Ontario is in the middle of a province-wide zoning reform. In direct response to the affordable housing crisis, the government recently announced plans to override municipal zoning laws to allow up to three units on a single residential property.
The government’s challenging goal is to build 1.5 million homes over the next 10 years, and one creative way to help it achieve that is to squeeze as many homes as possible onto one lot, saving time and money compared to financing larger developments.
Similar attempts to increase the number of dwellings began in 2018, when Toronto city officials launched the Laneway Suites Initiative, allowing for the construction of secondary dwelling units that connect to public laneways on residential properties.
Then in February 2022, Toronto city council passed a bylaw further permitting local homeowners to build garden suites without public laneway access towards the back of their single-family homes. The bylaw went into full effect in early July after an appeal from some Toronto resident associations was dismissed.
While they won’t solve the crisis on their own, garden suites may help to alleviate some of the demand for rentals. Here’s how property managers can cash in on adding this unique housing stock to their portfolios under management:
Two for one
A garden suite can maximize the liveable space and profitability of a single property by generating a second stream of income (or more) and expanding a landlord’s portfolio without their having to buy a new investment property.
Property managers can use PayProp to establish flexible and powerful payment rules to facilitate multi-tenancy in single-family rentals. For example, if the main house isn’t owner-occupied, that portion of the rent can be set up to exclusively cover expenses like mortgage, insurance, and maintenance, while the auxiliary unit yields pure, passive profit.
Depending on the unit’s size and neighbourhood, a garden suite can be rented out at a comparable rate to a one-bedroom condo in Toronto, which is currently up 20% year-over-year at $2,481 a month.
Don’t be a stranger
Relatives of varying ages are another cohort trying to cut costs in this tough economy by living together – but sharing one roof isn’t always an ideal arrangement.
Garden suites can satisfy each generation’s need for independence and privacy at a fraction of the cost of renting or buying their own single-family homes. Adult children can get a taste of what it’s like living on their own, and seniors can age in place, close to their families.
PayProp’s split payment functionality enables automated, separate rent invoices to each tenant and disburses funds according to the same rules mentioned earlier.
Corner the market
Since their legalization, garden suites are expected to rise in popularity. In August, a Toronto spokesperson said there were already “49 preliminary zoning reviews for garden suites” and a growing number of building permit applications this year.
The first property managers to invest in secondary dwelling units could gain an advantage over the competition. If they start now, they can familiarize themselves with building regulations to streamline future construction and establish their reputation as the local expert on garden suites.
Go with the flow
The way property managers see single-family rentals may need to evolve along with the changing face of housing in Ontario. Embracing garden suites is one way to take advantage of new zoning laws.