Affordability & Tenure

In 2023, the Terner Center published “Making It Pencil: The Math Behind Housing Development” to assist policymakers in understanding the financial feasibility of large-scale, for-rent midrise apartment buildings. However, recent state and local land use reforms have focused on smaller-scale housing in lower-density neighborhoods, including accessory dwelling units (ADUs), duplexes, and fourplexes, often referred to as “missing middle” housing. States like California, Oregon, and Montana, along with cities such as Minneapolis and Portland, have introduced legislation and rules to promote this housing growth.

This policy paper employs the methodology from our 2023 report to analyze the development characteristics of missing middle projects. Through a series of project pro forma case studies across four California markets, the report finds that many missing middle housing types are not financially feasible, with four-unit ownership buildings being the most challenging to develop. Despite these challenges, missing middle housing can play a crucial role in providing entry-level homeownership and naturally affordable rental options. It is imperative for local and state policymakers to reexamine regulations that hinder the development of missing middle housing, such as lot size, parking, and insurance requirements.

Nestled near the Elders Centre in the Tl’etinqox Community, six cabin-like homes are placed to form a circle to represent the four sacred directions, the cycle of the seasons, the cycle of life and more, and to encourage community gathering.

Tl’etinqox began to develop Elders Cabins in 2019 to honour the intentions, prayers, and needs of their Elders by providing safe and affordable living spaces for them to age in place, at the heart of the community. Elder tenancy applications opened for the cabins in September 2020.

Key insights:

In November of 2023, the province of British Columbia released their “Homes for People Plan” that drastically reduced zoning and municipal barriers to the creation of gentle density homes. In summary, new legislation requires all local governments in British Columbia to update their zoning bylaws to allow up to three to four units in all single-family zones and up to six units for properties with frequent bus service.

This resource, developed by the province, is intended to help local governments and their community members understand the legislative changes introduced related to small-scale, multi-unit housing (SSMUH).

Note: The information in this tool kit is for guidance only and is not a substitute for provincial
legislation. It is not legal advice and should not be relied on for that purpose.

This Small Housing Guidance Paper examines the viability of redeveloping houses in single family neighbourhoods with more homes on the same property, presenting recommendations that will assist various actors involved in setting financial and cost recovery policies as it relates to new gentle density development.

Key policy considerations explored include:

Enabling Tenure Options (Rental & Ownership)

Allowing individual ownership, or strata-titling, for each home on a lot will encourage more new units to
be constructed versus requiring that a property have a single owner (i.e. the owner rents out the additional units, or all residents share a single mortgage).

Leveling the cost playing field and reducing risk

Constructing multi-unit buildings is more complex and costly than single family homes; by offering standardized designs and simplifying approval processes it is possible to reduce the uncertainty and costs involved.

Building in affordability

Given the small number of units involved in these projects, it is administratively simpler and more financially viable to take any affordability requirements or financial contribution (if required) and combine them for affordable housing on a larger site.

For the comprehensive suite of Small Housing Guidance Papers, check them out in the Toolbox Resource Library. Simply search for “Guidance Paper”.

This Small Housing Guidance Paper identifies existing and emerging tools for local governments to increase the supply of gentle density and enhance its affordability.

This guidance paper brings together insights and perspectives collected through two expert roundtables where participants identified existing and emerging  tools for local governments to increase the supply of gentle density and enhance its affordability.

Key insights:

• Gentle density housing is more attainable than single-detached homes due to shared land costs, smaller square footage per unit, and shared building surfaces.
• The local government tools (see below) can make it easier to build this form of housing, and can help to bring down the costs of development. This, in turn, will help to incentivize the production of new supply. As more supply comes online, housing prices cool.
• If local governments stack the tools (and their related cost reductions), they may be able to create sufficient incentives to make the inclusion of below-market units viable within a development.
• There are additional tools that can be leveraged by community partners, such as non-profits, lenders, and other levels of government, that can further support the creation of new and affordable gentle density homes.

Tools for Local Government to support affordability:

• Pre-Approved Plans; Pre-Zoning Allowing for Ownership Tenure: Strata or Freehold; Regulatory Relaxations; Cash-in-Lieu Infrastructure Fund; Limiting Greenfield Development; Parking Reductions; Expedited Project Streams; Delegated Approvals; Certified External Professional Review; Density Bonusing; Reduced Fees; Tax Exemptions

Tools for Non-Profits, Lenders, and Senior Governments to support affordability:

• Create and resource a central knowledge holder; Provide administration support for housing agreements and affordable rentals or ownership; Oversee pre-approved plans; Develop supportive lending products; Create additional services and supports for local governments; Provide greater authority for local governments to enable gentle density; Develop new tools to incentivize gentle density

This Metro Vancouver study investigates the cost of providing infrastructure and services to neighbourhoods with varying residential densities, with the goal of informing municipal planning and regional growth policies for Metro Vancouver.

