$178 Million For Affordable Housing - How Can You Benefit?

It’s no secret that affordable housing is no longer a GTA problem, but rather a provincial problem. In 2011, Ontario passed Bill 140: Strong Communities Through Affordable Housing Act, mandating that all cities changed zoning to allow 2nd suites in single family homes. In 2016, they started to put their money where their mouths are – allocating $178 million with Ontario’s Long Term Affordable Housing Strategy.

Here’s the thesis of this strategy:

“Building on the 2016 Ontario Budget investment of $178 million over three years, the government is making a long-term commitment to stable funding that will continue its transformation of the housing system. “

How You Can Benefit

So as a homeowner or an investor, how can you benefit? Although this strategy is geared towards helping the most vulnerable, this is by no means a handout. It is clear from the language of the documentation that it is an investment – in the private sector. In other words, YOU. If you are willing to put in some effort, you can make quite a bit of money.

At the heart of this strategy is a renewed focus to provide affordable housing with 2nd suites.

“Second units – self-contained living units within detached and semi-detached houses, townhouses, and accessory structures – are widely recognized as one of the most affordable forms of rental housing. The government is introducing legislation and proposing regulatory amendments that would, if passed, reduce the complexity and cost of developing second units in new homes and provide more affordable housing options to Ontarians.
We are proposing to require municipalities to provide development charge exemptions for second units in new homes, and amend the Building Code standards to reduce unnecessary costs to building second units.”

Essentially this means that homes with legal 2nd suites will be very valuable as part of the mandate.

So the strategy for you is very clear – here are the steps. You can choose to wait it out for an incentive in your area, or simply take advantage of the policy environment that is conducive to creating 2nd suites now:

  1. Convert single family homes to ones with legal 2nd suites
  2. Rent one or both units out and gain extra cash flow
  3. Benefit from the overall increased value of the property
  4. Refinance and take equity to repeat the process, or
  5. Sell, take profits and repeat the process to make more money

In a few years, be debt-free, mortgage-free,  and create more wealth using this strategy and do what’s important to you with your time (at the end of the day – time is what we’re after right?)

Engagement Of The Private Sector

It appears the province recognizes that in order to get the job done, they must engage the private sector. Earlier this year, the Housing Policy Branch of the Ministry of Municipal Affairs and Housing issued a Proposal to Encourage Small Landlords to Provide Rental Housing seeking feedback from investors and landlords. Although their focus is on the tenancy process, they also wanted to help the process related to using 2nd suites as a form of affordable rental housing.

Being deeply involved in the 2nd suite conversion process, I jumped at the opportunity to share my 2 cents. Although cutting through the bureaucracy and red tape involved with conversions is a complicated process, I saw this as an opportunity to immensely improve it. Plus it helps that I absolutely enjoy helping clients with consultations and designs of amazing 2nd suites using existing spaces, increasing the value of the property, and providing an excellent form of affordable housing for those in need. A win-win-win.

I encourage you to also contribute. As homeowners and investors we have to push for the types of housing that we want. You can review the proposal on the link above and send an email to residential.tenancies@ontario.ca.  If you want an idea on how we can improve the process (and if you have few extra minutes to kill), you can see my letter below.

Admittedly, many of my suggestions are pie-in-the-sky requests. But hey, like Elon Musk’s strategy, aim to colonize Mars, and if you end up with the Moon, it’s a win. In your life and career, don’t be afraid to push for more, even if you land short, you’ve done much better than most people!

