Building a Backyard Suite

Sprout Dwellings kicks off a series of informational webinars with our panelists:

Erin Crosby | Partner, Sprout Dwellings
erin@sproutdwellings.com

Aaron Murnaghan | Manager – Housing Accelerator Fund, HRM – Community and Regional Planning

Bruce Lusby | Associate Mortgage Broker, Premiere Mortgage Centre
bruce.lusby@premieremortgage.ca

Questions & Answers

Forgivable Loan Program

• With regard to a "university aged child", would I be eligible for the loan if I were to be renting to my 20-year-old?

  As of April 10, 2024, the Nova Scotia program determines eligibility as follows:

  “…the tenant and the homeowner must meet one of the following situations where the tenant is:

  • a family member and is 65 years of age or older OR is a person living with a disability (supportive housing)

  • a family member and the homeowner is 65 years of age or older OR a person living with a disability (supportive housing)

  • an individual or household whose income is below income limits and to whom the unit will be rented below average market rates (affordable housing)

  A family member may be a mother, father, daughter, son, sibling, uncle, aunt, niece, nephew, or adult grandchild or similar related by marriage (i.e., stepmother etc).

  The terms are for 5 years, meaning for that period you must rent to your child or someone else that meets the criteria (family member or individual below the income limits) at below average market rent for your loan to be forgiven.

  More information can be found here:

  https://beta.novascotia.ca/apply-funding-build-secondary-or-backyard-suite-your-property-secondary-and-backyard-suite-incentive-program

• Are the forgivable loans available to not for profits? i.e. housing cooperatives?

  As of April 10, 2024, the eligibility Secondary and Backyard Suite Incentive Program provincial forgivable loan is determined as follows:

  • are the registered owner(s) of the property

  • live on the property as your primary home

  • have up to date property taxes

  • are a resident of Nova Scotia (and a Canadian Citizen or hold Permanent Resident status)

  • have money available to pay for the construction of the suite up front

  This does not include not-for-profits, or housing cooperatives.

• You said the federal loan forgiveness was a temporary program. How long is temporary?

  The goal of the program is to incentivize 200 dwelling units with individual loans valuing up to $40K each. The assumption is that the program will remain open to applications until the program funding is 100% accessed, or the program is cancelled by the provincial government.

HRM By-laws, Building Code, and Permits / Housing Accelerator Fund / Sprout Dwellings

• Is a property survey required to determine setbacks/location?

  A property survey is not always required to determine setbacks and location for a backyard suite. As part of our turnkey contract with clients, we handle the creation of a site plan, which is necessary for permit application. Additionally, Halifax Regional Municipality (HRM) requires a location certificate, which we also handle through the services of a surveying engineer before pouring any concrete.

• Will HRM have pre-approved backyard suite plans?

  Aaron Murnaghan did suggest that as part of the HAF, the Halifax Regional Municipality is working on the potential of having pre-approved plans that can be expedited in the permit process. That program is very early in the concept phase. CMHC is also working on a catalog of housing, and HRM plans to leverage that catalog.

• Can you give us a time estimate for approval of the proposed changes?

  The Housing Accelerator Fund is coming very quickly, but the proposed changes should be available to the general public by April 12, 2024 through the Heritage Advisory Committee Agenda that is available on the HRM website. It will go an approximate two-month approval process on its way to regional council, where it will go to a public hearing. So, by about early June 2024, we should have some clarity on which regulations will be passed and updated in the land-use by-laws.

• What does it mean that a backyard suite is not counted toward the unit total under the land use by-law?

  When a backyard suite is not counted toward the unit total under the land use by-law, it means that it does not contribute to the maximum number of dwelling units allowed in a particular zone. For example, if a zone permits only two dwelling units, you could have a duplex and then add a backyard suite. Despite the addition of the backyard suite, it would not be included in the count of the two units permitted in that zone.

• Is there a minimum square footage required?

  There is no specific minimum square footage required for a backyard suite. However, there are maximum size restrictions, such as 90 square meters in most areas (or 60 square meters in some by-law zones). Additionally, if the backyard suite is situated on its own property identification (PID), it is considered the primary dwelling and must adhere to separate land use by-law regulations.

• Would Halifax By-Law M-200 dictate the minimum floor area of a backyard suite? Or does this fall under NS Code Section 9.39 Tiny Houses?

  All backyard dwellings are required to conform to the National Building Code of Canada, and all applicable Provincial Building Codes and any Bylaws enacted around constructing a backyard dwelling.

  Specifically relating to floor area, the Nova Scotia Building Code Regulations state that a "Tiny House" Can have a maximum floor area of 37 Square Meters.

