Since taking power the Trudeau government has introduced several successive measures that have made getting a mortgage in Canada harder for many Canadians. By some assessments borrower rejection rate has gone up as much as 20 per cent after the latest measures were introduced in January 2018. Some borrowers are looking to riskier lenders to get what they need and others are looking for properties with mortgage helper potential.
Secondary suites are fairly common as mortgage helpers. These suites, often located in the basement of homes, provide additional income to homeowners that they can use to help pay their mortgages and other bills. Secondary suites are often defined as a separate living area contained within a single family dwelling that functions as a self-contained unit. There are often restrictions placed on these types of accommodations by municipal authorities. For example, in this Courtenay development services document a secondary suite cannot have a total floor space of more than 90m in area and it must occupy less than 40% of the habitable floor space of the building. Other restrictions also apply.
Carriage homes are fairly common on rural properties in the area. Some new developments are zoned for these homes as well. A carriage home (also called a coach house in some areas) is an outbuilding which was originally built to house horse-drawn carriages. Today municipalities like the City of Courtenay refer to them in their zoning bylaw as “an accessory dwelling unit located on the second storey of an accessory building accessory to a single residential use which contains no interior access to any part of the accessory building below the carriage house and is located on a lot which is a single real estate entity”. Other than where this dwelling is physically located, it sounds a lot like a secondary suite.
Bed and Breakfast (B & B) accommodations can be found in the area as well. This type of accommodation is generally defined as a small lodging establishment that offers overnight accommodation and breakfast, often located in private family homes. Air B & B accommodations have become visible and desirable in recent years. What is the difference? In the Comox Valley, a B & B is regulated by municipal authorities and it is inspected by the Comox Valley Association of Bed & Breakfast and Vacation Rentals to ensure adherence to quality standards. The term Airbnb refers to the American company Airbnb, Inc. which operates an online marketplace for people to lease or rent short-term lodging that includes holiday cottages, apartments, homestays, hostel beds and hotel rooms. They operate the website Airbnb.ca for accommodations in Canada. There is no universal agreement on what constitutes a short term rental although less than 30 days is a good guideline. Airbnb accommodations often currently operate in a legal “grey area” where they are not subject to accommodation regulation and taxes but they are on the radar of many municipalities in BC and this is expected to change. The province of BC and Airbnb recently reached an agreement that will see the online short term rental company collect provincial and municipal taxes through its platform.
Speaking of regulations, local municipalities regulate land and property use through things such as zoning bylaws, building bylaws, permits, and business licenses. As an example, the Town of Comox recently established a zoning amendment bylaw that disallows bed and breakfast accommodations on parcels with a secondary suite or coach house. People thinking about using parts of their home or property as mortgage helpers should check with their local municipality before proceeding with their revenue generation plans.