Multiple generations of families living together on the same property has become a growing trend the last few years, particularly during the pandemic. In response, governments have stepped up with policies designed to aid the multigenerational ownership process along.
New this year is the federal government’s multigenerational home renovation tax credit, which allows homeowners who are building a secondary dwelling unit for family members to write off 15 per cent of costs. In several B.C. communities, zoning changes are either being examined or are under way to allow multiple units of development on those lots traditionally reserved for detached houses. The B.C. government also helped multigenerational households when it recently prohibited some age restrictions in strata condos, thereby allowing younger people to buy into buildings with their parents.
Some municipalities have already implemented policies for “missing middle” density in detached house neighbourhoods. There’s been a slow but growing acceptance from the general public to make it happen, says Small Housing BC (SHBC) chair and real estate lawyer, Richard Bell. He cites the city of Kimberley, which last year approved up to six dwelling units in some neighbourhoods in order to address its supply crisis. Victoria is considering a similar strategy as part of its official community plan, which would also allow townhouses on certain corner lots. Kelowna has a plan to reduce the number of single-family zones. Last month, Toronto Mayor John Tory brought forward an ambitious plan to permit multiplexes on all residential properties. The plan still needs to be elaborated by planning authorities but council approved the plan Dec. 14. And Vancouver has its Making Home proposal coming before council this spring, which, if passed, would allow up to six-unit dwellings to replace many of the typical one or two family houses.
Small Housing BC had been advocating for the dwelling type for many years, and Mr. Bell is hopeful that 2023 will be the year it becomes a reality. Mr. Bell and his wife, Reni Kind, turned their own home into a family compound, for four generations of family, ranging in age from 2 to 94. When Ms. Kind died from cancer, the close support of his family helped him through his grief.
“Every municipality is now looking at this soft densification of single-family zonings, and it’s now just about the execution of a policy,” says Mr. Bell, who does estate planning and draws up agreements for multigenerational homeowners.
SHBC’s Permanently Affordable Homeownership model aims to create affordable housing for those who make $80,000 to $120,000, by mixing market units with non-market units on a typical detached house lot. A portion of units would be purchased at below-market prices as part of a shared-equity arrangement, administered by the city or a non-profit. In return, the homebuyer’s capital gain on the property is limited, ensuring the unit remains affordable.
“We have been proposing the concept through municipalities across the province. This is something we have worked on for a number of years, and I have drafted a covenant that has been circulated to a few parties,” Mr. Bell says.
Vancouver’s Making Home six-unit multiplex model is a similar proposal, which could become an option for so-called single-family lots. Single-family lots make up about half of the city’s zoning and most allow for three units on a lot, so “single-family” is a misnomer. The usual arrangement is a house with a basement suite rental and a laneway house.
Advocates of the six-unit model say that price escalation can be offset by the inclusion of at least one unit that is price controlled by a legal framework, such as a covenant on title that keeps it below market.
A city memo proposes at least one affordable unit within a six-unit multiplex, and a possible City charge on the market-rate units in order to limit land value escalation. Council passed a motion a year ago that asked staff to explore the idea for low-density areas of the city. It’s expected to go to public hearing in May. City staff couldn’t be reached for comment.
“It’s a worthy objective to look for solutions that don’t drive up the price of the land, and that is a discussion every municipality will be having, and looking at it through a social and environmental lens,” Mr. Bell says.
He says his law firm gets inquiries about multigenerational agreements from homebuyers every week or so, and they’ve grown in the past five years. However, it’s key, he says, that the units are stratified in order to make the arrangement a straightforward one for those who buy in. Current multigenerational models require a shared mortgage. There have been complications within his own family living arrangement, such as when his daughter wanted to borrow money to purchase a car.
“One of the big steps that all levels of government has to recognize is the ability to stratify. One of my daughters wanted to buy a new car, and because everyone is on the same mortgage, it was, ‘Dad, want to buy a new car with me?’
“That’s one impact. Under the current model where everyone signs the mortgage, what happens if someone goes into care? Their equity is tied up in the property. If strata titled, the parent could sell the strata unit, then their kids wouldn’t be put in an awkward position,” Mr. Bell says.
Canadian homes with multiple generations living together under the same roof number nearly one million, according to the 2021 census. The household type has grown 45 per cent in the past two decades, representing seven per cent of all households in 2021. As well, more than half a million children lived with a grandparent in the house, mostly as part of a three-generation household. In Metro Vancouver, multi-generational households increased by 48 per cent – compared to 38-per-cent growth for all household types, according to Andy Yan, director of Simon Fraser University’s City Program.
According to SHBC co-founder and builder Jake Fry, more than 80 per cent of his laneway housing business is multigenerational. Mr. Fry is owner of Smallworks, one of the first builders of laneway houses in North America.
However, he is concerned about the city’s approach to the six-unit dwellings. Their proposal to glean revenues from the new housing could overcomplicate the model and increase the cost, resulting in little uptake, he says.
“A lot of these incremental changes can have meaningful results, but people are so locked into a singular approach on what it is to improve land, it’s becoming almost impossible to have a meaningful dialogue,” Mr. Fry says.
“The City has been talking about intensifying that single-family lot use, and they’re really holding onto this idea of extracting money that would go into City revenue rather than taking the opportunity to create affordability on site. … It’s the biggest opportunity you have to do affordability on site … and if you set these up so they are below market in perpetuity, that’s a huge thing, an opportunity the city wouldn’t have again.”
The new multigenerational home renovation tax credit is for the addition of a dwelling unit for relatives, such as seniors or disabled people. Homeowners can claim of 15 per cent up to $50,000 in costs, resulting in $7,500 in support.
Montreal-based Bertrand Nembot runs a home renovation tech company called Billdr that helps Canadian and American homeowners and contractors with their projects. He says the new tax credit will help the economy, as well as people who want to add onto their homes and share expenses. The requirement is that the new unit is self-contained, with a separate entrance. The addition could take several forms, such as adding on an extra storey, or a secondary suite.
“The decrease of interest rates led to such a strong increase in home prices across the country we are seeing more and more families come together and live under the same roof rather than buy two houses. We are seeing that happening much more in cities like Toronto and Vancouver,” Mr. Nembot says.
“So with that tax break you kill two birds with one stone. You help consumers … and two, it helps boost and support the construction industry.”
However, in order to qualify, you must be renovating your home to suit a relative. The census data also show that 15 per cent of adults live alone – the highest percentage on record.
Mr. Bell says government could go further and offer breaks for people who aren’t related, such as elderly people or young families whose collective purchasing power goes further.
“But it’s something,” he says of the new policy. “Every little bit will help people get there.”