  Halifax Bylaw M-200 states:

  A sleeping room shall:

  (a) have a minimum floor area of 8 m² and a minimum ceiling height of 1.95 metres;

  (b) have a minimum floor area of 5 m² per occupant, where occupied by more than one person;

  (ba) have:

  (i) a door, window or skylight opening directly to an outside space capable of providing natural ventilation, with the sum of the openings being no less than five (5) percent of the floor area of the sleeping room, or

  (ii) mechanical ventilation equivalent to (i);

  (bb) have windows which meet the egress requirements of the Nova Scotia Building Code or be provided with an exterior exit; and

  (c) not serve any other uses such as a lobby, hallway, closet, bathroom, laundry room, stairway, kitchen or service room.

  Relating to floor area of a "Tiny House", both conditions for floor area shall be met. A "Tiny House" will not exceed 37m² in Floor Area, with sleeping areas being a minimum floor area of 8m² for one occupant.

• Is there a minimum size required for either secondary suites or standalones? In some municipalities they do not allow a dwelling below, say, 900 sq ft or so.

  No, there is no minimum dwelling size requirement for either secondary suites or standalone units in Halifax Regional Municipality. While certain covenants may impose size restrictions in some areas, the municipality itself does not have a minimum size requirement for dwellings.

• Could you comment on the use of a backyard suite as an Airbnb?

  In areas where short-term rentals (STR) are prohibited or regulated, utilizing a backyard suite for Airbnb purposes is subject to the same regulations as the primary residence. However, exceptions may apply in rural or unserviced lots. It's advisable to review the specific by-laws governing your location or contact local authorities, such as calling 311, to ensure compliance with relevant rules and regulations.

• What is the accelerator fund being used for with respect to backyard suites?

  The accelerator fund is primarily aimed at revising land use by-laws to promote greater flexibility in size, height restrictions, and lot coverage ratios for backyard suites. While potential grant programs through the Housing Accelerator Fund are being considered, the initiative is in its early stages and could take a couple of years to finalize.

• Can you use secondary suite as a long-term rental?

  Yes, secondary suites, including backyard suites, can be utilized for long-term rentals regardless of zoning regulations.

• If you have a 2nd power meter, do you need a 2nd address?

  Each backyard suite is allocated its own civic address, independent of the number of power meters present.

• Are we able to add a basement or a crawl space underneath that could be used for storage?

  Adding unfinished storage space, such as a basement or crawl space, to a backyard suite is feasible. While our current focus at Sprout has been on maintaining accessibility within the home and using an insulated engineered slab to increase R-values, such features could be accommodated if requested by a client.

• Is it permitted to set a dwelling on helical piles vs slab foundation?

  It is permitted to set a dwelling on helical piles instead of a slab foundation. Helical piles can offer cost-effectiveness, particularly in areas with undulating terrain and poor soil quality. While our priority typically involves building on a slab foundation for reasons such as minimizing air flow beneath the building for insulation purposes and enhancing pest control, helical piles remain a viable alternative.

• Would you be to do a single slope roof to optimize how many solar panels you can install?

  Yes. Our loft design uses a shed-style sloped roof. Our single-level models do not, but we have built some that have a solar panels installed. Our standing-seam metal roofs are perfect for mounting panels and the proper amount of panels and orientation would be determined by your location and Sprout orientation.

• If you are on the peninsula, could you build a Sprout Dwelling that is 2 story and is 2 suites (roughly 450ft each)?

  While we presently lack a model that fits this specific request, primarily due to height limitations for backyard suites, upcoming changes in by-laws could make it feasible. With anticipated adjustments allowing for increased height and potential density on most residentially zoned parcels, constructing a two-story Sprout Dwelling with two suites, each roughly 450 square feet, on the peninsula could become a viable plan in the near future.

Financial

• Would you pay capital gains tax on the second property?

  If a backyard suite is utilized for business purposes, such as operating a home hair salon, or if it generates rental income, it would likely be subject to capital gains tax, similar to a basement apartment. For personalized guidance, it's advisable to consult with a professional tax accountant to assess individual circumstances.

• Would backyard suite receive its own property tax bill, or would it be applied to the primary residence?

  No, only the primary residence would receive a tax bill, and the addition of the backyard suite (generally calculated by the Municipality by the permit value) would be added to that tax bill.

• Does the government provide an incentive for us to use our RRSP to finance a backyard suite similar to the "first time home buyer" option?

  The Canadian government doesn't offer a specific incentive akin to the "first-time home buyer" option for using funds from a Registered Retirement Savings Plan (RRSP) to finance a backyard suite or any other type of secondary dwelling. However, you can withdraw funds from your RRSP under the Home Buyers' Plan (HBP) for a first-time home purchase, which could potentially be used for this purpose if you're buying a home that includes a backyard suite.

  While this option isn't specifically designed for financing backyard suites, if you meet the eligibility criteria and the backyard suite is part of your first home purchase, you may be able to use funds from your RRSP under the HBP. However, it's always best to consult with a financial advisor or tax professional for personalized advice regarding RRSP withdrawals and home purchases. Additionally, government policies and incentives can change, so it's worth checking for any updates from the Canadian government.