In the tight Toronto real estate market, Canadians are turning to legal secondary suites as a way to earn enough income to become a homeowner. But many are unaware of the hidden legal fees they may face.
It’s no secret that Toronto has a housing shortage. With inventory levels at their lowest in 12 years, affordable housing hasn’t kept pace with demand. For some, condos represent a viable option, but for those would-be homebuyers who eschew high-rise living, affordable single-family home options are limited.
This scarcity has popularized the trend of Canadians turning their basements into legal secondary suites or adding additions as a way to earn enough income to pay their mortgage. By adding an income or legal suite in Toronto or sharing ownership with older or younger relatives, the dream of homeownership can be a reality.
Hidden Fees Build Up
But adding a legal suite or addition to your Toronto home will cost you money, and not just for materials and labour. There are many fees you’ll need to pay the city including the cost for the building permit, committee of adjustments fees, and architectural drawing fees.
On top of that, there are several hidden costs you might not be aware of, as one father and son duo learned the hard way recently.
Ben and his son had purchased a Toronto home together. The plan was for Ben and his wife to live on the main floor, and the son and his family to live on the second floor. To make this plan more financially feasible, the family decided to build two basement suites as mortgage helpers.
While Ben and his son had planned and budgeted for the fees outlined above when they applied for development permits, they were hit with four expected fees that left them floored:
- An $80,000 development charge
- A $4,500 education development charge
- A $72,000 parkland fee
- A $2,400 road damage deposit
All told, the duo needed to fork over $161,684 before they could begin their project. It was enough to make them reconsider their plans.
Barriers to Affordable Housing
This unfriendliness towards secondary suite development flies in the face of modern-day urban planning wisdom. Most experts agree that adding secondary suites to existing homes is an excellent way to increase available housing stock while preserving the integrity of neighbourhoods. It even has a term: gentle density.
In sharp contrast to Toronto’s policies, Canada’s other most expensive city, Vancouver, has put development policies in place to encourage secondary suite building through their famous laneway house program.
This program is designed to encourage homeowners to add secondary suites to their single family zoned homes to provide more affordable housing options in the city. The city prepared a 58-page step-by-step guide for any family considering adding a laneway home to their property. The guide includes checklists of materials required for permit approval and a complete list of fees that may be applicable.
But for residents of Toronto, it’s not so simple. Toronto also has a small guide to adding secondary suites, but the exact fees are not specified, and there is no comprehensive list of possible charges. This ambiguity can leave would-be landlords vulnerable to unexpected costs, like the duo mentioned above.
Reassess Your Options When Building a Legal Suite in Toronto
Your best bet? According to Zoocasa broker Chantel Crisp, if you are considering just moving in with family, forgo the secondary suite or duplex route, and live in the home as a family. You can legally add a second kitchen for religious reasons without triggering the secondary suite permitting process and subsequent hidden fees.
If you do plan to become a landlord and build a secondary suite for rental income, you should arm yourself with as much information as possible by partnering with an contractor. Until Toronto overhauls their available information, Crisp strongly recommends hiring an experienced contractor who specializes in secondary suites and can walk you through the process.
Otherwise, you might end up like Ben and his son, who are now considering cutting their losses and selling their newly purchased home.