Getting started with a secondary suite in Toronto

As a result of increasing urban density in Toronto, secondary suites have emerged as a housing solution to cater to the rising demand for multi-unit dwellings. Not only do they help cities fill the housing supply gap, they also provide homeowners and property investors with tangible benefits, often by upping the value of properties along the way.

In Part One of our guide series to secondary suites in Toronto series, we’ll go through what secondary suites are, what’s behind their rising popularity, what kind of benefits they have to offer to different stakeholders, and which are the different types of secondary suites that exist.

What are secondary suites?

A secondary suite is a self-contained dwelling unit with a private kitchen, bathroom facilities, and sleeping areas. It’s different from a rooming house, where you rent out different bedrooms which share a common kitchen. Depending on your city and its by-laws, this type of home addition can also be known as an accessory dwelling unit, in-law suite, nanny suite, or granny suite.

Other terms for basement apartment

What’s causing this rising demand in secondary suites?

Development constraints

Ontario is surrounded by a greater Greenbelt area, which is a natural land that delineates urban space to prevent urban sprawl.

The “Greenbelt Plan and A Place to Grow: Growth Plan for the Greater Golden Horseshoe” framework stipulates that you can’t build within this Greenbelt area. As a result, this creates a  more densified zone as people are forced down South.

Ontario's Greenbelt

Government policy

To support this urban densification, government policies have been put in place to encourage the development of secondary suites:

  • Strong Communities through Affordable Housing Act in 2011: This is a provincial act that is added within municipal by-laws and requires all cities to allow for secondary suites.
  • More Homes, More Choices Act in 2019: This act allows the construction of third units (e.g. garden suites, laneway houses) as part of additional densification efforts in lower density zones.

Housing supply gap

The housing supply gap is due to the lack of dwellings being built for the demand, which has led to rising house prices and rising rents.

Home prices and rents increasing

Demand for other forms of housing

There is a lot of talk about the “missing middle” which comes from there being single-family homes and an increasing amount of condos, but very few options in-between. So, there’s a rising demand for more diverse and affordable housing alternatives within the medium-density level, such as apartment buildings or lower-rise multi-units. These types of units have yard space and are more accessible since they don’t have as many steps to climb up and down.

What are the benefits of secondary suites?

Three main stakeholders can benefit from secondary suites: homeowners, property investors, and cities.

Homeowners

1. Offset high mortgage payments/housing costs

As a homeowner, you can rent out your additional units to help with your living expenses. 

2. Create a multi-generational space for “aging in place”

If you have elder parents, they can live in the separate unit. You still have your own private space, but they’re located nearby, so you can have easier access to one another and help each other when needed.

Property investors

1. Increase rental income

By adding a self-contained dwelling unit in the home, investors can rent the space out to an additional tenant. Doing so typically brings in more rental income as a whole compared to renting a single-family home.

2. Raise values of properties

The additional dwelling unit is attractive to homeowners that are looking for a property with supplemental income to help with mortgage affordability. The higher rental income of the secondary unit is typically more attractive to investors compared to single-family homes.

Cities

1. Increase housing supply to fill the “missing middle”

Cities are able to provide more housing options to increase densification in medium-density to lower-density areas.

2. Densify neighborhoods 

Secondary suites don’t increase the amount of infrastructure that needs to be built. Instead, cities can use existing infrastructure to add more housing and further densify existing neighborhoods.

What are the different types of secondary suites?

There are different ways of splitting up your property to add a second unit to your house. 

Secondary suites within the principal dwelling unit

Different types of secondary suites

Basement suites: a self-contained dwelling unit in a basement floor

These are the most common top-and-bottom splits where the two units both share an entrance.

Ground and lower floor plans

Multi-level: self-contained dwelling units divided by each floor level

Similar to a basement suite, these levels are split up into two floors. However, the multi-level split will have an interior staircase to the second level. Or, there could also be a third separate unit on an additional floor, if there’s an exterior staircase leading to the top unit.

Ground and second floor plans

Side-by-side: two self-contained dwelling units divided by the main parting wall down the middle of the building

An example of a typical side-by-side unit would be a townhouse.

Vertical split: self-contained dwelling units divided vertically rather than per floor. A side by side duplex would be an example of a vertical split as well 

As a more creative way to split the ground floor in half, you’ll have the second floor as part of the first unit and the basement as part of the second unit.

The more unique thing is that the basement stairs are at the center of the floorplan. To access the basement, you’ll need to have a vertical/center split. By splitting the ground floor in half, you can access the stairs through the backdoor. When entering through the front door, you’ll walk into the front half which is used for the kitchen/living space of unit 2, while the back of that ground floor is a part of unit 1.

Basement, ground and second floor plan

Secondary suites detached from the principal dwelling unit

This is a popular option for people who are looking to build a third unit. After adding the internal second unit, the third unit is seen as a detached structure.

The most common types of detached secondary suites are laneway houses, coach houses, and garden suites. The main difference between them is whether they have a back lane or not. Otherwise, they’re all located in your backyard.

Secondary suites detached from the principal dwelling unit

Secondary suites are what some may deem as the answer to rising urban density by filling that housing gap that exists between single-family homes and condos. Bringing advantages to homeowners, property investors, and cities, these types of multi-unit dwellings continue to be a worthwhile property investment.

What’s next?

Part Two of our guide series on secondary suites in Toronto focuses on whether you can add a secondary suite to your property in Toronto and what’s required within that process. Sign up for our newsletter to get the next guide delivered straight to your inbox!

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