In a country facing an ongoing housing crisis, underused spaces are becoming valuable assets. On October 8, 2024, Canada’s federal government announced bold action to address the housing shortage by making it easier for homeowners to add secondary suites, such as basement apartments and laneway homes, to their properties.

With the announcement of a new set of mortgage reforms and the Canada Secondary Suite Loan Program, the path to increasing housing density and creating more affordable homes is clearer.

Secondary Suites: A Win-Win for Homeowners and Communities

Imagine turning an empty basement or unused garage into a comfortable, self-contained living space—one that could house a family member or generate rental income. That’s the opportunity Canada’s secondary suite initiative is offering.

By allowing homeowners to refinance up to 90% of their property value to fund these conversions, the government is unlocking the potential for more homes to be built within existing neighbourhoods. Not only does this provide a potential revenue stream for property owners, but it also supports more affordable housing options without the need for sprawling new developments.

Why Secondary Suites Matter

Secondary suites (also known as accessory suites, ADUs, and laneway houses) are an effective way to increase the housing supply in communities that need it. These units allow for flexible living arrangements, whether it’s helping a family member live nearby or generating extra income to ease mortgage payments. Moreover, this initiative is particularly beneficial in urban areas, where space is limited, and the demand for housing far outpaces supply.

This approach to housing can also address generational needs. Retired homeowners can downsize into a smaller suite on their property, while their children and grandchildren can live in the main home, maintaining family connections and reducing living expenses.

“We must use every possible tool to build more homes and make housing affordable for every generation of Canadians.”

– Deputy Prime Minister and Finance Minister Chrystia Freeland

Mortgage Reforms That Make it Possible

Starting January 2025, new mortgage insurance rules will enable homeowners to access up to 90% of their property’s equity when building a secondary suite. Additionally, the federal government is raising the mortgage insurance price limit to $2 million, ensuring that homeowners across Canada—from Vancouver to Toronto—can take advantage of these opportunities, no matter how inflated their local housing market may be.

With longer amortization periods of up to 30 years, these reforms make the financing of secondary suites more accessible to homeowners, providing them with affordable monthly payments as they upgrade their homes.

The Bigger Picture: Making the Most of Underused Land

This secondary suite initiative is part of a broader federal effort to solve Canada’s housing crisis. Alongside making secondary suites easier to build, the government has also announced plans to unlock vacant lands and underused federal properties for residential development. The goal? To build 4 million new homes, making housing more affordable and accessible for every generation of Canadians.

By transforming basements, garages, and even vacant office spaces into homes, the government is tackling the housing issue from multiple angles, providing diverse housing solutions for families, seniors, and new homeowners alike.

A New Era of Affordable Housing

Secondary suites are more than just an innovative way to combat the housing crisis—they’re a win-win for homeowners and communities. With the added incentive of mortgage reforms and loans, homeowners can now make use of underutilized spaces to generate income or accommodate families, all while contributing to the broader solution of affordable housing.

Canada’s secondary suite initiative shows that sometimes the answer to big problems can be found in the spaces we already have.