these 650 municipalities permit secondary suites (501 units). This was up from 54 percent in 2006.

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© 2015 CMHC-SCHL “Permitting Secondary Suites”

More than half (58 per cent) of the municipalities that did not permit secondary suite dwellings were in rural, and just over a quarter (28 percent) were in small municipalities. 10 percent of medium areas and 4 percent of large areas did not permit these units.

The most frequently used zoning permissions among permitting municipalities included:

  • Imposing a size limitation,the secondary suite in relation to the primary building
  • Limiting the number of rooms and/or specifying a minimum lot size to be permitted
  • Allowing the secondary suites within a primary dwelling
  • Subjecting the suites to a specific process identified as discretionary or conditional (which could result in the suite being denied)
  • Imposing occupancy limitations (limited the number of occupants in the suite and/or allowing only relatives, or persons with special needs, to occupy the suite)
  • Having a permitting process that involves municipal approvals or agreements
  • Setting temporary use or time limitations on the suite
  • Allowing suites only in specific zones and/or specific types of dwellings

If you have more questions about these, or other, zoning permissions, please give us a call at
1-888-824-7346. Our Member forum myREINspace.com is also a great source of information and advice from other like-minded Members.

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