August 30, 2023
VANCOUVER, BC – In a recent survey of Canadian homeowners, Square One found that 10% of homeowners were renting out at least one secondary suite in their home. More surprisingly, as many as 2.7% of homeowners are renting out multiple rental suites within their home—and many of those additional suites may be illegal.
Despite the present housing crisis, most cities in Canada strictly limit the number of secondary suites that a single-family property can have—most of the time, that limit is one. Whether a basement suite or a laneway house, typical municipal bylaws allow two living suites per single-family lot: one primary and one secondary. While some provinces, including BC and Ontario, have introduced legislation to relax these restrictions, progress remains slow. Nevertheless, based on Square One’s research, more than one-quarter of homes have more than one rental suite.
“We’ve looked at the numbers of secondary suites in the past, and we were interested to see how that’s changed because of the worsening housing crisis and rising mortgage costs,” says Square One President + CEO Daniel Mirkovic. “It’s not surprising to learn that more people now have multiple rental suites to help with the extra financial burden of homeownership. Hopefully, governments continue to relax these restrictions, but for now, many homeowners appear to be sidestepping their local bylaws.”
The number of homes with more than one secondary suite has increased over the past five years. The combined data from Vancouver, Calgary, Edmonton, Regina, and Winnipeg indicates this number has increased by over 50% from 2019 to 2023 (from 18% to 27% of homes with secondary suites having multiple such suites). And the actual numbers could be even higher, as many homeowners renting out multiple suites may not disclose the additional (potentially illegal) units.
In the face of rising mortgage costs, many homeowners understandably turn to secondary rental suites to help make ends meet. Based on the survey results, the main reasons for renting out a secondary suite are:
Renting out a secondary suite is more common in western Canada, where 13% of homeowners do so compared to just 8% in eastern Canada. There was a similar split between urban and rural areas. 16% of urban homeowners indicated they rent out a secondary suite, compared to 8% in suburban locales and just 4% of rural homeowners.
Given skyrocketing mortgage rates of late, it’s understandable that many homeowners would consider adding multiple rental suites. But all would-be landlords need to understand the regulations where they live and how secondary suites impact their home insurance.
“Given that we’re seeing so many new secondary suites, some homeowners probably feel like they need to hide those suites from their insurance provider. This is a major issue,” says Mirkovic.
A home’s occupancy is one of the most important aspects of a home insurance policy. Above all else, a homeowner must inform their provider if they’re adding unrelated tenants to their property (or renting out their home on a short-term basis via Airbnb or similar services). Failure to do so could render their policy void and any claims invalid. But there are other home insurance considerations for those adding a rental suite:
Homeowners or landlords wishing to know more about secondary suites and insurance should speak with their home insurance provider or visit www.squareone.ca/landlord.