If you have been following the news you know there is a lot of talk about the missing middle in BC’s real estate. The provincial government is rolling out a new program helping homeowners create secondary, affordable housing suites with the secondary suites initiative.

Starting April 1st, 2024, applications in BC will open for a program aimed at supporting homeowners in creating secondary suites on their properties. These properties would then be available for rent below market value.

What’s in it for you?

• Qualified homeowners can receive up to 50% of renovation costs, capped at $40,000, in the form of a forgivable loan.
• But who’s eligible? Homeowners must be Canadian citizens or permanent residents, residing in the property as their primary home, with a combined gross income of under $209,420.00.

Property and Suite Eligibility:

• Properties must be located within British Columbia’s incorporated municipalities and have an assessment value below the homeowner grant threshold.
• Secondary suites must be new legal self-contained units with a kitchen and full bathroom, including laneway homes/garden suites, provided they received municipal permits after April 1st, 2023.

Covered Costs:

• The rebate covers various expenses, including architectural fees, structural modifications, electrical work, and even appliances (up to $2,500).

Documentation Needed:

• When applying, make sure to have your BC ID or services card, proof of citizenship or PR status, proof of income, and residency documents handy. You’ll also need approved building permits, estimated construction costs, occupancy permits, and final receipts.

Of course, like any decision it’s for anyone wanting to partake in this program is the potential trade-off between the financial benefits and risks associated with participating in the program.

While you can receive up to $40,000 with a portion forgiven over 5 years, it’s crucial to assess the impact of offering below-market rental rates.

For instance, in Vancouver, a typical 1-bedroom apartment rents for around $3,000, but through this initiative, it could be as low as $1,500. It’s important to note that in British Columbia, tenant eviction regulations are stringent, and there are caps on annual rent increases, posing a risk to landlords.

Let’s do the math: $1,500 x 12 = $18,000 annual loss on rent compared to market rates Multiply by 5 years = $90,000 total loss on rent compared to market rates.

While the addition of the secondary suite adds value to your property, weigh in the pros and cons and see if this program makes sense for you. If you are considering adding a suite either through this program or not and need extra funds reach out so we can discuss your mortgage options.