BC government to incentivize new secondary suites with forgivable loans

BC government to incentivize new rental secondary suites with forgivable loans

Example of a secondary suite in a basement in South Surrey. (Bob Zhong/Luxmore Realty)

As another measure to help address the housing affordability and supply crisis, the Government of British Columbia is creating new policies to help incentivize the creation of new secondary suites for rental uses.

This provides an update to the provincial government’s previously announced strategy of legalizing secondary suites across the province, overriding municipal jurisdiction, with legislation expected to be introduced this fall.

A new “Home Suite Home” guide is being released by the provincial government to provide homeowners with more information on adding a secondary suite. Up to four homes will be permitted on a single-family lot.

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As well, as previously announced in the 2023 budget, a pilot program called the Secondary Suite Incentive Program will provide about 3,000 homeowners with forgivable loans of up to $40,000 to create a new secondary suite or accessory dwelling unit on their property. The budget has set aside $91 million for such a pilot, which will begin in Spring 2024.

But there are numerous caveats for eligibility.

Homeowners must be living on the property as their primary home and cannot have a combined household income over the 80th income percentile for couples with children in BC. They must have equity in the property that can be leveraged as security for the forgivable loan as a registered mortgage.

Moreover, they must agree to rent the secondary suite at below-market rates for at least five years, and the suite cannot be rented out to an immediate family member.

Other eligibility requirements do not permit the use of recreational properties, nor can the property have an assessed value over $2.125 million for 2023, which is the BC Home Owner Grant threshold.

In addition to the pilot program, the provincial government is rolling out the Single Housing Application Service to eliminate the need for multiple permitting applications across different ministries for provincial permits. This is expected to cut timelines by two months.

“People in our province deserve a decent place to live they can actually afford to rent or buy, but a chronic housing shortage and long permit approval times are frustrating that achievable goal,” said Premier David Eby in a statement.

“Our government is taking action. We’re making it easier and faster to get provincial permits to build new homes, and offering financial support for people who could build a suite they can rent out at more affordable rates. We’ve got lots to do, which is why we’re focusing on initiatives like these that make a real and tangible difference for thousands of families.”

The provincial government estimates about 229,000 units could technically be rented out as secondary suites across BC.

Coincidentally, as of today, the City of Burnaby is accepting applications for adding secondary suites and laneway houses to single-family lots.

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