Permitting Secondary Suites

Summary | How the Strategy Works | Advantages and Issues | Sources | Case Study #1 | Case Study #2 ]

How the Strategy Works

Secondary suites are an important supply of rental housing in many cities, towns and rural communities across Canada. For example, in 2014, it was estimated that there were about 26,600 secondary units in Vancouver, forming about a fifth of the rental stock. About a fifth of the rental stock in Edmonton is in secondary suites and accessory dwellings, as well. Rents in secondary suites are often lower than those for apartments in conventional rental buildings, and the suites can be developed with no or minimal government assistance. Secondary suites enable low- and moderate-income households to live in ground-related housing in a residential setting.

Not only are secondary suites a source of affordable rental housing, they can also provide the needed extra income to first-time homebuyers for whom that additional income makes housing affordable in high-cost areas. For older households who no longer need a large house, the addition of a suite can generate needed income and security, as well as allow them to continue to live in their neighbourhoods and age in place.

What are Secondary Suites?

A secondary suite is a private, self-contained unit within an existing dwelling. Secondary suites are also called second units, accessory apartments, granny flats, in-law suites and basement apartments (since many are found in basements). A secondary suite has its own bathroom, kitchen, living and sleeping areas but can share a number of features with the rest of the house. Shared facilities may include a yard, parking area, laundry and storage space, and sometimes a hallway.

The secondary suite is usually created in a dwelling originally designed to accommodate a single family. Builders in some markets construct houses with apartments included at the outset or houses that can be easily converted (see Designing Flexible Housing).

How are Secondary Suites Created?

The majority of secondary suites are created through internal alterations, although some are built as additions to the main house. The size of the apartment will depend on the size and design of the house as well as the lot configuration. Secondary suites can be located in the basement, on a floor or in the attic. However, most secondary suites are found in basements, because such units are the easiest to develop and they allow for the greatest degree of privacy and separation. The following diagram illustrates a basement in a house before and after its conversion into a secondary apartment. Owners are required to have a building permit to add a secondary suite.

Legalizing Non-compliant Secondary Suites

Because many municipalities do not permit secondary suites, or only permit them in selected neighbourhoods, secondary suites are often created illegally. Even when secondary suites are legalized, homeowners may be reluctant to declare their unit because they will likely have to bear the cost of upgrading their unit to local and provincial building, fire and safety standards. Some owners do not legalize their units in the hope of continuing to avoid paying income taxes on their net rental revenue.

Municipalities are taking a variety of approaches to facilitate the documentation and upgrading of illegal suites. In order to ensure residents have adequate and safe housing, some municipalities developed specific programs to assist homeowners with secondary suite compliance. For example, the City of Saskatoon, Saskatchewan, offers to waive municipal building and plumbing permit fees for property owners to encourage the legalizing of existing secondary suites. The City of Burnaby, British Columbia, provides property owners who would like to legalize their secondary suite with the option of a complimentary suite feasibility inspection and report. This free service is a coordinated inspection carried out by building, electrical, plumbing and gas inspectors.

Types of Regulations

Secondary suites are subject to a number of provincial, territorial or municipal requirements, including:

  • zoning;
  • building code;
  • unit size;
  • parking; and
  • inspections and licensing.

Zoning

Most municipalities allow secondary suites in a limited number of areas; however, in recent years many municipalities have expanded the areas and building types where secondary suites are permitted, as illustrated by the following list:

  • The City of Vancouver permits secondary suites “as of right” within the RS (one-family dwelling), RM (multiple-family dwelling) and RT (two-family dwelling) zones. They are also permitted in multiple-unit dwellings (apartments) and mixed-use developments.
  • The City of Edmonton permits secondary suites “as of right” in all locations, in all low-density residential zones. A maximum of one secondary suite is allowed per single-detached dwelling. Requirements include providing three on-site parking spaces (tandem parking is permitted).
  • Some municipalities, in the province of Quebec, for example, permit suites occupied by immediate family members only.

Although all provinces in Canada encourage the development of secondary suites as a means to provide options for affordable housing, only Ontario has enacted specific provincial legislation requiring municipalities to develop policies in their official plans and zoning provisions to provide for secondary suites. Changes made to the Ontario Planning Act in 2011 make it obligatory for municipalities to allow for secondary suites within single-detached, semi-detached and townhouse dwellings, as well as in ancillary structures, such as detached garages. These changes are intended to improve access to adequate, suitable and affordable housing. Municipalities must meet the new requirements set out in the Planning Act and bring their planning documents into conformity as part of their five-year review or sooner, at the discretion of the municipality.

In Quebec and British Columbia, the provincial legislation includes provisions granting municipalities the authority to regulate intergenerational dwellings and secondary suites, although they are not mandated. In Quebec, under section 113 of the Act respecting land use planning and development, municipalities have the authority to limit the occupancy of an additional dwelling to a relative, a dependant, or persons who are or were related to the owner or occupant of the principal dwelling. As well, Saskatchewan, Manitoba and Nova Scotia provide financial assistance to property owners to construct or renovate secondary suites.

Building code

In Canada, the design and construction of new secondary suites and the upgrade of existing ones are governed by provincial and territorial codes. The provinces and territories often either adopt or adapt the National Model Construction Codes, which include the National Building Code (NBC) of Canada and the National Fire Code of Canada. The NBC includes specific floor area maximums, ceiling height minimums, window dimensions and smoke alarm installation, as they pertain to secondary suites. British Columbia, Alberta, Ontario and Quebec have their own provincial building codes that regulate the development of secondary suite codes, based on the National Model Construction Codes.