Key insights:

• The study emphasizes a complex relationship between residential densities and infrastructure costs influenced by factors like infrastructure age, existing capacity, and the physical landscape of the serviced area.
• Evidence presented suggests that infrastructure and servicing costs per capita and per unit are significantly higher for houses compared to apartment developments.
• Increasing density is identified as a potential contributor to lowering housing development and municipal operating costs over time.
• The study includes a literature review on municipal infrastructure and associated costs.
• Cost calculations are provided for various factors, including development cost charges, municipal operating costs, property taxes/utility fees, and infrastructure servicing, categorized by housing type.

In the fall of 2023, the Province of British Columbia introduced changes to the Local Government Act and Vancouver Charter (VC) to allow more small-scale, multi-unit housing in land use zones that are otherwise restricted to single-family dwellings or duplexes.

This policy manual aims to support local governments in amending their local zoning bylaws and associated legislation to allow for small-scale multi-unit housing (SSMUH) in traditionally single-family zoned areas as per recent requirements mandated by the Province of BC.

Key insights:

The manual provides:

• An overview of the new SSMUH legislative requirements and implementation timelines for municipalities to come into compliance
• Best practices for updating zoning bylaws, guidance on related policies that may need to be updated (including housing tenure options, estimating potential increases in density, and planning for increased demand on municipal infrastructure and services)
• Sample site standards that local governments can use to update their zoning bylaws to allow for financially viable ADU and 3-6 unit housing developments.

This research paper examines Detached Accessory Dwelling Units (DADUs) from an affordability lens, addressing both affordability for renters and whether or not DADUs are affordable to build.

Cities across North America are facing unprecedented challenges related to housing affordability, climate resilience and economic sustainability. In many cities, infill housing policies are being adopted in response to these issues. This research focuses on one particular type of infill housing – Detached Accessory Dwelling Units (DADUs). DADUs, also known as laneway homes, garden suites, or carriage houses, are independent rental units typically built in the backyards of single-detached homes.

Key insights:

• DADUs offer opportunities for downsizing, age in community, multigenerational living, additional rental income, and adaptable housing across the lifespan, often considered as a form of affordable housing.
• A policy comparison across nine municipalities in Canada and the United States identifies DADU best practices and common characteristics among municipalities with high DADU uptake.
• A secondary analysis of Edmonton’s DADU permitting data explores the spatial distribution of DADUs concerning affordability.
• A survey of DADU owners and prospective builders in Edmonton uncovers barriers to development, excluding tenants from the survey.
• Policy recommendations from the comparison include reducing regulations for flexibility in DADU size, height, and orientation. This involves eliminating parking minimums, owner occupancy requirements, location restrictions, and contextual regulations tying DADU dimensions to the primary dwelling. Such measures aim to foster a successful DADU market.

Research paper authored by Ashley Salvador, University of Waterloo (November 11, 2020).

This report aims to rapidly develop and scale solutions to address some of the main land use policy, project financing and design challenges faced in delivering affordable missing middle housing.

Key recommendations:

• Reforming zoning bylaws to allow as-of-right development of Missing Middle housing,
• Reforming current public consultation processes
• Creating incentive programs and seed funding (via CMHC) for the development of missing middle housing
• Establishing missing-middle specific building standards and development fees
• Creating a set of missing middle typologies that can over time allow for replicable approval, design, finance, and construction phases.

A pilot project has been identified in Little Jamaica (Toronto) to test out the proposed affordability framework and housing financial models advanced in this report.

Additionally, a National Scalability roadmap has been created to continue to progress the work of the Missing Middle Lab, through maintaining partnerships, bolstering municipal support, and developing design catalogues and financial incentives.

This report was authored by CMHC & Keesmaat Group.

Opening Doors is the final report from the B.C. – Canada Expert Panel on the Future of Housing Supply and Affordability. The group was established in 2019 to identify actionable recommendations to increase housing supply and improve affordability in B.C.

Key insights:

The report features 23 policy recommendations that can be categorised under 5 broad calls to action, including:

• Creating a planning framework that proactively encourages housing
• Reforming fees on property development
• Expanding the supply of community and affordable housing
• Improving coordination among and within all orders of government
• Ensuring more equitable treatment of renters and homeowners.

More granular policy recommendations are detailed in the report also, including:

• Streamlining approvals processes
• Increasing transparency on development charges
• Extending tax advantages to renter households
• Phasing out some subsidies offered to homeowners