In Canada, we need housing hacks - MoneySense

In Canada, we need housing hacks

For real solutions big-city housing problems, we need to rethink how we do things


I’m intrigued with unconventional housing. Tiny houses; homes built from shipping containers; even cleaned-up brownfields turned into condo complexes. These are housing hacks for a complicated real estate landscape. Perhaps that’s why I am smitten with the tale of a Toronto family who packed up their life and moved into an abandoned 10,600 square-foot Prince Edward County school four years ago. Before it was shuttered in 2011, the school’s annual electricity bill was $10,000 and oil-heating came in at $38,000 a year. Puts my family’s heating bill in perspective!

But they made it work. This family refurbished the school, found economical ways to heat the place (including adding proper insulation and converting the heat source from oil to peet); three years later, they have a warm family home, complete with gym turned open-concept family room and kitchen with a pre-dinner performance stage. The school-come-home is located in a thriving farm-to-table tourist community, so this family also found a way to earn a living: They turned a portion of the school into a B&B.

This decision to repurpose an outdated building offers a lesson for all of us—and hope for an entire generation of would-be homeowners, who are currently negotiating an unstable job market amidst out-of-reach housing prices. But to foster out-of-the-box thinking we need bureaucratic help. I know. Don’t even say it. Thing is, a number of European cities are trailblazing these housing hacks and even some U.S. cities are finding ways. Canadian cities are, once again, a step behind.

Read more: 5 questions you probably have about the housing market »

We need to consider repurposing, first

Take, for instance, the Vancouver School Board’s decision to demolish the Point Grey Secondary School in the neighbourhood of Kerrisdale. Rather than sell the school to a developer that would repurpose the 1929-built Gothic-style architecture, the VSB sold it on the premise that it would be torn down and the land redeveloped. Their rationale was that it’s too costly to update such old buildings. But in a Globe & Mail article (“Disposable Vancouver”), Heritage Vancouver charged the VSB with willful neglect, stating that the school board defers maintenance on these old schools to the point where upgrading costs become astronomical.

It doesn’t have to be this way. Just last year, a  decommissioned school in Hamilton, Ont. was bought by the Valvasoris—developers with plans to retrofit the 85-year-old building and turn it into condos.  “Old schools are very structurally sound,” explained Mike Valvasori.

To make the deal happen, the City of Hamilton waived almost $670,000 in development fees. City staff also found a work around to getting a heritage site designation (a process that can add months, even years, to the development process). The solution? Slap an easement onto the building. This allows the city to protect the Gothic architecture and historical lands with development restrictions. Even better is that the easement stays on the property even if it’s resold.

Large developers aren’t the only one repurposing old buildings. In Boston, for instance, urban-centred classic Victorian homes are converted into legal, self-contained condo units (known as duplex condos). Over the last decade duplex condos have become the mainstay of city’s housing inventory, explains Boston realtor Joanna Kirylo. “We’ve got first-time home-buyers, people moving, downsizing, there’s even families living in them.”

Read more: Home ownership, the disappearing dream »

Death by a thousand fees

Drive 900 kilometres across the border to Toronto and it’s an entirely different story. Years after buying her large Victorian home in the Harbord Village area, Carolee Orme sought to convert it into two legal condo units. But before a hammer could touch a nail, she had to shell out close to $50,000 in consultancy fees. This isn’t uncommon. According to the Canadian Home Builders’ Association (CHBA), development fees start at $50,000, and go up—sometimes quite significantly. Martin Rumack, a Toronto real estate lawyer with over three decades of experience, has seen more and more of these fees passed on to the home buyer. At times tacking on tens-of-thousands to the purchase price.

Read more: Canadians feel priced out of their own neighbourhoods »

Then there’s tax

Tax on new builds or conversions is not uniform. There are taxes added at the municipal level, then more taxes added at the provincial level before getting to the federal level where more taxes are added, once again. This creates a tax on tax system and in some of Canada’s bigger cities, these taxes add more than 20% to the total cost of a new build. In Vancouver this translates to more than $100,000 added to the final cost of the new- or re-build.

Read more: Foreign buyer tax not enough to fix GTA housing problems »

Time to rethink zoning

Another problem is zoning, which is the use of bylaws to dictate exactly how land, buildings and other structures are to be located, built and used. One critic of current zoning processes is Josef Filipowicz, a policy analyst with the Fraser Institute. “There are an incalculable and ever-evolving series of uses, densities, and forms [of land use] that are not accounted for in traditional zoning codes.”

Why is this a problem? Because of the correlation between zoning policies and housing prices. It was a link that was established with the release of a landmark policy paper over a decade ago. The report authors concluded that, “If policy advocates are interested in reducing housing costs, they would do well to start with zoning reform.”

Yet, here we are: In Toronto there are year-long waiting lists for owner-occupied building permits, while taxes and fees and inflexible zoning continue to make alternative housing development prohibitive to all but a few larger developers. If our governments—municipal, provincial and federal—are serious about developing innovative housing hacks then they’ll need to work hard to eliminate the barriers to out-of-the-box housing solutions, such as removing layers of tax, establishing fee exemptions and updating and streamlining archaic zoning bylaws. Do this and we’ll be the next generation to watch new housing options take root.

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