Sonya Rolfe
Manager, Residential and Commercial Tenancies Unit
Housing Policy Branch
Ministry of Municipal Affairs and Housing
Dear Ms. Rolf,
Firstly, thank you for your initiative in engaging the private sector for input.
My feedback is in relation to the process involved with creating new secondary suites, as well as converting existing illegal secondary suites in single family homes.
As a consultant and designer to homeowners and landlords on constructing legal, safe, healthy, and comfortable second suites, I recognize the importance of the private sector to provide affordable housing options to support the province’s Long Term Affordable Housing Strategy (LTAHS). In this respect, it is important to make the process as simple and straightforward as possible for these homeowners and landlords to create these options, while doing everything properly and not cutting corners.
Throughout Ontario cities, we have a great deal of well built low density neighborhoods that are close to business cores that are not being utilized to its full potential. Many of these neighbourhoods have great infrastructure built around them that can sustain a much greater amount of density. The private sector has the ability to transform these into thriving higher density communities that can both address affordable housing for low and medium income families as well as re-invigorate economic activity, but they need greater support from municipalities and the Ministry of Municipal Affairs and Housing.
With Bill 140 – Strong Communities through Affordable Housing Act, 2011, the province has taken a big step in the right direction. However, leaving the entire process of legalizing the secondary suites to each municipality have resulted in the process being extremely difficult for homeowners and landlords, discouraging them from providing the solutions legally, or attempting to entering the market for properties with secondary suites at all. Many of these individuals are clients of mine. Some of the issues include:
  • Outdated local by-laws that are not conducive to creating secondary suites in the low density housing stock indicated above (e.g. side-by-side parking requirements).
  • Secondary suites defined as new use spaces, therefore creating difficulty in conversion process in order to comply with the Ontario Building Code.
  • Lengthy process for minor variances with Committee of Adjustments
  • Difficulty in permit approval process due to inconsistencies in information internally within building departments (e.g., disagreements between plans examiners and inspectors due to interpretation of building codes).
  • Examiners, inspectors and other staff at various municipal building departments who are unfamiliar with code requirements specific to secondary suites (e.g. not familiar with Part 11 compliance alternative).
  • Convoluted system between various municipal departments to determine where to go for conversion of existing units (e.g. Depending on municipality, homeowners are advised to contact Building Department, Municipal Licensing and Standards, or Fire Services).
  • Expensive fees associated with changing function of property. (e.g. parkland dedication fees, development fees etc).
I believe we can all agree that with secondary suites, issues such as fire and electrical safety, and maintaining integrity of homes and neighbourhoods are very important. But certain by-laws, as well as property and occupancy standards create unnecessary barriers. These types of added difficulties discourage homeowners from going through the proper channels to doing things properly. That is likely a big reason why most secondary suites are illegal, unsafe and poorly constructed.
Below I have some recommendations to improve the process, and make it easier for homeowners to ensure that secondary suites are legal and built properly. This benefits everyone including:
  • Owner-occupied homeowners (ability to afford property, by renting a portion of home)
  • Landlords (profitable business for them)
  • Low and medium income households (an affordable solution compared with an entire single family home)
  • Municipality (e.g. revenue generation from permit applications, service fees for additional garbage collection, etc)
  • Local businesses (contractors, retailers, etc)
I recognize that many of the items listed below are covered under the Building and Development Branch of the Ministry, as opposed to the Housing Policy Branch, but are nonetheless important to achieve the LTAHS mandate. I also recognize that recommendations below may not be realistic or achievable overnight, but should be something we can strive for to improve the process.
  • By-laws should be reduced to eliminate difficulty in use of existing older properties (e.g. side by side parking requirements, front yard landscaping ratios, property line setback requirements, etc).
  • Further expansion of Part 11 Compliance Alternative section of the OBC to be more specific to secondary suites (primarily basement suites) to eliminate property and occupancy standards that don’t affect safety of individuals, but is rather an issue of comfort. These may include ceiling height, spatial requirements for rooms, and natural lighting requirements. For example, a family who is unhappy with the room sizes, will not choose to rent that apartment.
  • For second suites that are utilizing spaces of existing structures (e.g. basements) as opposed to new construction (second floor additions, rear additions), many of the space constraints should be “grandfathered” into current use instead of being considered new construction, similar to how units existing prior to 1994 are considered legal non-conforming.
  • Dedicated personnel (either at municipal or provincial level) that is very familiar with requirements specific to secondary suites to provide consistency during permit approval and inspection process.
  • Reduction in overall development fees for landlord and homeowners to encourage investment.
By improving the process, we can incentivize the private sector to do things the correct way. This maintains the integrity of the property, preserves its value, improves tenant profiles, and protects the community where it resides.
Moving forward, to address affordable housing issues and increased density into the core areas of various Ontario cities, I believe we will need to provide additional urban intensification solutions in addition to secondary suites. These might include conversion of single family homes into triplexes, creation of laneway homes, additional properties on existing lots, and various other innovative housing arrangements. Many of these new solutions are already implemented in many cities across North America to address new realities, and I believe it’s important for Ontario to also be part of the innovation.
Being a solutions oriented individual, I would be happy to participate in moving things forward to create a true win-win for all parties involved. If there is any need for further input, please don’t hesitate to contact me.
Thank you for your time and consideration.
Sincerely,
Andy M Tran
Suite Additions Inc.