Calgary Secondary Suite Issue
There is a hot new topic being discussed in Calgary right now and its revolving around secondary suites. Our new mayor, Naheed Nenshi, is behind a proposal that would legalize secondary suites in almost every district in Calgary and he is facing some tremendous opposition mostly from community associations and homeowners.
So what’s the problem? Well the homeowners and community associations (which are pretty well made up of homeowners strangely enough) are pointing out how it will destroy property values in their districts, how renters will neglect the neighbourhood because they don’t care and how they originally purchased their properties because they were zoned R1 and how they simply don’t want change. More accurately, it’s a case of NIMBY.
If you are not familiar with NIMBY, it stands for Not In My Back Yard. This usually pops up when individuals are more concerned about themselves than anything else, which makes me think of these people as Petty Little People. I may start to get a little opinionated here, so hang on (oops that warning was two paragraphs late!).
I have to say I haven’t actually quizzed any of the Realtors I know, but I have the feeling a significant portion of the people who have bought homes from them never asked “Is it zoned R1?”. They bought the homes they own because it was in an area they liked, it was convenient for their work, it was great for their kids, but because it was zoned R1? Really?
Having suited properties nearby will decrease my property values? Again, really? What exactly is this based on? Wouldn’t having a mortgage helper suite in the basement actually be a better idea than having a row of foreclosed properties across the street. The lowball offers that flow in for foreclosures could spell more impending doom for pricing values in your neighbourhood than having a paying tenant living downstairs across the street.
Renters will neglect the neighbourhood and it will go downhill. That comment makes me want to slap someone. Our first home in Riverbend had owners across the street that made the Beverly Hillbillies look high class. They left half of a shell of an ambulance on their driveway for six months, decorated their non-working pickup truck in the driveway with Christmas lights and dutifully cut their lawn twice a year. These were owners!
Our new neighbourhood has a neighbour with five vehicles, a Harley and a stream of the son’s friends parking outside where my kids often play. I even watched the dad just outside my home do a donut to turn around quicker, perhaps that’s why his son does it as well? Both these people and the ones in the former neighbourhood are owners. Other than calling the bylaw police or catching incidents on film, I have zero recourse, if however they rented, I could talk to their landlord. Perhaps they wouldn’t renew when the lease came up?
My opinion is that if you have a nice neighbourhood, with a nice rental property and a proper landlord, you will have good tenants. If the tenants are bad, it falls back to the landlord to deal with it.
So what happens if this does get pushed through, well suddenly there will be a surge of new rentals suites appearing on the market? Many of them which have probably already been there, but now they will get inspected and legalized. Thus ensuring they are safe and suitable, unlike many of the illegal suites currently operating out there.
With extra suites appearing, the downside for anyone who is currently an investor is rental rates may drop for a bit. This in turn works out great for the renters as there will be more choices, safer properties and it will create a better lifestyle for many people. This could be the perfect first step to helping make housing more affordable for more of the population.
Here’s an interesting little tidbit of information. Calgary is the only major Canadian City that currently has restrictions in place for zoning of secondary suites. They are banned in roughly 60% of the single family homes in Calgary because of zoning.
The big issue from all this is that is solves a lot of problems for people just getting by (both homeowners and renters), it helps make the city itself more attractive to people moving her for work (and there will be plenty more coming in the next couple of years) and it’s a fairly simple solution. The question is, will the Petty Little People make so much noise it gets squelched?
Investor’s Perspective on Real Estate
Obviously, the addition of new suites will have a direct impact on rental rates, but how much? If landlords are smart, it will likely be very little. There is no reason a landlord with a beautiful suite in Tuscany (NW Calgary) should be lowering their rates to the equivalent of a 30 year old property in Forest Lawn (SE Calgary). They may have to lower the rate slightly to be competitive in the area, and there will be some fools who don’t understand how it works, but for the most part, we should be looking at small decreases around $50-$100 to attract tenants.
The big issue will be for the slumlords out there. With all the extra competition of new shiny suites in nicer neighbourhoods, how will they possibly attract tenants? They have two choices, they will have to reduce their rents even further, or they will have to pony up and fix up their places. This will make it appear that rents are decreasing, but when smart landlords are paying attention, they will notice the low cost units that smell of mould and decay seem to be continually up for rent. So although they are priced low, no one is actually renting them and the nicer, higher priced properties will still rent just fine.
As for property values, if it’s a unilateral move across the city there will be absolutely no change in values. Since it’s all encompassing, nothing changes. The bonus may be slightly down the road when the homeowners who suited their property finally sell them and discover there is demand for properties that have suites in them and they may actually increase the property values.
It will be interesting to see who wins, I’m hoping for them to approve it, but NIMBY’s can be whiny and that’s the problem we often run into. The loudest voices win rather than the smart choices.
What are your thoughts? For or against? Or should I just keep my opinions to myself in the future so as to not upset the apple cart? Comment, reply email me, just tell me your thoughts!
Seriously, these NIMBYs have to get a grip. Legalizing existing suites only increases the standard of living for both the tenant and the landlord (as well as the Health & Safety Standards being followed!) It’s a fabulous idea, and I hope it goes through. Well written, Bill.
