THE CASE FOR GARAGE SUITES?
For a long time in Calgary, Garage Suites or Backyards Suites have been rare unicorns. The financial expense didn’t justify the rental income – only in a few cases did the business plan make sense. But, like everything else, that is changing.
Let’s just clarify the definitions. Garage suite, Laneway house, Carriage house, Backyard suite and Garden suite are all expressions that are used in Calgary and other Canadian cities. Step outside the city limits, and now they’re referred to as Accessory Dwelling Units. Generally, a carriage house is at ground level, and a garage suite is above a garage.
Why Now? On Sept 16, 2023, Calgary City Council approved a new housing strategy. Hundreds, if not thousands, of requests and complaints about the lack of affordable housing had been heard. And then … the federal government added a twist: figure out a policy to allow densification, or else miss out on the federal “Housing Accelerators Fund.” And for the icing on the cake, the Calgary Housing Needs Assessment was released on Sept 6, 2023, with some pretty shocking statistics, https://www.calgary.ca/communities/housing-in-calgary/housing-needs-assessment.html. Now there is both proof and motivation: we finally have a City Council ready to allow densification.
When do the changes come into play? Clearly a big policy shift like this requires time to implement. The expectation is that details will be coming clearer “soon,” and that the new bylaws should come into effect in the spring/summer of 2024. Increased density, and relaxed parking rules for new builds are at the heart of the changes coming to Calgary.
What this means is that much of Calgary is likely to be able to have BOTH a secondary suite and a garage suite. The changes mean a lot of other things too, but for the purpose of this blog, homeowners and investors can have 3 legal suites on a property: main floor, basement and garage suite. No more begging city council and/or the neighbours.
What’s in it for the investor or homeowner? Tenants love garage suites! And investors love a great tenant who stays for a long time. Garage suites can be easily customized to attract specific tenants; for example, a 1 bedroom with an office will attract professionals who commute to an office part-time, and work at home part-time. Another example is a 2-bedroom design that attracts single parents and young couples in communities close to schools; this model would also work well close to universities and SAIT, for student roommates.
A little fringe benefit for those of us with an altruistic nature is the ability to contribute to the affordable housing inventory in Calgary.
And the financing? As investors, we LOVE an extra source of income! We also love forced appreciation to our properties (higher net worth). Many investors will compare building a garage to suite to buying a condo. We would suggest a discussion with a mortgage broker regarding financing options for the build, as there might be some lower cost alternatives (compared to going out to buy another investment property). The clear added bonuses here are no condo fees, and complete control of the property.
What’s the catch? First, the ink isn’t dry on the city’s new zoning regulations YET. Second, the utility connections (tie-ins) can present a challenge. We’ve all seen pipes burst across the city. If the existing property has older water and sewer, the city will likely require an upgrade for the entire property—this is in addition to connecting the new garage suite to the existing utilities. Third, Enmax makes the rules about power poles. An electrical pole may require relocation, or replacement—it’s not open for discussion. And fourth, trees still matter in this city—there are rules and fees if a tree needs to be removed (and sometimes even if it isn’t going anywhere, probably best if we don’t take a sidebar into that story!). So, a perfectly reasonable build quote has a few wild cards until these issues all get sorted out by the experts and city administrators.
We’re already in the planning stages for a garage suite on a property that doesn’t yet have a secondary suite. But we’re incredibly excited about the opportunities for investors and homeowners who are interested in a relatively simple extra income source, on a property they already own. Hoping to share some good news stories about this build project in 2024!
