Hanout with Paul Toffoli
Vancouver Real Estate Questions - What Are Authorized and Unauthorized Suites?
Mark: Hi, it’s Mark Bossert from Top Local Lead Generation. We’re here today with Paul Toffoli and answering some common Vancouver Real Estate questions and today’s question is: What are Authorized and Unauthorized Suites? How are you doing today Paul?
Paul: I’m well Mark, yourself?
Mark: I’m good, really good. So, what are unauthorized and authorized suites and what’s the difference?
Paul: Sure, so why don’t, I’ll back up a little bit and I’ll just generally talk about housing in Vancouver, as we talked about the last time is expensive, and many families live in single family homes or in condos try to find ways to subsidize those costs, so that could be everything from someone who has a student living with them in a room and provides the meals and gets the money or someone like myself who has a suite in their home that they rent out on a monthly basis, whether it’s furnished or unfurnished and, you know it’s a good way to recoup some of that investment. The next question that you alluded to is, ok, we hear a lot of talk about an unauthorized suite vs an authorized suite; what’s the difference? It really comes down to bylaws and zoning and bylaws in different, and of course each municipality will have its own tweaks, you know the City of Vancouver will be slightly different than City of Burnaby or Richmond etc. but I can do some generalizations and then maybe I can talk a bit specifically about Vancouver which is the one I know best.
Generally, in the lower mainland, municipal governments have been encouraging of secondary suites in housing because housing is expensive and we need to find ways to house people, whether its students or people on lower incomes or people on higher incomes who aren’t ready to buy property. There’s a shortage of rental properties and suites are one way of doing it. In the City of Vancouver specifically, which is the one I know best, RS1 zoning is one of the main single family zoning types and that will allow a primary residence with a secondary suite which would typically be a basement suite and in the last couple of years they’ve also allowed people to build a coach home or a carriage house that would have rental accommodation in it as well. Often when people are looking at buying properties, unless it’s a brand new property, it often won’t have a coach house in it so we’ll just talk about basement suites at the moment.
People will go into a basement suite and say, well, how can I tell if this is authorized or unauthorized? In order to be authorized, it has to, the work to convert it to a suite has to have been done with permits from the city, so building permits like you would do for any other Reno and there’s certain regulations that those permits require and those are really aimed at safety and health. So some of the ones that I’m aware of: the minimum height on an exit route, so going through the doors, so in the middle of the night there’s a fire somebody jumps out of bed and they have to get out, the minimum height is 6’6” going on the lowest points on the way out; there has to be interconnected smoke detectors between the upstairs and the basement suite; there needs to be separation, fire separation between the upstairs and the downstairs, so there’s lots of different things that go into making it something that’s legal but the main thing is that the work has to have been done with permits and it has to be on record at the city. If it was not done with permits or it’s not on record at the city then it’s not authorized.
What are the repercussions of that of that if it’s not an authorized suite? That’s the big question. First of all, if you have the those physical things, if you have the right heights downstairs and you can take it through the process to make it authorized it may be well worth your time and energy to do that because it takes any risk away, you know, and what’s the risk? The risk is that you get a complaint from a dissatisfied tenant or you get a complaint from a neighbour because there’s too many cars parked in front of the house or there’s noise or you know, whatever the reason and the city comes in and says, guess what, you can’t rent this out. It’s not authorized and then all of a sudden that revenue source is gone and if you counted on that money to help you pay your mortgage, guess what, all of a sudden things get a lot less comfortable. In addition there’s costs to doing those changes, getting the permits and making sure everything is done to code and done property, there’s costs. Now, it’s a lot less onerous now to put in a secondary suite than it used to be. It used to be that you would have to sprinkler the whole house which was very expensive, now you don’t have to do that as long as you meet some of those other, those other rules and regulations. That sort of answered it in a nutshell?
Mark: Absolutely. So, then I guess that’s the general sort of picture across probably with some sub changes in, you know, Burnaby, Richmond etc. but how would you actually find out what those rules are in those other municipalities. How do I check it?
