Time to Make Secondary Suites Legal

Worth A Look, Housing Affordability, Frontier Centre

Pore over any real estate ad and “in-law suite” is often listed as a desirable home feature. It’s code for “illegal” though many sellers anyway dispense with the formality and acknowledge a suite’s technical illegal status. Homeowners and potential buyers know that cities often won’t shut down secondary suites unless a formal complaint is filed, usually by some irascible neighbour.
But given the high home prices in many cities and where some markets are still rising and rental vacancy is tight (see Alberta), it’s overdue for city councils, if not provinces, to end the legal hypocrisy.

Legalizing secondary suites would permanently guarantee that homeowners can expect help with their mortgage payments without fearing the NIMBYist crank next door. As the Canada Mortgage and Housing Corporation notes, such suites can help reduce the carrying costs by as much as 25% for first time home buyers. Rental income is also useful for older homeowners who have more space than needed but less income.

Without suite legalization, many homeowners who might otherwise convert their basement into a rental unit are reluctant to do so. Free-market Alberta, which should have led the country in legalization, is instead highly restrictive. Legal secondary suites are tough to create because the province’s building code treats suites as duplexes or semi-detached dwellings with mandated separate heating and water tanks, among other too-high regulations.

The result is fewer rentals. One Calgary couple I know live near the city’s core and could convert their basement, something desperately needed given Calgary’s vacancy rate, forecast to average 0.6% for 2006. But they’re wary about becoming landlords; they’d spend up to $20,000 to create an illegal suite, a risky venture given the possibility that one complaint could shut it down.

More suites would help renters, especially in tight markets, since secondary suite rates are often lower than market rents. Alberta’s minister responsible for this issue, Government Services Minister George VanderBurg, has promised to relax provincial regulations but Calgary also needs to ease off its restrictive zoning. As it is, the slowness of governments at both levels has sharpened the province’s rental shortage and price spikes. A Calgary friend just had her monthly rent raised to $875 from $675 for a nondescript one-bedroom apartment. More choice in the marketplace would have moderated that increase.

Suite legalization would be a good deal for taxpayers. Social housing advocates often want more money to be spent on government-owned and run housing, and also for rent control to combat price increases.

But social housing with taxpayers as an absentee landlord is an inferior option to opening up a larger pool of additional suites at no cost to the public treasury. As for rent control – which yet exists in varying forms in British Columbia, Manitoba, Ontario, Quebec, Nova Scotia (trailer parks only), Newfoundland, and Prince Edward Island, it’s counter-productive. It creates artificial shortages, worsens existing ones, cuts down on the number of new rental units built over time and provides owners with an incentive to convert existing stock into condominiums. Rent control also gives building owners a good reason to let existing rentals deteriorate, given the government-determined return on their investment.

Secondary suites are environmentally friendly. Much hand-wringing comes from anti-growth advocates who decry the growth of sprawl and who dislike suburbs for aesthetic reasons. But city cores could fit in more people and use existing roads and city services if city councils and provincial governments would allow secondary suites as an assumed property right and not as an occasional privilege.

As CMHC notes, informal rental suites are a significant addition to the rental stock in small towns and rural areas, which often lack rental accommodation (the economics of building rental accommodation are often both poor and riskier in smaller centres).

Some cities understand all of the above. The municipality of North Vancouver sensibly legalized secondary suites “as-of-right” in 1993 and in 1995 permitted the same in all single-family homes, regardless of previous zoning. Vancouver changed its bylaws in 2004 to permit secondary suites city-wide. The practice varies in the rest of British Columbia.

Post-amalgamation, Toronto brought varying suburban approaches into line with previous city policy and thus allows suites in single and semi-detached housing as-of-right, although the house must be five years old. (That’s unlike Vancouver where new houses can be built to include suites.) While otherwise commendable, Toronto’s five-year ban on new home suites is unhelpful to homeowners and renters alike.

Oddly, it was the Mike Harris government which, after its election win in 1995, scrapped a province-wide policy that allowed for secondary suites in favour of municipally-set bylaws on the same. True, subsidiarity makes sense – except when cities run roughshod over a homeowner’s property right. Ontario’s Liberal government should restore the property right and include it for new homes.

Rent control should have been killed off long ago by provincial governments; they should attend to that detail now. While they’re at it, the provinces, constitutionally responsible for municipalities, should end the legal hypocrisy on illegal suites and reform the onerous provincial and city rules and regulations that discourage secondary suites. Homeowners, renters, taxpayers and the environment all would benefit.