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Bill 108 – Building a 3rd residential unit on your R1 property!

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In 2019 the Provincial Government came along and changed some very important rules regarding Ontario’s Housing Supply.

Basically, what these rules have allowed, among many other things, is the ability for a 3rd residential dwelling unit to be built in the rear yard of a home in a detached building. These types of buildings are often referred to as a “coach house” or “granny flat”.  

These new provincial rules override any municipal bylaws restricting the creation of such buildings so most cities in Ontario are now having to re-adjust their bylaws to conform with the new provincial legislation.

I had a chance to sit down with the City of Guelph Planning Department to discuss what this meant for the average Guelph homeowner wanting to take advantage of this new opportunity.

Here are the 3 main takeaways:

1)    Currently, the proposed building would have to meet the following criteria:

       Maximum floor area is 30% of the rear yard or 70 square meters (about 753 square feet), whichever is less.

       Maximum height of the mid-span is 3.6 meters (about 11’ 9”).

       Set back requirement is 2 feet from the property line.

       Ontario Building Code standards are to be followed during construction along with the usual permit process.  

2)    Services such as gas, hydro, water and sewer would have to be separately installed.

The current rules do not allow the new services to be tied into the existing home’s services. If you wanted to create a 3rd dwelling unit on your property, currently you would need separate services from the street to the new building which would be quite costly.

3)   Currently, the City of Guelph would make you go through a Zoning Bylaw Amendment process (A.K.A a “zone change”) which could cost anywhere between $12,000 – $15,000 along with the wait-time for an approval to allow the creation of a 3rd dwelling unit on your property.

The new City of Guelph Bylaws should be completed sometime in late 2021 or early 2022 according to best estimates but the City of Guelph is trying to eliminate the need for a zone change altogether as early as summer of 2020, prior to the rest of the bylaws being updated. It seems they are fast-tracking the removal of the current zone change requirement which will only help to encourage even more homeowners to take advantage of these new rules. 

It is unclear at this time how these new bylaws will affect homeowners and the criteria they are required to meet to create a 3rd dwelling unit but ideally, having the new services tied into the existing house and not having to pay an additional $12,000 – $15,000 fee for a zone change would be allowed saving you tens of thousands of dollars before a shovel even hits the ground.

Waiting to see how these new bylaws are rolled out may be advisable before submitting any plans to the City. 

Bill 108 also removes the distance separations between lodging houses and reduces the parking requirements for accessory apartment creations. Only 1 parking space per dwelling unit is now required under the new rules and those parking spaces can be in tandem.

My belief is these new rules will change how investors are purchasing properties moving forward and will place even more upward pressure on land values. You will essentially be able to create a “triplex” property on a simple R1-zoned property without having to go through the zone change process which has previously not been possible in the City of Guelph for many years.  

The new Provincial rules allowing 3rd dwelling units also applies to townhomes and semi-detached homes, however, the yard space of these properties could practically restrict what can be built if these properties offer a small rear yard to build on.

With a detached home typically offering the most amount of land, demand for these properties is expected to increase significantly in the next few years as investors start to acquire these types of properties for future 3rd dwelling unit creations.

If you are considering an investment purchase in the next few years and are looking at condo versus freehold, it may be better to choose a freehold property if your budget will allow it as condo board rules will most certainly not allow these structures to be built on their common elements land. A freehold property with a sizable enough yard to accommodate some sort of 3rd dwelling unit in the future would be worth considering instead.

My hope is many Guelph homeowners will be encouraged to create these 3rd dwelling units to help increase our cities housing supply and also increase homeowner revenues, so I believe this is a huge win for Guelph residents and homeowners alike.

Until next time, Happy Investing! 

Kyle