Government rolls out new mortgage rules designed to spur construction of secondary suites
UNSPLASH/Greyson Joralemon
The government rolled out more measures designed to ease housing affordability.
The federal government unveiled a fresh series of changes to mortgage rules that will allow homeowners to build secondary suites by refinancing insured mortgages.
“Many homeowners have extra space they may want to convert into rental suites, such as an unused basement, or a garage that could be converted into a laneway home,” the finance department said Tuesday in a statement. “Historically, the cost of renovating, combined with municipal red tape, has made this both difficult and expensive.”
Beginning Jan. 15, “borrowers seeking to access mortgage insurance in Canada to add more units” will be able to apply for loans of up to 90 per cent of the property value, including the value added by one or more secondary suites, according to the statement.
The new rules allow for as many as four “fully self-contained dwelling units,” including the existing unit, and the property value, including improvements, must be less than $2 million. Borrowers must already own their properties and they, or a close relative, must occupy one of the current units. The additional units can’t be used for short-term rentals.
Among further changes rolled out Tuesday, the government will undertake consultations on the taxation of vacant land, and it has identified 14 “underused” federal properties that could be used for building new homes.
The new rules are the latest in a series of changes designed to increase housing supply amid what RBC economist Robert Hogue called persistent and intense affordability strains. In a note to investors this week, Hogue said recent interest rate cuts by the Bank of Canada have “barely moved RBC’s affordability measures off worst-ever levels nationally and in many major markets.”
Last month, Finance Minister Chrystia Freeland, whose governing Liberal Party is well behind in election polling, extended the maximum amortization to 30 years for all buyers of newly built homes—and for first-time buyers, for all homes—and raised the ceiling for government-backed mortgages to $1.5 million, from $1 million.