Some of the requirements that secondary suites must follow:

  • Entrances — A secondary suite must have a separate entry door. This door may open to a vestibule shared with the rest of the house or may lead directly outside. An existing side or back door can often be used as the apartment entrance.
  • Fire safety — Each wall, floor or ceiling separating the secondary suite from the rest of the house must provide adequate fire and sound resistance. According to a brochure prepared by the Province of Ontario, a combination of batt insulation and drywall supported on metal channels will normally enable standard wood-frame construction to meet code requirements. Other requirements include smoke alarms, carbon monoxide detectors and a fire exit.
  • Height, moisture and natural light — If the apartment is provided in the basement, it must be dry and have adequate natural lighting and enough headroom (height varies by jurisdiction).

Unit size

The size of the secondary suite varies with the individual unit and the municipality. For example, North Vancouver has a minimum size of 27 square metres (400 square feet) and a maximum size of 968 square feet (90 square metres), while representing no more than 40 per cent of the habitable floor space of the building, for a secondary suite. An issue for some municipalities is to ensure that the secondary suite is “accessory,” that is, smaller in size than the main unit.

Parking

In most municipalities, a parking space is required for the secondary suite. Two parking spaces are the minimum usually required for houses with a secondary suite, but these requirements vary considerably. For example, in a built-up area that is well served by public transit, a lower parking standard may be appropriate. In the city of Toronto, one parking space was considered sufficient for the main unit plus a secondary apartment, and so, no additional parking is required in the bylaw. But in Nanaimo, where two off-street parking spaces are required for a single-detached dwelling, a home with a secondary suite has to provide a total of three off-street parking spaces.

Inspections and licensing

The ability of municipal officials to inspect secondary suites depends on provincial legislation. Municipal officials have limited powers to inspect units unless they are considered a threat to health and safety. Generally, fire officials have the strongest powers to inspect a property. When a secondary suite is created legally, relevant municipal officials will inspect it. Some municipalities use licensing as a way to provide for inspections, but others are reluctant to enter into licensing arrangements because of the bureaucracy that this entails.

Financing

Typically, homeowners must take out a loan and/or second mortgage to create a secondary suite. The rent will usually exceed the cost of repaying the loan. As shown below, a secondary suite lowers the monthly carrying costs for a homeowner and also reduces the required annual qualifying income for a mortgage. Costs for installing secondary suites can range from $20,000 to $30,000.

How a Secondary Suite Can Reduce the Cost of Homeownership
House price
(based on the Canadian average house price from the Canadian Real Estate Association)
$398,618

 

Mortgage principal
(based on a 20% down payment)
$318,894
Monthly carrying costs
  • Mortgage payment
    (based on a 4.32% annual interest rate and a 25-year amortization)
$1,733
  • Taxes
$397
  • Maintenance and utilities
$200
  • Total***
    (based on a 30% gross debt service ratio)
$2,330
Required annual qualifying income for mortgage $93,205
Conversion cost $25,000
Additional monthly carrying costs  
  • Mortgage payment
$135
  • Taxes, maintenance and utilities
$150
  • Total
$285
Total monthly carrying costs $2,615
Rent for additional unit $808
Net monthly carrying costs $1,807
Net monthly financial benefit $523
Required annual qualifying income for mortgage $72,285
% change in affordability (before tax) 22.5%

To make the conversion financially attractive, governments have had programs providing interest-free loans and forgivable grants through programs that usually had a high take-up rate.

Impact of Secondary Suites

Often, the opposition to secondary suites centres around their perceived impact on the neighbourhood. Communities that oppose secondary suites will cite worries that the densification will lead to the overcrowding of schools and neighbourhoods, increased parking problems, and higher use of water, sewer, and garbage collection services. However, research undertaken by CMHC in the past regarding the impact of municipal user fees on secondary suites found that secondary suites do not have an overall significant negative impact. Given the trend to smaller households, secondary suites generally do not place an extra burden on municipal infrastructure or services beyond the original design capacity. Conversely, by helping to reduce the decline in neighbourhood density, secondary suites can absorb underutilized capacity and allow for the more effective use of resources, such as for water, sewer, and garbage collection services.

In terms of infrastructure services, secondary suites tend not to overtax services but serve to offset the decline in school population. The impact on parking was found to be negligible, as people who live in secondary suites tend to own fewer cars on average than people who live in single-detached homes.

Secondary Suites in Canada

In 2014, CMHC completed a study using information on local secondary suite policies obtained from 650 Canadian municipalities in census metropolitan areas (CMAs) and census agglomerations (CAs). Overall, 77 per cent of these 650 municipalities permit secondary suites.

Size of Municipalities(population) Percentage of Municipalities Permitting Secondary Suites
Rural (less than 5,000 persons) 68%
Small (5,000 to 29,999 persons) 82%
Medium (30,000 to 99,999 persons) 85%
Large (100,000 and over) 88%

Of the 149 municipalities that did not permit secondary suites dwellings, more than half (58 per cent) were rural areas, and just over a quarter (28 per cent) were small municipalities. Only 10 per cent of medium areas and 4 per cent of large areas did not permit these units.

The percentage of municipalities in CMAs that permit secondary suites increased from only 54 per cent (220 of 404 municipalities) in 2006 to 78 per cent (292 of 373 municipalities) in 2014.

The most frequently used zoning permissions among the municipalities that permitted secondary suites were imposing size limitations, including limiting the size of the secondary suite in relation to the primary building, limiting the number of rooms and/or specifying a minimum lot size to be permitted, and allowing the secondary suites within a primary dwelling.

Also popular were subjecting the suites to a specific approval process identified as discretionary or conditional (which could result in the suite being denied), imposing occupancy limitations (limiting 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, and allowing suites only in specific zones and/or specific types of dwellings.

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