By Diane Amato, on behalf of Royal Bank of Canada.
In the midst of a housing supply shortage across much of the country, compounded by affordability challenges, there are many reasons to densify the existing housing stock. Due to the pressures to increase housing supply, more municipalities are easing or otherwise amending zoning bylaws to allow for converting, renovating, redeveloping and building new housing units on an existing property. While bylaws are specific to individual communities, and there are still plenty of challenges for builders, renovators and homeowners to navigate that process, more and more Canadians are interested in learning about the options available to them.
As a renovator or builder, you may have clients who are considering adding dwelling units to their existing property, so you may want to make sure they’re aware of the different solutions available to them.
This article outlines several options for converting a single-family property into a multi-unit property. However, it is important that your clients understand the processes, bylaws and regulations applicable in your specific municipality, so that they know what types of homes and units are permitted, and how many are allowed on their property.
Adding more legal residences can not only accommodate more people, it can also be financially helpful for the property owner in the longer term. In the short term, however, getting access to the necessary funds to finance such a major project can seem daunting.
It’s a challenge that Royal Bank of Canada (RBC) is aware of, and it has developed financing options to help.*
An RBC Construction Mortgage can help Canadian homeowners add up to six new housing units to their property – whether by building new units (such as a garden suite), adding new structures (such as a laneway home) or renovating their existing home (such as by adding a basement apartment or converting it into a duplex or triplex). Plus, with an in-depth knowledge of construction mortgages, RBC Mortgage Specialists can give homeowners the support they need to guide them through the budgeting and mortgage application process, while you guide them through the planning and development process of re-engineering their existing property.
In addition to this article, on Sept. 26, 2024 CHBA is co-hosting a webinar with RBC exclusively for CHBA members, titled “Getting Buyers into the Market: CHBA Action and RBC Mortgage Solutions,” which will go over these and additional mortgage solutions available to homeowners.
You can register or watch on-demand after the air date at chba.ca/webinars.
Learn more about RBC’s financing options for multi-units at rbc.com/constructionmortgage.
Fast Facts
RBC is committed to being a leader and innovator by offering financing solutions that meet the ever-evolving needs of homeowners and has recently enhanced its Construction Mortgage program to now include financing for various types of homes and dwelling units, such as manufactured and modular homes, for qualifying customers and properties.
Common types of housing that add residences to an existing property – Duplex, triplex or multiplex
Single-family detached homes may be able to be converted into multiple units, including duplexes (a building with two units), triplexes (three units) and multiplexes (four or more units).
Each unit in the “plex” must have its own entrance, kitchen, bathroom and driveway, and must have the same amenities that you would find in a single-family home. The building can be divided side-to-side or upstairs and downstairs.
Scenario 1: Alan has three adult children who are entering the workforce. He wants to help them out as they get started. He bought a large home in Toronto with the intention of converting it to a three-unit house. Once the conversion is complete, each of them will have their own space and pay their own rent to Alan (at a rate he can set). This situation removes the possibility of unexpected rent increases, allows Alan to ensure his kids have a quality home in which to live, and helps nurture financial independence.
Laneway home
This is a structure that is typically detached from the main house on a property but located right beside a city laneway. While not attached to the main house, the utilities and services are shared – think water, gas and electricity. Cities such as Toronto, Vancouver, Edmonton, Regina, Calgary, Ottawa and Halifax are among the more popular sites for laneway homes in Canada so far.
Scenario 2: Lee and Cameron have a home in Vancouver with a laneway garage they don’t use. Lee’s parents are immigrating to Canada in a few months and Lee and Cameron have decided to convert their garage into a laneway home, giving Lee’s parents a soft landing in their new country. This means Lee can have their parents close-by, while still giving each couple some privacy. It’s a win-win!
Garden suite
A garden suite is similar to a laneway home – it is detached from the main house but shares its utilities. The difference is that a garden suite isn’t located near a city laneway, and instead sits in a property’s backyard.
Scenario 3: Ali’s son and daughter-in-law are newly married and want to move out of their one-bedroom apartment in a noisy part of the city. Ali owns a large property in the suburbs with a big backyard. By building a garden suite on his property, he can add a two-bedroom unit for the couple – with enough space for them to start a family – and help them save money on rent and other home expenses.
Basement apartment
A home’s basement may be able to be converted into a separate living space. There are several safety and liveability standards that must be met when creating a basement apartment.
Scenario 4: Lynsey and Jon are empty nesters and have space in their home they hardly use – including their basement. They could use a bit of extra cash each month and are contemplating converting their finished basement into a rental apartment. With a separate entrance and a bathroom already in place, adding a kitchen is fairly straightforward, along with a few other upgrades needed to make it a legal apartment. Lynsey and Jon determine that the rental income they could earn from renting out their basement apartment could help them pay down their mortgage over the long term and put a bit extra aside for retirement.
Manufactured and modular homes
Manufactured homes are typically built in a factory off-site and then delivered and assembled on your property. Formerly (and still informally) called mobile homes, manufactured homes are not affixed to your land. Generally, manufactured/mobile homes aren’t actually all that mobile, since they are semi-permanent, but they can be moved when necessary. Note, a permit is typically required to move a manufactured home to a new property.
Modular homes, unlike manufactured homes, are permanently affixed to your property, sitting either on a conventional foundation or a concrete slab. They are built partially or completely off-site using one or more prefabricated, three-dimensional components or modules, then transported to a property. There, the home is put together, a little like building blocks. These homes can be installed on various sized lots in urban or rural settings, and there are companies that can help homeowners determine whether their property would be suitable for such a home.
Scenario 5: Ada has a large property with a lot of land. Her parents are getting older – she would like to have them nearby and see them in a home that is all one level and in which it’s easy to get around. Together, she and her parents purchase a modular home meets their mobility needs. It is put together on Ada’s land – close to her home but with enough outdoor space that they can have their own garden. This gives Ada the peace of mind that her parents are in a safe place where she can care for them as their needs change, while enabling them to retain their independence.
*Personal lending products and residential mortgages are offered by Royal Bank of Canada and are subject to its standard lending criteria. Conditions apply. For more information, contact Royal Bank of Canada.
