More builders may rough-in rentals
June 17, 2020
An expected surge in demand for rental housing—partly due to new rules that stifle first-time homebuyers and consistently high home prices—could have more new homebuyers requesting secondary suites.
The latest survey on the secondary rental market sector from CIBC found that those who earn income by renting out space in their home reduce their housing costs by as much as 70 per cent.
Canadian homeowners who own a separate rental property earn $2,189 per month on average—50 per cent more than their monthly costs, the CIBC survey reports.
Toronto, which has allowed secondary suites in existing homes since March 2019, was among the last major Canadian city to let existing home owners add a mortgage helper. Toronto Council’s ruling removed a restriction that a house had to be at least five years old to include a separate rental unit. Vancouver, in reaction to the lowest rental vacancy rate and second-highest rental costs in the country, now allows up to three suites on single-family lots in most city neighbourhoods.
Real estate firm CBRE’s 2019 survey discovered that 15 per cent of Canadian homeowners are already landlords and that 11 per cent plan to earn rental income by letting out space in their primary residence or from a separate rental property.
As well, 37 per cent of all homeowners say they would prefer a home with a source of rental income if buying a home today.
A new demand may come from homeowners adding a suite for home care for aging relatives due to the high incidence of pandemic victims in senior care residences.
Recent changes to mortgage insurance restrictions from Canada Mortgage and Housing Corp. are expected to prevent 5 to 11 per cent of first-time buyers from qualifying for a mortgage—leaving renting or moving back home the only option for many.
This option is reflected in the desire for an in-house rental suite among younger Canadians. CIBC found that of those buying a home, twice as many millennial homeowners (54 per cent) than boomers (25 per cent) say they'd opt for a home with a source of rental income.