Whether an in-law suite or an apartment to help cover the mortgage, secondary rental units are becoming a popular option for homeowners. To help ensure that trend contributes to the stock of affordable housing, the Region of Waterloo is offering forgivable loans to those interested.

The secondary suites program allows homeowners to apply for up to $25,000 to construct a legal apartment on their property. To qualify, the unit must be rented out at below the average market rate.

“It’s called a forgivable loan; we enter into an agreement for 15 years,” explained Jeff Schumacher, the region’s supervisor of housing program initiatives. “And that loan declines over the 15 years. So after the 15 years, it’s completely forgiven. We set the starting rent, and it varies by the number of bedrooms. It helps the low-income homeowners, and it also creates new affordable rental housing.”

Requests for affordable housing in Woolwich Township, for instance, have increased dramatically over the years, particularly among seniors and families, notes Dan Driedger, executive director of MennoHomes, a non-profit organization that focuses on such housing.

In fact, demand is so high that interested applicants often need to be put on a waiting list.

“The demand remains strong for affordable housing, it’s a very tight market out there,” said Driedger. “We’re trying to respond; but what we’re able to do with community support and building new housing, has not been enough to meet the need.”

Secondary suites can address that growing issue.

Under the regional program, a bachelor apartment can have a maximum rent of $589, one bedroom is $734, and two bedroom is $874. This amount is subject to increase after the first year.

“There’s no standard size,” said Schumacher. “They have to meet building code. And they have to get a building permit and an occupancy permit through the local municipalities. So, the township or the local city. We want to make sure it’s a legal unit, so whatever size their zoning bylaw allows as a minimum would be eligible.”

Possible new second units include a basement apartment, an addition, or what is known as a “granny suite,” or a garage that is converted into a standalone apartment.

“There are no income requirements for the homeowner, but the home value has to be a modest home,” said Schumacher. “So the home has to be at or below $403,635 as the current property value.”

The goal is to increase the number of available rental units and to help bring into conformity existing basement apartments that may not be registered and may not in fact meet legal requirements.

Homes that currently have secondary suites put in place without applying for the likes of this program – and often without proper permits – are technically considered illegal. Unauthorized suites that have all the basics of the legal suite, such as smoke alarms, laundry, and separate entrances, but are not approved by the city, may be eligible as a means to bring them into legal conformity, notes Schumacher.

“We know there are unsafe or illegal, or unapproved units out there. They can use this opportunity to make the unit safe and legal.”

One of the biggest hurdles, and one not overridden by this program, is ensuring that the home has the necessary zoning to allow for a rental unit. The designation of properties varies not only from municipality to municipality in the region, but from neighbourhood to neighbourhood. All the way down to the street level, in fact.

While the province sets planning guidelines for all municipalities, and in recent years it has eased the rules to permit more secondary suites, it’s still up to individual municipalities to approve the actual zoning.

In its most recent change to the official Provincial Policy Statement, made in 2014, Queen’s Park directed municipalities to provide a greater mix of residential housing and densities, including secondary suites.

Along with helping municipalities to meet increased density and intensification goals and provide more affordable housing options, the provincial changes recognize the increased price of housing: secondary units allows homeowners to earn additional income to offset their costs.

There’s also a nod to shifting demographics, as in-home apartments and granny flats provide housing options for extended family, elderly parents or a live-in caregiver.

The regional program recognizes that reality.

The program will continue throughout the next number of years, subject to federal-provincial funding. But how does the process work for those looking to take part?

“Interested households need to complete an application,” explained Schumacher. “So part of that application form is, we need to get written confirmation that it is permitted by the township or city under their zoning bylaw. Once they’re approved, we give them a conditional commitment. Then they would need to go out and get at least three quotes from contractors to do the work. Once the work is done, and the municipality approves the occupancy, we would fund up to $25,000 for the work. Anything over that, they would cover. Anything under that, we would reduce the amount equally.”

Driedger voiced his support for the secondary suites program.

“That’s a good option, especially if you’ve got potentially somebody who’s still able to live in their own home, but they’re not maximizing the use of it,” he said. “And so, if you’ve got a senior or somebody who is just living alone in a house that would easily lend itself to a secondary suite, I think it’s a great way of bringing on housing that provides density to the community as opposed to new construction. We’re certainly supportive of that and think it’s a good step, if people want to take advantage of it.”

Those who wish to apply this year must do so before December 1. Anyone interested can find an application form on the region’s website.