Secondary Suites: A new age for Calgary Real Estate

Secondary Suites: A new age for Calgary Real Estate

Guest Contributor: Brett Turner, Broker & President, Redline Real Estate Group Inc.

On March 12, 2018 the City of Calgary passed an amendment to the land use bylaw that allows secondary suites development as a discretionary use on all Calgary parcels zoned R-1, R-C1 & R-C1L. These land use designations comprise 55% of all residentially designated parcels in Calgary and number over 170,000 individual properties. The amendment created a larger playing field, but the process to create a basement suite stays the same and it is no easy task.

All permit applications must be reviewed by City Administration

“Discretionary” use means that a development permit is required, and that all permit applications must be reviewed by City Administration. The City is looking to make sure that all applications are within the approved guidelines for secondary suites, most notably that at least one parking stall for each dwelling unit is on the parcel itself and that the property is big enough to accommodate the increased density (a minimum of 9 meters wide with a few exceptions). If the application ‘ticks’ all the boxes, City Administration will usually approve the application and seek community engagement over a two-week period. This is the opportunity for neighbours to voice any concerns they have regarding the proposed suite, and if they make their case then Administration can either direct the applicant to revise the application or they can reject the application outright. While there is no guarantee that a discretionary use application will be approved, in practice, the vast majority are. Key to this success rate is an applicants’ knowledge of the rules and criteria beforehand. Furthermore, few objectors can provide enough rational for why a suite should not be allowed when it meets planning criteria.

After a development permit is approved the applicant proceeds to the building permit phase, where they must show detailed plans for how their suite will look after construction is complete. The City references the Alberta Safety Codes Act regarding standard of work needed to be completed for a city to pass inspections and be legally registered as a secondary suite. Of note, the code reads as any suite built prior to 2006 need only meet fire code standards while any suite built later must be meet building code standards. This is an important distinction as the building code requires separate heating sources and HVAC for each suite in addition to all elements of a fire code application. This can add an extra $15,000-$20,000 to a build-out cost. In my experience, building a brand new basement suite from scratch costs between $40,000 and $65,000+, depending on specifications. I have been through the approval process myself several times and I can tell you that it is no joke. Any suite coming out of the inspection process will be a very safe and liveable property.

A Two Year ‘Amnesty’ Period

Contained within the bylaw amendment is a 2 year ‘amnesty’ period, which stipulates owners of illegal suites will not face fines. After that, however, the fines become steep; between $200 and $1,000 for operation or even advertising an illegal suite for rent. So, yes, you can expect task forces to be watching rental ad’s for basement suites and subsequently checking them out for compliance. Fining owners at first and then prosecuting them under the bylaw for larger fines ($5,000+) with a jail sentence if they aren’t paid at that stage. So anyone with an illegal suite is currently on the clock: legalize it within the next two years, because enforcement is going to get real after that!

What can Calgarians expect to happen next? Well in the short term, not a lot will change. The exsisting illegal suites will remain for two more years while responsible landlords bring them up to code (or take them out). Some astute investors will seek to develop basement suites in the areas where they are allowed. They will pay a pretty penny to do so. Residential homeowners need not fear this sort of investor / developer: It is neither cheap nor easy to build-out a basement suite. You can be assured that anyone who does so is making a considerable investment in the community, likely as large or larger than any other renovations you may have seen in your area.

In the long term however we can expect several things to happen, all of them good for our community and real estate market:

  • The unsafe illegal suites will come out of the grey and into the black, by not being able to advertise and hefty fines facing their operators.
  • The only basement suites in town will be part of a registry system. Prospective tenants will know they are about to rent a home that has met safety code requirements, and home purchasers & their banks will know that what they are buying meets the same criteria. Again, out of the grey.
  • We will see some emerging markets in the residential space. Laneway housing of a range of quality will become viable, with backyard suites being able to be developed on land valuable enough to justify them. Caretaker suites will surface in larger suburban homes, and higher quality basement suites will show themselves as the stigma unfairly associated with this living arrangement erodes.

Property Values Will Not Drop

Since the City made the decision to apply this amendment universally, no community will be adversely affected by the change. Property values will not drop due to the inclusion of secondary suites within the bylaw, simply because they are now allowed everywhere. There is no getting away from them if you were so put off by the prospect of living near one, something I have never had any of my clients ask of me in my 13 year career.

The other long term benefit? Our City Council will no longer have to spend upwards of 20% of its time – that’s one day a week on average listening to people justify why they should be allowed to make an investment in their property, adding affordable housing at no cost to the public. Our elected officials can turn their attention to bigger things, like arenas, Olympic bids, the Green Line LRT etc, projects several orders of magnitude greater in cost and overall importance to Calgarians. A new age for Calgary real estate, indeed!