Exactly, most likely they already have suites in their neighborhood, they just don’t know about it. So when it does get legalized it simply ends up safer for everyone.
Bill
Outstanding post Bill!
Some of the louder opposition to this are affluent folks who tend to have a lot of pull but I think the city in general is getting behind this one. Did you go to the town hall meeting last night that was ironically in the basement? I wasn’t able to go but watched the twitter feed. Interesting stuff.
Anyway you are dead on with your predictions in my opinion and I look forward to seeing the outcome of this one.
I really wonder if the objectors have thought anything through. A secondary suite is often a mortgage helper so the landlord is upstairs. Are they going to let the place get run-down more than an owner without a suite? They want to attract and keep tenants. They will take more care. If the owner is in residence, but is renting the upstairs as well, that owner is probably in the business and legal or not, is already renting the suite. Nothing is actually changing for him.
Thanks Wade,
The positive aspect of this is that Nenshi is behind the push right now and from everything he has done so far, once he gets behind a program he stays on it. Not being a true politician he understands the underlying importance of issues like this and appears to focus on that. The big question will be how the affluent opposition deal with this and whether it affects how long he stays mayor.
No I didn’t attend, I imagine it was quite a “fun” time with people getting along very well and expressing their views politely. 8′]
Bill
Hi Fay,
The intent of the change currently is for this to occur in owner occupied dwellings which actually makes it even more likely that the properties will be maintained. As you said, with the landlord upstairs, there is less chance the property will get run down and they will want to keep tenants as long as possible.
Regards,
Bill
Bill, I appreciate that you share your opinions and that you provide information to back them up. I’m hesitant to be on board with this possible new change because I know a lot of people are drawn in to the idea of being absent landlords. Being able to bring in two (or more) rents on one property is like the chicken that lays golden eggs. I warn people that being a landlord is not an easy (or absentee) job – it is 24/7. I have to agree with you that illegal suites would be reduced if this change takes place. That is really one of the most important things to consider (safety!!!).
Thanks for putting a fresh perspective on this.
The end result of secondary suites can be seen today, and all you have to do is go for a ride through Pembrooke, Forest Lawn, Acadia and the list goes on and on. These use to be working class neighborhoods with a sense of community, but currently they are being ravaged by secondary suites. This will affect every one, in every community, it has just affected my area first, so go for a drive and take a look because what Nenshi is selling is not what you are going to get.
I think that’s a bit of a leap Ron. Secondary suites are a cost effective solution to high housing costs. Calgary is actually one of the very few large cities that still has restrictive zoning in place blocking secondary suites. If this was the cause of a downfall of an area, we would see most of Toronto, Vancouver, Victoria and Montreal also ravaged, but it’s not the case.
There are an excess of suites in some of the areas you mentioned specifically because they are blue collar neighborhoods and as such have a higher rate of rental properties. To maximize the properties, many were suited, often illegally.
I still maintain that if it became legal in all areas of the city, and the homeowner has to reside in the property, it will create a safer more affordable selection of rental property.
Bill
Parking is becoming an issue as we already have rental units across from R1 area. We not only have to deal with the renters across the street we now have to deal with the neighbours parking in the back lanes in front of our home and to top it all off they don’t speak english. When it comes time for winter and snow removal it will become a nightmare, they park on the R1 side and don’t move their vehicles. The people renting in the R1 side are parking where ever they can find parking often not in front of the R1 suites they are renting. This a problem, and the road will NOT be cleared as the City of Calgary are timorous at best and will not deal with the situation as they are to BUSY trying to do the many jobs already on there desks I do pay my taxes and they are going up every year for the next few years what is being done about this?
I get frustrated because the rules to residential areas only apply to the people that try to maintain there neighbourhood and the bylaws that the City of Calgary put forth.
Hey Brian,
Thanks for the comment, ironically I have the same issue regarding parking in my R1 neighborhood too. I’ve had one neighbour leave his truck beside my house for over a year (he finally had it towed away now that summer is over) and he and his kids have three other vehicles, so two are always parked beside me. Another neighbour has three vehicles and another had four and the best one has five vehicles and two motorbikes.
My rental properties, especially ones that are suited, have additional offstreet parking to go with the street parking and I seem to have more problems with neighbours parking in front of my places than any issues with tenants.
What I’m trying to say is this isn’t so much a rental issue as an ongoing problem in the city. It doesn’t matter what area. The problem that does come up is when a landlord tries to pack in two families with two or three vehicles per family. The landlord has to take some responsibility for issues like that and if there is limited parking, he needs to address it with incoming tenants.
By opening up more areas to suites, there is a chance this will alleviate cramming people into properties they shouldn’t be as well. Big picture (at least for me) and from this original post is many of the reasons people give for not wanting suites everywhere have more to do with personal interests than interests for the neighbourhoods. They are simply looking out for their own back yard.
Bill
Bill,
Your posts re. tenancy and secondary suites are real amazing and educating. Unfortunately, we are in 2015 now and still not much has been done about legalizing suites and making it easier for law abiding landlords.
Part of the problem is the biggest problem with “democracy”. In the system as it’s set up the few vocal people who whine and bitch the most get their way.
The politicians hear the squeaky wheel and believe to retain their position of power, they need to follow their direction. My thoughts anyway.
Bill