secondary suite owner-occupied restriction in Alberta

[penhold]

Hello REIN members,



I could use some expertise as I have run into a little problem with the "owner-occupied" restriction for the "Secondary Suite Grant Program" in Strathcona County (East of Edmonton). I recently moved into a new home I built and didn't have any success with the sale of my existing home, so I was told about the "Secondary Suite Grant Program" from a friend and it seemed like a good opportunity to take advantage of the program and end up with a solid investment property as our existing house layout was setup very well for a basement suite and the cash flow numbers were good.



Since I am not planning on living in the property I was told I cannot be approved for a development permit for a secondary suite. I was told that the municipality has put a restriction on all secondary suites in Strathcona County that they must be "owner-occupied". From reading online it seems that some municipalities in Alberta had this restriction (then removed it) and others (Red Deer for example - see Point 12) state that an owner-occupied restriction "would not stand up in a court of law if challenged. The City is able to regulate the use of land, but not regulate the users of that land. Administration has excluded any requirement for the primary resident of a dwelling unit, with a secondary suite, to be the building owner. "



Without the additional income from the basement suite it makes it much less attractive for me to proceed with this as an investment.



I'm curious if anyone has any experience with this area and if it would be worth the hassle to even try to challenge something like this. I was told I could apply and appeal if rejected but at this point I'm not sure if this is even worth all the hassle. It seems like my options are:



a) apply and challenge if rejected

b) rent whole house including the basement to a single tenant

c) renovate basement into suite illegal suite and rent basement anyways (not really my style as I like to stay within the rules)

d) sell the property and give up my dream of being a landlord



TIA

Chris

 

[ChrisDavies]

Hi Chris,



I didn't want to see your post go unanswered, and a bump might get some more people's opinions. Strathcona County has some interesting attitudes, and while I agree with you about both the logic and the law, that's an expensive fight you're considering. Someone like Barry McGuire at Richie Mill might know about the related case law which might give you an idea, but it's likely not worth fighting for one suite.



For you options above, here's my two cents:



a) If you're not planning to try and fly under the radar, I don't think it hurts to try. I don't think it'll work out though.



b) If you can rent the whole house as one and still cash flow, then this is your best option IMHO, with one caveat, which I'll touch on under d). There's not a lot of rentals in Sherwood Park, so you may do very well. (assuming you're in Sherwood Park, and not another part of Strathcona)



c) Good call. Adding illegal suites works for some investors in municipalities where the risks are better known, but Sherwood Park can be a bit of an oddball. I'm a fan of playing by the rules.



d) This can be a good way to move on to a fresh new place to truly launch your dream of being a landlord . (The Alberta Power Workshop is a good one to get rolling too) There's something to be said about selling a property which was intended to be a home, and rolling the proceeds into something that's truly intended to be a positive cash-flow investment property (or two).



Hope that helps!

 

[Sherilynn]

Strathcona County has a history of resistance towards secondary suites, and likewise has a tendency to crackdown on illegal suites.



But the fact that they have any secondary suite initiative at all is promising, and maybe they will loosen up in the future.



Edmonton's Grant program had many restrictions when it first started, and hence they didn't have any takers. They were forced to eliminate or relax some restrictions to make the program more attractive.



The entire point of the program is to encourage safe, affordable housing. If a landlord or homeowner figures a cheaply-built, illegal suite is the only option, then the program is not working as intended.



In time, Strathcona may loosen up as well.