Paul: Sure, that’s great. So the easiest thing to do is, all municipalities have websites. So first of all, talk to your realtor who’s familiar with the areas, you know, I’m going to have that information usually at my fingertips in terms of being able to tell you but also I think you can do it yourself or you can talk to me. Go onto the City of Vancouver website, go onto the City of Richmond website, go onto the District of Nor Van, city of North Van website. They have all of their bylaws, zoning bylaws that state whether suites are allowed and then you can dig deeper into those zoning bylaws and find out what’s required to make a suite legal. It’s not rocket science. The cities are very open about it. They want people to know the rules. They want people to get informed but I would say as a buyer, probably one of the first things to do, talk to a realtor, talk to myself, talk to somebody who is familiar with those neighbourhoods whose familiar with those bylaws and get the information so that when you’re walking into homes you understand, ok this one’s authorized, that’s great, I don’t have to worry about it anymore or this one’s unauthorized, could it be made authorized if I had to or if I wanted to, you know, and also there can be insurance questions around that. You need to talk to your insurance broker. I’m living in a single family home, it has an unauthorized suite or has an authorized suite, make sure those declarations are on your policy because if you have a loss and the insurance company finds out that they didn’t have all the correct information on their policy, guess what, they may disallow that loss or that coverage. So that’s another thing that you really need to be clear about. Working with professionals who know all the t’s to cross and i’s to dot so that you get your insurance coverage, that you get everything dealt with before you remove your subjects and are committed to buying that property.
Mark: Absolutely. So, I guess the other thing that comes up is, if you go to the city and you are going to convert it from unauthorized to authorized then do your taxes go up?
Paul: Depends on the municipality. That’s a really good question. So, in the City of Vancouver, all cities if you’ve got an authorized suite you’re required to get a business license which is inexpensive. I think it’s like thirty-five, something like that per month, per year, I should say. Your utility costs will probably go up so you will be paying for extra garbage collection; you’ll be paying a little bit extra for water and so forth. In some areas your property taxes may go up but it’s more driven by the utility costs than it is the housing value but again, you have to check with the different municipalities to see how they assess those things. BC Assessment is the one who assesses the value of a property so they’re going to take into account that it’s got a secondary suite and they’re going to say, they’ll probably add a little value for that, so it will go up but also when you go to sell your property, it’s easier for the banks to finance because it’s an authorized suite, they’re going to be more comfortable using the revenue from that, so your buyers are going to be capable or more comfortable paying a little bit more than they would maybe with an unauthorized suite. So that’s something also to take into account.
Mark: So, I guess that last kind of question that pops into my mind and this is more a function of where we live, we’re surround by and we ourselves we, you know , it’s a sandwich house. There’s three generations, you know, our kid, one of our kids is living with us and my parents, was just the easiest way to look after them as they’re in their eighties and I know that there’s, we’re surrounded by houses that is exactly the same, multiples, so how does that . .
Paul: That is a question, because, certainly the municipalities and the bylaws are more open to having multigenerational families, because you are right, that is very much, that’s very important particularly culturally you will have a lot of cultures, Asian cultures where you get three or four generations living in the same home. It’s very common and because of affordability also it’s becoming local residence, people grew up here like yourself, myself, we’re starting to see the extended family living in, you know, I’ve got young kids, I’ve got an eight year old and a six year old. I’m not sure how old they’ll be when they move out, it might be another twenty years or twenty-five, thirty years, who knows. So municipalities are open to that. What we are seeing is that they used to have more of what they would call in-law suites and so forth. They seem to be doing away with that, again it depends on the specific municipality, but one of the big things is, it’s driven by the number of kitchens you have in a home so they’ll allow you to have, with a secondary suite, if you have a kitchen in there and somebody’s cooking in there, that’s considered a secondary suite, if you have something that’s just got a door that’s locked and it’s got a bedroom and maybe a wet bar, that may not be considered a suite so that might be perfect for somebody who’s got parents or older kids that come up an use the family kitchen, you know, also or nannies, right? That’s another situation where somebody may eat with the family but have their own sort of separate locked off area. That typically wouldn’t be considered a suite, it would be more just, you know, separate living quarters but it’s not a suite so the big thing that people look at is, you know, or the cities will look at, is how’s extra square footage been added onto the house and that’s where they get quite cranky. If people are adding extra square footage onto a house or taking a garage that’s supposed to be required for parking and converting that into secondary accommodation or second or third suite in a house then the municipalities tend to get a little cranky because, you know, you’re using extra utilities, you’ve got safety aspects, there’s on street parking hassles that become problematic so, it’s just layer after layer that you can peel back so it’s really important to be working with someone who can talk you through the concerns and the risks and you know, you may decide you want to take the risk of having an unauthorized suite but you have to understand what that risk is. So getting properly informed, that’s really the key to all of this.
Mark: That’s great Paul. I really appreciate this. This is important information that I think a lot of people kind of brush over and don’t know what they’re getting into until it’s kind of almost too late. So, we’ve been talking with Paul Toffoli. You can reach him at Toffoli.ca or 604-787-6963. Thank you Paul.
Paul: Thanks Mark.